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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.

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!