Beginner’s guide to housing loan application

Before you pay the booking fee for a property you intend to purchase, you need to first determine if you have the capacity to pay the loan. The general rule of thumb is that the monthly installment should not be more than one-third of your income. However, some banks allow you to borrow more, depending on your profile and financial health.

Second question that you may ask is "What are the documents that are required to apply for a home loan?" The answer is pretty straightforward. The bank is lending you a huge sum of money. So, all you need to do is to prove to them that you have the earning capacity to repay the bank.

For a new property purchase, a booking slip / Sales & Purchase Agreement (SPA) is required. For refinancing, the borrower needs to provide the latest loan statement or letter of offer from the existing bank.

If you are a salaried employee, the required documents are:
(a) Letter of appointment (for new employee)
(b) Latest three months’ salary slip
(c) Latest three months’ bank statements to show the salary credited
(d) EA form
(e) EPF statement
(f) Borang BE
(g) A photostat copy of your IC (identity card)

If you are self-employed, the required documents are:
(a) Latest one year’s B form
(b) Latest two years’ audited accounts / trading accounts
(c) Form 24 & 49 & Company Registration
(d) Business registration form (A/D)
(e) Six months’ bank statements (personal account)
(f) 12 months’ bank statements (company account)
(g) A photostat copy of your IC (identity card)
(h) Other supporting income documents

Lastly, the borrower needs to know the loan’s features that he or she requires, such as loan amount, tenure, flexi / non-flexi, fixed rate /floating rate etc. The borrower needs to be prepared with extra down payment should the earning capacity be not strong enough, or the actual property’s value is less than the purchase price.

If you need further clarification, seek the advice from a banker or a mortgage agent to calculate the monthly installment required based on the current market rate. - by Peter Loke, a professional mortgage agent  (www.klang-valley.com).