You have decided that property is an asset you want to have. Superb. You have started to count your down-payment and estimating when will be the time you will actually buy. Excellent. You already have the area and the type of property possibilities. Great. Now, have you prepared in advance for this new journey as a home owner or a landlord?
What could be done in advance to ensure you have the best chance of getting your loan approved? Perhaps 6 months in advance? Here are some key things yeah. Most of it has to be done in advance and not just before you apply for your home loan. That would have been too late.
Are you CONFIRMED? Having a job is great but has the company actually confirmed you? The confirmation has to be in writing yeah and not just verbal. The banks would need a proof of documentation for that. It’s safe to say that if you intend to apply for a loan, better not switch jobs and thus having the situation of not having been confirmed in your new job prior to applying for a loan.
Is your EPF contribution in order? This part is not for the bank to tell you that your employer has not cheated you. This part is for the bank to understand if you really are working with a proper employer and thus has the stability in income. Of course, when you do this checking, you also get to know if the employer is really paying into your EPF account or they did not! Here’s a good reference in case they (the employer) really did not pay…
Salary slip = bank statement? Banks just want to ensure there’s no fraud elements. So, if your salary slips says RM8,888.88 then your bank statement on the date the salary is credited should be RM8,888.88 lah. It should not have RM8,888.66 for example. Perhaps it’s a genuine mistake but it’s super important to tally your salary slip to your bank transaction slips yeah. Not a small matter to ignore at all!
Have you paid your income tax? You can say you have earned $$$$. However, if you have NOT been paying your income tax, then there’s no record and this does not look good on you at all. A good friend who’s just starting his job has earned over RM3,000 per month for the last 1 year. He did not submit his tax because he believed he will not be taxed anyway. Bad idea. His home loan was rejected even though he showed his over RM3k pay slips to the bank.
Timeliness in paying your other commitments. Banks feel insecure if they could see that you are occasionally late when paying for your commitments. For example, when they look at your payment for your Hire-Purchase. (Yes, your favourite car!). You may think late by a few days is fine. The bank would not tow away your car anyway. Wrong. This gives a very bad signal to the bank when they want to decide on your home loan. What if you do the same for your home loan?
How many credit cards do you have anyway? If you have always been paying in full every month for all your credit cards, you will be just fine. You are considered a good boy / girl. However, if your credit card limit (total for all cards) is RM100,000 and you are already nearing the limit which meant that just paying interest alone, you are now paying up to RM1,500 per month, then this will be included into the calculation for your home loan too. With this added, it may just burst your Debt Service Ratio (DSR) and there goes your application into the rejected folder.
Fixed Deposits will come in handy or at least healthy bank balances. Yes, if you have Fixed Deposits which has been around for some time with the same bank that you are applying for the home loan, the chances of you getting the approval is higher, even if you are at the DSR borderline. It’s very important to ensure you have money in and money out and your balance is always healthy yeah. Banks love to see you being good with money…
Pre-Approval is possible these days. Just ask your friendly banker or your real estate negotiator friend for this Pre-Approval thingy. If they do not know, something is wrong with them yeah. Please change! However, if you like to at least know where you stand, then you can check it out here: loanstreet.com.my . Sample as below.
Fill up, Check and Check Again before submitting. The good thing about a friendly banker is that they will help us to check and check and check before they send it up for approval. However, some may not be that friendly and if some documents are missing, then your home loan application may need to be resubmitted or even rejected. So, it’s important for us to know what are all the documentations necessary and tick it out one by one and make sure we have all in place prior to submission.
Now… you wait for the home loan approval and that day when you get the keys to your new home, the feeling will be amazing. Haha. I still remember I told my wife, ‘Hey, our own home!’ That was in 2003. Yea, super long time ago. Haha. Anyway the property investment journey has been a wonderful one for me. I could not say that everything was smooth but slow and steady could be a good description for it. My advice? Start this journey and you will soon enjoy it after a while. Do not be too afraid about the timing. Be more afraid of buying the wrong property instead. Remember yeah, heavy discount and low price are two different things altogether. Cheers.
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