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| Before you commit to buying a property,
please use the following guide: |
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| Step 1. Do your home
work. |
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| A very common mistake is to commit to the purchase of a
property before having clarity on (i) if you qualify for the loan, and in
particular, if you indeed qualify for the amount you need to borrow to complete
the purchase; and (ii) the terms and conditions that the Lender(s) may impose
and that you can easily meet those conditions, and (ii) the sum of monthly
repayments that you will be obliged to pay. |
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| First, find out how much you are entitled to borrow and
how much the repayments will
be.[see Note below] While most Lenders follow a similar process in assessing
loan applications, they do differ somewhat in their preferred margins of
finance (% of purchase price/value); loan tenure; treatment of source of income
such as commissions, rental income,
debt service ratios
(DSR also known as payment to income ratio, PTI), total commitment to
income ratio) as well as whether insurance/MRTA is compulsory. |
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| [Note: As a general rule, a DSR or PTI of 40% is
acceptable, that is, the monthly loan repayment is less than 40% of the
borrower’s gross income.An important note of caution: how much you can borrow
need not be equal to how much you can actually afford, and should borrow. It is
vital that you take into consideration future expenses, increasing cost of
living, and the fact that interest rates may increase. Please feel free to use
Money3’s
Loan Affordability Calculatoror
contact us by
email]. |
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| If buying a property under construction, it
is important to have confirmation that a particular developer is not under the
Banks’ negative list. Also important is the type of property you are planning
to buy. Some Lenders may not accept serviced residences and/or holiday or
resort type properties, while other Lenders may not be prepared to lend on
properties in certain regions.
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| Finally, be sure that you have a clean
credit history. All consumers are entitled to search the
Central Credit Reference Information System (CCRIS)
and
Credit Tip Off Services
(CTOS).
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| Basically, both CCRIS and CTOS are two
credit checks that all Lenders perform as part of their assessment in
determining the risk of lending to a borrower. |
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| Should you discover that that you have a
history of bad/missed payments or pending lawsuits against you, it pays to
speak to an officer or consultant prior to making a down payment for the
property as poor credit may very well see to your application being rejected or
assessment being severely delayed. |
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| Read
on: |
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Finding the "Right" home loan |
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