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FAQs

1. What budget should I set to buy a property?
Depending on your income and other financial commitments, the rule of thumb is to buy houses that cost 2 to 3 times of their annual income. For example, if a house buyer is earning $50,000 yearly, it is advisable to buy a house between $100,000 and $150,000. The monthly loan repayment should not exceed 1/3 of your gross monthly income. Other payments such as car loan, personal loan and credit cards will also be taken into account to calculate your repayment scheme.

2. How much can the bank finance me?
This depends on the value of the property, your income and your repayment capability. The Margin of financing can go as high as 95% (inclusive of MRTA). The higher the margin, the higher the installment payments will be. Also, at a given rate, a shorter tenure would require you to pay a higher installment.

3. How much time does it take for a loan application to process?
It would normally take within two weeks for a loan application to be approved provided you have complied with all the bank requirements and documentations. To avoid any delays, you should ask for a checklist for all the proper documents and forms required when applying from a bank.

4. Is it necessary for me to get a valuation for the property?
It is required if you are purchasing a completed property. The bank requires a valuation report as a security for the loan granted and is also to show the value of the property you are about to buy.

5. Are lawyers involved in the process and do I have a choice from my preferred law firms?
Yes, a lawyer is needed to draw up your loan documents. The banks would normally provide a list of law firms that usually deal and are familiar with their bank documents and requirements for you to choose. However, you should refer to the bank first should you prefer another law firm apart from the list they recommended.

6. Who should pay for the legal fees?
Generally, all legal fees are borne by the buyer. Depending on certain developers and banks, the legal fees will be settled by them as part of their promotion packages. There are some banks that also provide financing for legalization of loan documentations.

7. What happens if I experience financial difficulties and unable to make my loan repayments?
You should seek advice from your bank. An arrangement to restructure your loan repayment or other alternatives could be arranged to assist you.

8. Is it possible for me to settle my loan earlier than the scheduled repayment date?
An early repayment penalty charge would normally be applied when you wish to have an early settlement for your loan. It would vary between 2-5% of the outstanding amount, depending on the loan type and how it is structured.

9. Am I allowed to put in more than the arranged monthly repayment amount if I have the extra fund?
This depends on the terms and conditions in your loan agreement and also on the type of loan you applied for. Some loans are with reducing interest that works like an overdraft facility. By increasing your repayments, the interest would be reduced and you would have control on how fast you wish to settle the outstanding amount. If you plan to make a lump sum or partial payment to the principal amount, you are required to notify your bank prior 1-3 months in advance.

10. Why is my outstanding amount still high in the initial stage regardless of my repayments?
During the initial periods of the loan, your payments will be for the interest of the loan. You are able to lessen your interest amount when you make partial repayments for the principal amount outstanding and also shorten your loan repayment term.

11. Do I require a guarantor for the loan application?
This is at the bank’s discretion and on the credit standing of the borrower.

12. Can the bank charge my loan account for late payments and other charges such as insurance and legal action costs?
The bank would usually give a grace period of 7-14 days for you to make payments for your installment and any payments received after that would be subjected to late payment charges. As for the other miscellaneous charges, it would depend on the terms of the loan agreement.

13. When will the bank release the loan for the developer?
For properties which are under construction, the bank would release the progressive payments to the developer based on the claim made upon the completion of each construction stages as certified by the architect. For completed properties, the loan will be released once the legal documentations are finalized.

14. Would I still be required to honor my interest/installment payments when the developer abandons the project?
Yes. You are still obligated to continue with the repayments based on the loan contract between you and the bank. An alternative loan structure for repayment could be arranged by the bank.

15. What will happen when I have settled my outstanding loan?
The bank through their solicitors would hand over the title of the property and transfer it to you.

16. Should I transfer my loan to another bank if I was offered a lower interest rate?
The main factor to refinancing would be the costs involved. Initial loan charges such as processing fees, legal fees, stamp duty and transfer fees are all incurred at the beginning of the loan application process. Refinancing would mean that the following charges would be applied again. Therefore it is advisable for you to check if the interest rate is low enough to compensate all the charges incurred when you transfer your loan including any penalty charges, if any.

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