Remember those days when credit cards were easy to apply for but after spending the future money, it’s suddenly very hard to escape? You see. RM5,000 in income meant that you could get a credit card with a limit of say RM10,000. Imagine getting just 6 banks to approve your credit cards at the same time and you suddenly have RM60,000 credit which you could spend within 30 days. WOW. Your lifestyle will suddenly change in that 30-60 days. All your friends will envy you. Money is easy for you. Everywhere you go, the shops welcomed you.
You will soon have to wake up soon because you will suddenly realise that just serving the interests alone will already be crippling every month. If credit card application can be this damaging, imagine what happens when one submits many mortgage applications at the same time! There’s even a term for it; multiple loan submission. My good friend, Miichael Yeoh wrote an article for iProperty.com.my and my good friend, Reena in iProperty.com.my helped to make the article available in easy to read format. Please read yeah.
Article in iproperty.com.my Multiple financing is also known as the “loan compression” method, multiple financing is when one applies for a few home loans at various banks, simultaneously. This ‘loophole’ is popular amongst investors who plan to purchase a few units/properties at one go, and avoid the 70% loan margin for the purchase of the third and subsequent properties.
The situation where multiple financing is used, is usually for “cashback” properties. Usually, these units are being sold in bulk to a group of purchasers. Hence, the developer is able to offer a massive discount for its units (as high as 40%), and each buyer will get a disbursement via a cashback amounting up to 6-figures per unit. This is possible as these cash-back properties usually have a marked-up selling price. The article is a long and very comprehensive one. Please read it here: Article in iproperty.com.my
One word. Don’t. Two words. Don’t try. Three words. No further comments. Remember, when someone helps us to submit these applications, they will earn from the successful applications. For them, the risk is NIL. They get to enjoy that ‘commission.’ For you, the risk is REAL. Everything is in your name. When you need to start servicing the loan, it is you who will have to do it. Hopefully you still have the money in your bank and has not spent it all away. When you start defaulting because you have no money, that agent who helped you to submit those loans in the first place will definitely not be coming to help you yeah. He may be sipping coffee somewhere and speaking to his next client. Happy investing but never resort to gambling and definitely not multiple loan financing.
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