Take a home loan? Here are 5 common mistakes people make, especially when asking for it for the very first time. Read on to avoid these pitfalls too.
Diving when you are not qualified
Banks, by nature, are generally keen to offer home loans to qualified buyers. The keyword, however, is “Qualified”. In Malaysia, a qualified home loan applicant generally refers to one who has the appropriate Debt Service Ratio (DSR) and does not have any red marks on the Central Credit Information System Report (CCRIS ) collected by Bank Negara. If you don’t fit the criteria, they will have no problem rejecting your application. So, before applying, you need to make sure that you have made the necessary preparations and that you are not fighting a lost cause from the start.
Advice on DSR and CCRIS
- You can easily check your DSR by dividing your total monthly debt or loan commitment (including the loan you plan to take out) by your monthly income. Suppose the bank has a DSR requirement of 50% and your monthly income is RM10,000; you are considered a qualified applicant if your total loan or debt commitment is RM5,000 or less.
- You can ensure your CCRIS is clean simply by managing all your existing loans, debts and credit card bills on time.
Go straight to the lowest interest rate and nothing else
You are going to borrow a large sum of money. Obviously, you will sign up with the one that offers you the lowest interest rate. Right? To a certain extent, it is. Your priority should definitely be to get the lowest interest rate possible, but you shouldn’t forget things like the funding margin, the lock-up period, and simple things like making sure a branch is located. near.
For a list of things to consider when choosing your home loan, see the type of home loan that’s right for you to learn more.
Apply to one bank and tell them
In Malaysia, it has become a general practice for seasoned homebuyers to “shop around” for the best loan package before committing to it. Apply to just one bank, and what you’re really doing is giving yourself no other options, even if the terms you’re offered are appallingly bad.
The even worse mistake you could make is telling a loan officer that they “are the only bank you are applying to.” It’s pretty much the same as giving them the license to give you the worst possible rate because they would know you have nowhere to turn because the 2 or 3 week lead time that promoters usually give you real estate goes down.
Not taking into account the costs of your mortgage
Home financing involves fees, charges and even home insurance that may surprise inexperienced buyers. Some banks cover part of these costs, others do not. Most homebuyers have limited funds (and therefore the need to take out a loan), so it’s imperative that you understand these fees before committing.
There are various fees and charges that homebuyers need to consider when purchasing a property. Check if you are financially ready to buy a house in Malaysia before taking the plunge.
Read more: Are you financially ready to buy a house in Malaysia?
Not reading the terms and conditions
Before making any financial decisions, it’s important to read all the fine print. This also applies to your loan contract. If you don’t have the ability to do this, make sure the loan officer tells you everything that matters (such as loan amount, interest rate, installment amount, loan term, margin, lock-up period, early settlement penalty and fees and charges).
The general rule is that if it doesn’t appear in your agreement, it doesn’t take effect. Period. So if your home loan says a lock-in period of three years when your agent tells you it’s one year, the former wins. All the time.
Getting your own property is great, but expand it without making these mistakes.
Find out how affordable Malaysian homes are in different parts of the country. Use our interactive map here.
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