Under MAS Notice 645, a bank can turn your savings and investments into extra income for a loan assessment. It spreads them over 48 months. Lock SGD deposits with the bank for at least four years and they count in full. $48,000 pledged adds $1,000 a month to your assessed income. Leave the same money unlocked and simply show it, and 70% of it is ignored. You would need $160,000 for that same $1,000. This guide is about that 3.3-times gap, and which side of it suits you.
How does the bank turn assets into income?
The list of assets that count is wider than most people expect. SGD notes and deposits. Stocks. Unit trusts. Business trusts. Bonds. Gold. Foreign-currency deposits. Structured deposits.
Two warnings. First, those percentages are the best case. MAS sets them as the standard, but each bank decides which assets it will actually accept. Some cut more than MAS requires, especially on shares and foreign-currency deposits. Second, this extra income goes into the same TDSR sum as your salary. 55% of your total counted income, less existing debts, has to cover the instalment at the 4% test rate.
How much do you need to pledge?
Take a worked case. A 48-year-old earns $14,000 a month in fixed income and has no other debts. They want a $1.5 million loan, which is 75% of a $2 million private property. Their age caps the loan at 17 years, because it must end by 65. The bank assesses it at the 4% test rate.
| Line | Amount |
|---|---|
| Monthly instalment — $1.5M at 4%, 17 yrs | $10,146 |
| Income required (instalment ÷ 55%) | $18,447 |
| Assessable income | $14,000 |
| Monthly shortfall | $4,447 |
| Route A — pledge only (SGD deposits, × 48) | $213,461 |
| Route B — show funds only (× 48 ÷ 0.30) | $711,536 |
| Route C — pledge $100,000, covers $2,083/mo… | $100,000 |
| …plus show funds for the remaining $2,364/mo | $378,202 |
Three things stand out. First, the gap is small, just 24% of what is needed. Yet closing it by showing funds alone takes $711,536, nearly half the loan. Ignoring 70% of the money gets expensive fast at this size.
Second, this is why most people mix the two routes. Pledging $100,000 that the borrower can genuinely spare cuts the show-funds requirement almost in half, to $378,202.
Third, age drives this whole table. The same borrower at 38 would get a 27-year loan, an instalment near $7,600, and no shortfall at all. This mostly helps older borrowers, where the loan length cap causes the gap, not the salary.
Should you pledge the money or just show it?
Pledging needs far less money. The catch is that it ties the money up. The assets sit with the bank for 48 months. Pull them out early and the bank redoes your assessment. If the ratio then fails, you may have to top up assets or repay part of the loan. It suits money you genuinely will not need for four years: matured savings, a bonus, or proceeds parked after an HDB sale.
Showing funds lets you keep control. The money can stay in your shares or deposits, still earning a return. The catch is the amount: about 3.3 times as much. The bank also checks it twice, once when you apply and again before it releases the loan. Move the money between those two checks and your approval can be void.
Most real cases mix the two. That is what the pledge/unpledge calculator is for. Enter what you are willing to lock up, and it tells you how much you still need to show.
What mistakes do people make?
Treating this as a fix for affordability. This changes how the bank assesses you. It does not lower what you pay each month. In our example the bank tests the instalment at $10,146, using the 4% rate. Your real payment will usually be lower, since banks charge less than 4% in practice. But whichever figure applies, pledging will not reduce it. It helps you qualify. It does not make the loan cheaper.
So check whether you need it at all. Re-run your numbers in the affordability calculator. A smaller loan may work. So may a cheaper unit from the budget matcher. So may clearing a car loan: every $500 a month of debt you clear frees up roughly $100,000 of borrowing room, without locking up a cent.
Pledging money that already has a job. Think of your renovation budget. Or the next stage payment on a unit still being built, which our payment schedule maps out. Or working capital for a business. Pledge money you will need inside four years and a useful shortcut turns into a forced repayment.
Assuming every bank does this. MAS allows banks to count assets. It does not make them. Some accept SGD deposits only. Some cut shares harder than the rules require. Some do not offer it at all. Ask about this alongside the rate when you shop for a loan.
Forgetting the cut on variable income. If part of your pay is bonus or commission, MAS already cuts that part by 30% before it counts. So $10,000 of commission counts as $7,000. That happens first, before any asset discount. If you earn mostly on commission, work out your shortfall from your income after that 30% cut, not from the gross figure. The calculator does this for you.
Where do you check the current numbers?
Four numbers here are MAS settings, and they change with policy reviews: the 55% limit, the 4% test rate, the 48-month conversion period, and the discount tiers. We keep the live sums in the pledge/unpledge calculator. The income-only baseline sits in the affordability calculator and the tables in our TDSR guide. The stamp duty calculator prices the tax on your purchase.
One clarification. This guide is about using assets to qualify when income alone falls short. Unlocking cash from a property you already own is a different thing. Read the equity term loan guide for that. Note that the cash can fund renovation, education, business capital or investments, but never the purchase of another home.
So should you pledge?
Pledging suits one kind of borrower well. You have real savings, but your ability to pay does not show up fully in the bank's sums. Perhaps your age shortens the loan. Perhaps most of your pay is commission, and MAS cuts it by 30%. Perhaps you changed jobs recently. For that borrower, $48,000 for every $1,000 of shortfall is a fair price, and the money was sitting idle anyway.
There is a second kind of borrower, and the warning is real. If the shortfall exists because the loan is simply too big for the income, this same rule can still get it approved. You end up with a mortgage you struggle to pay every month. Remember too that pulling the pledge back early forces a fresh assessment, and possibly a top-up or partial repayment. That money is locked away for four years.
Work out your shortfall in the calculator. Then decide honestly which borrower you are.
The short version
What to remember
- What pledging doesTurns savings into income the bank will count
- Cost of $1,000 a month, pledged$48,000, locked for 4 years
- Cost of $1,000 a month, shown only$160,000, not locked
- The gap between the two routes3.3 times
- Shortfall in our worked example$4,447 a month
- Cost to close it by pledging$213,461
- Cost to close it by showing funds$711,536
- Does it lower your repayment?No. It only helps you qualify
- Who it helps mostOlder borrowers capped by loan length
So what should you do with this? Work out the shortfall before you work out the assets. Run your income through the affordability calculator first, and check whether clearing an existing debt closes the gap on its own. Every $500 a month you clear is worth about $100,000 of borrowing room, and it costs you nothing in locked-up savings. If a gap remains, take it to the pledge/unpledge calculator and decide how much you can genuinely do without for four years.
Frequently asked questions
What does pledging assets mean?
You place savings or investments with the lending bank for at least 48 months. A fixed deposit is the most common choice. The bank then divides that amount by 48 and counts the result as monthly income when it assesses your loan. SGD deposits count in full, with nothing cut off.
What is the difference between pledged and unpledged?
Pledged assets are held by the bank for four years. SGD deposits then count in full, and other assets at 70%. Unpledged funds stay in your own control, but only 30% of them counts. So closing the same gap by showing funds takes about 3.3 times as much money.
How much do I need to pledge?
Multiply your monthly shortfall by 48. Short $1,000 a month? Pledge $48,000, or show about $160,000. The borrower in our worked example is short $4,447 a month. They would pledge $213,461, or show $711,536.
Which assets can be counted?
Under MAS Notice 645: SGD notes and deposits, stocks, unit trusts, business trusts, bonds, gold, foreign-currency deposits and structured deposits. Each bank still chooses which of these it will actually accept.
What if I withdraw pledged assets early?
The bank redoes the assessment without them. If the ratio then fails, it can ask you to top up the assets or repay part of the loan. So pledge only money you will not need for four years.
When are shown funds checked?
Usually twice. Once when you apply, and again before the bank releases the loan. The money is not locked. But the balance must still be there at both checks.
Does pledging change my repayment?
No. It changes only how the bank assesses you. The instalment is the same as it would be for a borrower who qualified on income alone. That is exactly why you should check affordability carefully before using it to close a large gap.
Update history
- Plain-English rewrite for first-read clarity. Added a "short version" summary, shortened the title and meta description, and split the longest passages into single-idea paragraphs. No figures, rates or rules changed.
- Guide published, alongside the pledge/unpledge calculator. Worked example computed at the 55% TDSR threshold, 4% stress rate and MAS Notice 645 haircut tiers.
Methodology & sources. Asset recognition rules come from MAS Notice 645 (eligible financial assets, 48-month amortisation, haircut tiers); the assessment framework comes from MAS's TDSR rules (55% threshold, 4% medium-term stress rate, 30% variable-income haircut). The worked example mirrors the default case in our pledge/unpledge calculator so the two can be cross-checked line by line.
Disclaimer. All figures are illustrative estimates for education — not financial advice and not a promise of loan approval. Individual banks decide which assets they accept, apply their own valuations and internal policy, and may decline asset recognition entirely. Pledged assets are committed for 48 months and early withdrawal can trigger loan reassessment. Speak with your bank or a licensed mortgage adviser for a personalised computation.
Talk it through with an advisor
Our research tells you what the data says. If you want to work through what it means for your own situation — budget, ABSD position, timing an HDB sale, or comparing launches against resale options — you can request a one-to-one consultation.
- No obligation. The first conversation is about your goals.
- Affordability and stamp duty worked out on your actual numbers.
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