Tips



THE BASIC IN APPLYING HOME LOAN:



Choosing the Financial Institution
You may choose any Financial Institution to finance your home but normally we will provide you the list of end-financier that will make your job easier.


Documents required

  • A photocopy of identity card or passport
  • Your latest 3 months' salary slip
  • Your latest income tax return form (Form J) or EA form
  • Sale and Purchase Agreement/deposit or booking receipt/letter of offer from the housing developer
  • The latest bank statements (compulsory in the absence of salary slips and/or Form J/EA Form) dating back six months/savings passbook/fixed deposits
  • If you are self-employed, you need to provide your business registration documents, latest 3 months bank statements, latest financial statements and other supporting documents to support your income

However, some financial institutions may require additional supporting documents.


The letter offer
Once your loan application has been approved, the financial institution will issue an offer letter containing the loan package information including the Base Lending Rate (BLR), margin of financing, loan tenure and other relevant information.


The Loan Agreement
A Loan Agreement is a contract signed between you as the buyer and the financial institution. A Loan Agreement contains major provisions such as the terms of the loan, principal sum of the loan, interest rates, default interest rate, penalty charges and repayment terms. It also sets out the duties of borrower and the lender and in the event of default, the rights and remedies of each party.


Loan Disbursement
The financial institution disburses (pays out) the loan once it has received advice from its lawyer that the legal process has been completed and the loan documents are in order. At this time you will be informed of the date and amount of the first installment you have to make.


Insurance
It is extremely important to take insurance coverage when you purchase a house. The most important factor is that it gives you and your loved ones peace of mind, in the form of financial security if an unfortunate event should occur.




There are two important insurances to consider:


The House Owner/Fire Insurance policy
This policy provides coverage for your property against natural disasters such as flood, fire, riot, strike and malicious damage. For properties with strata titles such as apartments or condominiums, you need not buy the insurance because the Management Corporation (MC) would have taken up insurance on the entire building. You should ensure that you obtain the sub-certificate of the Master Policy issued by the insurance company from the MC and present it to the financial institution. This is necessary so that the financial institution is aware that the property has been insured and will not buy fire insurance on your property. In such a case, you will be required to assign your rights under the policy to the financial institution.


The Mortgage Life Assurance or MRTA
This type of policy provides for full settlement of the outstanding balance of the housing loan with the financial institution, in the event of total permanent disability or death of the borrower. Premiums can usually be included in the loan amount, and the repayment period of the premium is usually spread over the loan tenure. The premium is only incurred once. There are no monthly or yearly premiums to be paid. In the event of early termination of housing loan, you will generally have the option to request for a refund of the premium for the balance of the unexpired period or to continue the insurance coverage.

Financial institutions have their own panel of insurers and most of them can arrange insurance on your behalf with the annual premium charged to your loan account.