Financing for your property assets is one of the best lesser known tools of leverage which can increase your networth. To own a house is no longer a dream or illusion and now everyone can have your own dream house easily. In Malaysia, the house owners only have to come up with a minimum of 10% or even less of the purchase price and the balance can be financed by the banks.
First of all, you may want to shop around to look at the different housing loan packages offered by banks. Different banks offer different mortgage packages. The borrowers have to choose the most suitable packages for themselves, according to their financial needs. Bankers would decide on the loan approvals based on 5 C's, which stands for Characteristic, Capacity, Capital, Condition and Collateral.
Characteristic refers to the repayment record of the borrower. This is given the heaviest weightage by the banks in deciding the loan approvals. The borrower's payment track record can easily be obtained from the Central Credit Reference Information System (CCRIS). Bank Negara Malaysia has a Kiosk Counter to allow the public to check their CCRIS. This is a free service provided by the Malaysian Central bank.
Capacity refers to the Debt Income Ration (DIR) of a borrower. The total debts and new housing loan installment divided by the total borrower's income must not be more than 40% in ratio. Capital refers to the networth of the borrower. Condition refers to the economy and borrower's condition. Collateral refers to the property that the borrower going to finance. The fair market value, marketability factor, and the condition of the property are always taken into consideration while considering the loan approval.
After your housing loan has been approved, the next step is to check the conditions of the letter of offer issued by the bank, which includes the interest rate, the holding period starting from first drawdown or last drawdown, installment amount, and other details.
Choosing a responsible lawyer is another vital issue. An irresponsible lawyer might drag the processing of the Sale & Purchase Agreement and Loan Agreement. The Purchaser might end up having to pay the penalty to the Vendor if the housing loan has not paid before the expired date. Hence, choosing a good, reputable and responsible lawyer will expedite the whole process.
As a purchaser and borrower, is important to follow up closely with the bankers and lawyers in order to get things done on time.
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