Pointers on making sure the bank approves your application

Jerry Tang, managing director of De Bancco Group Bhd

SPEEDING up your loan application process is a crucial game plan, especially if you are trying to grab a good housing deal that is way below market price. However, first-time buyers may be flustered to learn the ropes of this bureaucratic process.

According to De Bancco Group Bhd managing director Jerry Tang, you must consider several essential points.

Prepare papers in advance

After completing the offer form with the estate agent, you have 14 to 21 days to sign the Sale and Purchase Agreement (SPA). That means you have less than 21 days to apply for a loan.

“The loan process is not that simple; the bank will have to go through several steps before approving your loan application. Hence, I usually advise my clients to begin preparing the essential documents before making a booking.

“Do some self-checking on loan eligibility. Among the documents you need to furnish the bank is your income statement as proof of your loan repayment capability,” he said.

Minimise bank KIV and rejection

It’s important to understand the bank’s requirements.

“Prepare clear copies of your documents. Even your photocopy technique is vital here. The carbonised salary slip is probably the most challenging item because it is hard to get a clear copy.

“Note that the bank officer will KIV (keep in view) your loan application if he or she can’t read the photocopy. Bear in mind that most banks require similar documentation,” said Tang.

Choose a package that best suits you

“My advice to first-time homebuyers is to look beyond just securing a mortgage loan. They need to ensure that their finances meet the affordability criteria before purchasing.

“Avoid taking on a debt you cannot handle. Never forget the various entry costs of making a purchase. Buying a house does not entail only the 10% down payment,” he said.

According to Tang, many borrowers merely say they want a loan with the lowest interest rate. “This isn’t wrong. However, the loan package comprises many other terms and conditions. We need to study and find the package that suits us most before applying for the loan.

“You can make comparisons by using an online platform or going to the bank. It’s good to seek the advice of your mortgage broker.

“Customers may change their mind after the loan approval. Take note that the process of requesting to change your loan package will be time-consuming. It could also downgrade your credibility from the bank’s perspective,” said Tang.

Be logical when selecting the bank

“Loan application is a logical process, not an emotional one. I understand that many people have their preferred bank due to various reasons. It is a challenge for me to persuade customers to apply to a specific bank for loan approval.

“Despite explaining the reasons, they would still revert to their choice of bank. It won't be an issue if the bank approves the loan application. However, we need to consider the SPA signing deadline if the application is rejected.

“Furthermore, other banks will downgrade the customer credit scoring after finding out the application was rejected previously.

“A customer’s loan application status is linked to all banking institutions,” said Tang.

Leverage on who you know

“If you don’t have experience, listen to those who have and do some market study on loan approval. Many people perceive that anyone who works in a bank understands the mortgage process and application. This could not be further from the truth.

“For most scenarios, the banker might be inexperienced when handling the loan case. Other bankers may have too many loan applications to deal with at the same time,” said Tang.

He stressed that an individual should choose the right banker because the loan process is a crucial one. A simple mistake may lead to long delays or even a rejection.

This article is part of the StarProperty.my’s upcoming ebook titled “Looking for your first house? House-hunting tips in 2018.”.

Register at bit.ly/househuntingtips2018 to get a free ecopy.

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