News & Articles 6 Ways To Increase You Chances at Getting a Housing Loan

6 Ways To Increase You Chances at Getting a Housing Loan


7 Dec 2015
6 Ways To Increase You Chances at Getting a Housing Loan
When taking a housing loan, banks usually access your ability to pay these loans back based on several aspects. These include:

Your debt servicing rate: How promptly and how regularly you pay back your other loans like personal loans, credit cards and car loans.
Personal risk assessment: How likely it is that something bad will happen to make you unable to service the loan or lose your income.
Property assessment or valuation: The Bank’s definition on how much your property is worth, which will determine how much of mortgage you are allowed to have
Loan to Value Ratio (LVR): This is basically how much your mortgage amount is compared to the assessed property value. The higher the LVR the more the perceived risk is.

Among all these factors, the most important are your debt servicing rate and personal risk assessment as it will be calculated using your income versus the amount of loans you have. The banks are very through and will go through all your debt history to determine whether you have the ability to pay all your loans on your current income before issuing you a new mortgage that will add to your financial burdens.

If you happen to have a high debt servicing rate, this would mean that your income is able to shoulder all the liabilities you have and will increase your chances at loan approval.

The following a several steps you can take to increase the chances of your loan approval:

1. Reduce Your Overall Debt
Try and pay off whatever small debt you are capable of, like student loans or small personal loans as quickly as possible. You will be blacklisted by the Central Credit Reference information System (CCRIS), the online debt profile portal if you have failed to settle loans like the PTPTN, which will cause your housing loan to be rejected by the bank.

2. Ensure Good Credit Rating
Banks can easily access you loan profiles from any financial Institution on the CCRIS or CTOS (Credit Tip-Off Site) so you will not be able to hide any of your debts from the bank when they access you

3. Build a Healthy Credit Report
Start early and never ignore your loans as they have a tendency of building up, like a snowball that grows bigger and bigger as it rolls down a hill, to the point that it will eventually bury you when it lands.

4. Keep your credit cards well serviced
Pay all your monthly expenses charged to your card within that month itself or immediately when the bill arrives as this indicates that you are financially disciplined

5. Prove that you have savings
Show the bank you have stable investments, bonds, fixed deposits or any other form of savings or passive income that will reduce your personal risk.

6. Share the Housing Loan
Take the loan jointly with your spouse or trusted family member to increase the debt to service ratio as the income of the loan applicant will be considered increased as well.

Source: DurianProperty.com

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