Home loan guide
Before you commit to buying a property, please use the following guide:
A very common mistake is to commit to the purchase of a property before having clarity on
Whether you qualify for the loan, and in particular, if you indeed qualify for the amount you need to borrow to complete the purchase;
The terms and conditions that the Lender(s) may impose and that you can easily meet those conditions, and
The sum of monthly repayments that you will be obliged to pay.
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.
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.
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).
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.
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.
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.