4 Great Tips For Getting your Housing Loan Approved

1. Usage of credit cards

There is nothing wrong with having 10 credit cards but you must pay on time. The problem with credit cards is abusing the given credit amount – you swiped your credit card one time.. and then one more… and another swipe.. and at the end of the month you found out you have used more than you can pay – yikes!

I attend a talk by a professional bank officer regarding credit cards and it was an eye-opener. I found out that bankers will see you as having little money the more you use your credit cards. It is also recommended that you use a maximum usage of 75% of your full credit amount – recommendably 50% for better chances of getting your loan approved.

It is also recommended that you use a maximum usage of 75% of your full credit amount –

recommendably 50% for better

chances of getting your loan

approved.

It was also discovered that if ever, there is a record that shows you paid your credit cards late – there is high likelihood that your loan applications get rejected. To sum up, high use of credit cards equals high chances loan applications gets rejected.

So what’s a good credit card practice to get most of your loan applications approved?

  1. Maintain good track record of credit card payments
  2. Maintain credit card usage approximately 50% of total amount

2. Status of work or company

Lets say if you are a creditor or a bank yourself, would you be concerned what your debtors are working as? – of course you do!

From bank’s perspective, they do not know how credible you are and whether or not you are able to meet your commitments. This is why what you work as and who you work for are important.

Banks would normally opt to lend to people from companies with credible backgrounds and track records. A company that always pay their employees’ salaries or EPF fees late are excluded from being reliable.

The lenders would also need to have a job that can proof to the banks that they can ensure a continuous income to meet their monthly commitments to the banks. Banks would normally see contract-based workers as risky lenders because their work contract can be terminated at any time. But then again, in this situation maybe you will be able to convince the banks by your high savings amount – that may work.

3. Savings

Having a certain amount of savings is an extra point you get from the banks. It would be much easier for banks to assess your risks and behaviour from the money you saved. The best amount of savings is around 6 months of your salary – why so? This is because in normal circumstances people are able to settle down and look for a job or to restructure their short term plans within 6 months – I call this the calm down period.

‘The best amount of savings is around 6 months of your salary’

Savings can come from anywhere such as bank accounts, asb, tabung haji, or an investment account. However, savings are not income. Incomes are money that comes in your bank account on regular basis with an estimated amount each period unlike savings which you don’t earn on them.

What if you own company shares or you act as a shadow director for a company and receive dividends on it? Is it considered as income?

Yes! It is an income and I urge you to save the dividends as banks would see the dividend incomes as part of your earnings. Save around 30% to 40% of your income as this will help banks to determine your capability and credibility to meet your commitments with the banks – remember, every dollar you save is a dollar you earn.

4. CCRIS records

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The Central Credit Reference Information System or commonly known as CCRIS is a system that helps gather credit information from borrowers who participates in financial institutions – banks, insurance brokers, or private companies in normal circumstances and produces credit reports (contains outstanding loans, special attention account, or bankruptcy status of a person) that will be utilise by the financial institutions. CCRIS record is important to gauge our financial capabilities.

So, what is a good CCRIS record?

  1. Your credit report shows 0:0:0. This is the ideal record because the higher the number means no months having outstanding loan. PTPTN, housing, and car loan is normally included as part of CCRIS assessment.
  2. No 12 months outstanding credit payments.
  3. No outstanding amount in your special attention account. Take note that you may thought that the card can cancel itself after you have used up all your credits with the intention of not using it anymore and you think its okay not to manually cancel it – this is where it gets scary. The credit you didn’t pay will be transferred into your special attention account and it will be there forever until you manually call the banks to cancel and pay the outstandings. Whenever you want to apply for a housing loan, make sure to clear any outstandings you may have due for a long time.

To sum it all, you will be able to obtain higher chances of getting your loan approved by applying the 4 main tips as aforementioned. Also, you may need to take into consideration of what you can actually own. Sometimes the banks may approve of your loan but you may face difficulties to pay the banks’monthly installments – so don’t bite more than you can chew. Take things slowly and enjoy your wealth growing process.

5 Tips to buy a house in your 20s – This is the best time

These days people complain that it is getting harder to buy a house than the good old days – wouldn’t blame them. Pressing matters such as increase in costs of living has lead to lower purchasing power by consumers worldwide.

However, such matter should not stop us from achieving our dreams – right? Would you not dream of owning a house now more than ever? The price of properties will keep on rising and imagine how high it will push in the future.

But, when will the best time be to buy a property? My opinion has always been NOW – but one must proceed with right knowledge and always be aware of the opportunities and threats that lies ahead, one must proceed with the right info and knowledge.

Here are 5 tips to buying your property in your 20s.

1. Get a stable job

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With a job that can give you a sustainable monthly income, you will be able to know which type of property you would want to buy. Banks will also be able to be comfortable to loan you the fundings knowing you have a steady income to pay your monthly commitments.

2. Savings

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Be it a savings in the local bank accounts, ASB or 401K – just SAVE! When you know which type of property you want to buy, you will be able to know the amounts you need to allocate for your savings. Savings are mainly important for the 10% loan deposits and payment of legal fees during property acquisition stage.

However, I would highly recommend saving your money in an account that has compounded effects.

All you need to do is to ensure that you allocate certain amounts every month to put into your bank accounts and watch the money grow – disipline is key. After few years, you would be surprised how much your savings have multiplied.

3. Be aware of housing promotions and schemes

These days there have been many promotions made by developers and even the governments, the offers made differed in every countries.

In Malaysia, there is Skim Perumahan Rakyat Satu Malaysia (PR1MA), Rumah Selangorku, Perumahan Penjawat Awam Satu Malaysia (PPA1M), Skim Perumahan Mampu Milik Swasta (MyHome), and Rumah Mampu Milik Wilayah Persekutuan (RUMAWIP).

With the right housing schemes and financial capability, you may be able to own your first house – at a cheaper price!

4. There is nothing wrong starting with a small house

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Now that this post is about owning a property in your 20s, I am assuming most of those who reads this are finding ways to buy your first home yourself.

Some of you might decide to buy a low range priced property or a medium range property but whatever it is – I advise not to bite off more than you can chew. This is simply because you might not know the whole property game yet and might risk a lot of money if you buy straight up a big house which means more money at risk.

Take your time and progress slowly. However, if you think you are capable enough to buy a big house and you are ahead in the property game then why not?

If an opportunity comes and you can already buy a big house in your 20s – you are good to go!

On the other hand, the good thing about living in a small house is that it does not necessarily mean you are not doing good in your life or are behind your other peers – you are only in your 20s.

Also, there is high likelihood you’ll be happier too when living in a comfy small space. You will get to spend more time with your family and all spaces on the house are occupied. Unlike living in a big house where everyone is doing their own thing in their private areas in addition to the extra marginal maintenance you have to pay for the extra spaces.

All and all, there is no right or wrong when you want to buy a house for your own stay – it is all about your personal preferences but remember to always know what you are buying and the full potential of your purchase.

By owning a small house you don’t have to strain your budget too much, get to spend on other your families.

Also, owning a small space will help you get better rentals as majority of society these days preferred a smaller space to stay due to temporary work placement and the rising costs of properties.

5. Learn the property market

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Real estate cannot be lost or stolen nor can it be carried away. Purchased with common sense, paid for in full and managed with reasonable care it is about the safest investment in the world.

– Franklin D. Roosevelt

Of all the 4 tips aforementioned I believe this is the most crucial. Without learning the property knowledge you might be buying a property:

  1. At higher prices
  2. In an area that would not have development in 5 years to come – a dead town area
  3. That is build with low quality, or
  4. That might be a scam

This will get you into very hard times and may even lure you into a financial crisis if you are not aware.

You should opt to know what are types of properties that are best for investments, the whole process of buying a property and many more. But knowing that you are reading this article would mean that you are doing your best to do what you can to get the best out of your property investments and I know you will get to your destination someday – keep hustling and learn continuously!

5 Traits of a good property to invest and get good rental

Yes, you have read it right – the 5 traits of a good property to invest! In this article I will focus more on structural factors that can boosts a property’s value and with high possibility making the investment you will never regret out of it. Here are the top 5 traits.

1. Public transport

Accessibility factor has been the trump card out of all other factors in most times – who would not want to stay in a house that are convenient to go anywhere? You don’t even need to worry about traffic or where to park your car at your destination. This is why most properties that are beside train stations or bus stations has the best rental occupancy rate – people think its convenient.

2. Shopping mall

Doesn’t it tire you when you have to wait for a cab or a bus after you have your hands full of shopping bags or you are working at the mall and it is too far to walk to the train station to get home – it’s dreadful. Which is why having a property near a mall is one of the most strategic area to invest. Speaking about the rental game, you will be able to attract anybody to rent your unit or you can even pull in mall employees themselves, which is better because they normally would want to rent for at least 2 years.

3. Hospital

Having a property near health care centres have always been a comfort for everybody. People in general have higher likelihood to rent a unit near hospitals because you will never know when you are going to fall sick and the best thing is to know the hospitals are nearby – which one less thing to worry, right? Not to mention that the health care employees such as nurses or doctors might be interested to rent a unit nearby.

4. Offices

Properties near office areas generally would be attractive to the workers working there – specifically young executives. There have circumstances where some young executives or fresh graduates starting their first job would opt to move to the city or state-hopping from their suburbs or villages. (add stats!) This provides golden opportunities for landlords near office areas to have a good rental margin.

5. Education Facilities

One of the business that have the least impact towards economic downturn – education sector and the people in it. Even when the economy is not doing too great, there will always be people going to school or universities. These people will always need a place to stay and they might stay on their own or with friends which is why having a property near education facilities are a great investment. It can help generate continuous rental returns. After one semester ends, another one comes – it is constant and sustainable. Students, teachers, lecturers, or even the general workers at these places will normally opt to find a nearby housing area to rent.

7 steps guide to buy a house – the complete guide

According to CNBC, in their article “Here’s why millions of millennials are not homeowners“, the number one reason people can’t afford properties is because they can’t afford the down payment and number two would be not being able to qualify a mortgage loan. While some people think that the process of buying a house is complex, here is the good news – it’s pretty simple!

You may have drove into neighborhood areas, flipped through newpaper or the property websites and think that you are getting serious to commit – you think you are ready to buy a house. This guide will take you into simple steps to help your purchase experience more straightforward.

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Step 1: Finding the right house

It never was easy to find the right house – even for myself. It takes a lot of time and effort to do this. You are going to have to check your financial strength, search on multiple websites, and ask someone with experience or a property coach – if you find one. Its a lot of work! Things like getting yourself insured or knowing “What’s the difference between master title, strata title, and individual title?” takes a lot of time and energy to absorb. But then again, this is the place you are going to live in or the asset that will grow you money. My property coach always said “if you don’t sweat looking for properties then you are not doing enough”. None the less, it is also the most exciting process to buy the right house. You may come across 2 or 3 houses shortlisted and I encourage you to visit all of them – you won’t know what you may missed!

Have a read on MRTT vs MLTT? Get yourself insured before buying a property to know what kind of insurance – in general, you would need to get a head start in your property investment journey.

Step 2: Call an agent/owner to inquire the property

Now that you have scoped down your choices, it’s time to call an agent for inspection – yippie!

This particular part is quite easy as most properties on sale or lease is either through a direct owner or an agent. Normally there will be advertisement boards at the front of the said units or listed in the property websites. But wait! This is very crucial step because you might have to wait longer if you screw up here – why?

Because we have to be careful of scams as some owners or agents are fake ones out there. How do we identify them? Here are some ways to ensure you won’t get scammed, I suggest the precautions as below:

  • Request a land tax invoice/original sales and purchase agreement from the owner. This is to show that the owner owns the property by paying taxes to the government
  • Request a ‘Real Estate Negotiator'(REN) number from the property agent. This can be done by asking for a card. You can check their numbers in the Board of Valuers, Appraisers, and Estate Agents Malaysia or your country’s respective Boards’ portal to see if their names are listed in the web. If they don’t, you may want to opt for another alternative to buy the house you wanted.

After all the verifications in terms of reliability is made for owners and agents, you can now rest assured and be in a more comfortable position to proceed with the inspection of your dream property – thumbs up!

Step 3: Arrange for an house inspection

During the inspection, make sure that there is no damage that may go unnoticed so that it will be easier to prove to the agent or owner that a certain damage has been there even before the purchase.

These are the things you should ask during house inspections, ask:

  • To take pictures of the property
  • How old is the property from the day it was built
  • Has the land title been issued. Strata title (for high rise properties), individual title (for landed properties) and master title (for any type of properties not given any individual or strata title)
  • Is there a caveat still attached to the property?
  • How is the rental potential?
  • Is it a leasehold or a freehold?
  • Why is the current seller selling the unit?

There are many other questions but these are the questions I consider important to know when buying a home.

Step 4: Put down a booking fee 3%

After you have made up your mind and you think that everything is good to go – it’s  booking time!

You will have to transfer 3% of the total purchase price of the property. That means RM 4,500 for a RM 150,000 worth of property. This payment of 3% is inclusive of the total of 10% deposit that you need to pay as part of the purchasing policy set by Malaysian government.

The balanced 7% will have to settle through a lawyer – not through AGENT or OWNER! as some people got scammed by paying all 10% to an agent or the owner – this is very important to take note.

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Step 5: Apply a bank loan and sign letter of offer upon bank approval

After you have placed your booking through payment of 3% – time to look for a banker!

Normally you would just apply to multiple banks. After that it is a matter of waiting for an approval decision by your banks – sometimes some of the banks will decline but hey, you still have few banks approved on your application. The last step is to compare the interest rates as derived from the bank loan agreement.

After you made up your mind and think you can live with the payment terms set by the banks, you let the banks know that you are ready to commit and you are all set! You will sign the Letter of Offer – this will officially grant you the funds you need to own your dream property.

“never sign sales & purchases agreement before you sign the  bank’s letter of offer”

You might get stuck with a property worth thousands without having a funder if you sign the S&P first before getting funded by the bank. That means, you may incur debt worth thousands which can get you into serious trouble for many years – so take note.

Interest Rates = 5% (base rate) + 1.3% (profit rate)

In most cases the profit rate does not or unlikely to change because the banks already set it at fix amount but the base rates are more likely to change over time – so pick your rates based on the profit rates of the banks!

Have a read on 4 Great Tips For Getting your Loan Approved to know more about loans 🙂

Step 6 : Appoint a lawyer

Now that your bank loan is approved – you have actually went through the storm. Now it is just a matter of appointing a lawyer to settle the rest. The lawyer help you prepare the ‘sales and purchases agreement’ and also the ‘loan agreement’ in order for the banks to be able to reimburse the agreed loan amount you made with the bank through the sign of the ‘letter of offer’ as stated in step 5.

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Step 7: Sign the Sales and Purchases Agreement

Here is the moment you are waiting for – yahoo! Now that everything is in place, once you sign the Sales & Purchase (S&P) agreement – you can now wait to receive the keys to your dream house and ready to move in!

Having to read this article to the end means you are really serious about buying a house – hope you get the dream house you wanted, good luck with the house hunt!

5 things you should consider before buying your first house

Nothing beats one of the best feelings rather than having a roof over your head but the greatest thing to know is – you own it! After working for about a year right after college, I managed to buy my first house. I went through all the process – finding the right house at the right place, did my credit checks with the banks, and arranged a house visit with a property agent which I get to trust. Overall, it was not a straight forward process as there were many questions I asked – whether the land title has been issued, the current unit’s market price , or even the issue of why the current owner is selling the unit. Here are the 5 things you should know before buying your first house.

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1. Do you want it or do you need it?

Whenever you decide to buy a house is always to determine whether you need the house? or do you want the house? .Need and want are two different things and are quite simple to distinguish, that is in theory. A need is something that you really require to carry on your daily life; a want is something that springs out of your desires and may not be very crucial to your current life.

If you think you can finally buy a property without stressing out your life too much – then you are all set! However, in some cases buying properties may get you in heaps of trouble – having to settle the loan installments late or always on a tight budget, then maybe you need to reconsider your purchase decisions.

hugo-sousa-383214-unsplash.jpg2. Is the house for investment or for your own stay?

This question changes a lot of things if you ask yourself. If you consider to buy it for own stay, you might want to buy the house in a descend environment, be it in a suburban area or the city. You might also prefer a better house condition if that’s the case, Then again this is all up to personal preferences. However, it will be quite different if you buy a house for investment purposes because you would need the house at places with high population, malls, offices, public transport, and etc. to get good rental income.

 

jacob-townsend-771573-unsplash.jpg3. Do you have an exit plan?

An exit plan should always be the planning stage in case if your property purchase could go haywire – fake property agent or owner, or maybe unsettled installments down the road. These possibilities must be simulated so that you will be able to anticipate preparations if these scenarios happen – yikes! But at least you will be able to know just what to do and panic less if it does happen, right?

rawpixel-252130-unsplash4. Do you have enough money?

As cliché as it may sound, yes, it is important to assess your ability to purchase the said unit. This is because there are times where property agents only wants to secure their share of bargain, their booking fees of 3% out of the total 10% deposit. Sometimes, these agents do not assess our financial credibility. It is up to us to assess our own so that we won’t lose out.

Let’s give an example,

You want to purchase an apartment costing RM 170,000 and you have a salary of RM 3,000 – which is still alright. You also have in your savings RM 17,000 which is just enough to pay for your 10% deposit of RM 17,000 from the apartment’s total cost. There is still to pay for the legal fees which is by the lawyer, oh no! this will normally cost around RM 7,000 that needs fork up. Hence, always take into consideration all costs associated with purchasing a house including the hidden costs and you will do fine.

florian-van-duyn-511440-unsplash5. It is alright to wait.

Sometimes it is just better to hold your purchase. I am not saying that you should not buy a property at the soonest, sometimes if you hold for a moment and reassess your decisions then you might think – nahh maybe this property is not too good a deal or you might just realise that you may be in a worsen condition if you proceed with the purchase. Being in a situation where you don’t have to worry about your daily finance is better than having to maintain a house and constantly struggle to meet ends meet – but that is just my personal opinion. Not all property investments makes great money – some of the investments might get you into serious financial trouble, learn and plan right. To sum up, buying a property is always a great idea especially if you have the stable financials and the right knowledge.

 

 

Property investments and general finance tips

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