Bank Housing Loans
A Guide
Procedure for application
Compare home loan packages and shortlist those that meet your criteria with competitive rates
Consider hiring a mortgage consultant who can help you find the best package for your needs and handle the paperwork
Interest rates can differ between banks
Terms of loan packages can also differ, such as lock-in period, fixed versus floating interest rates or rates pegged to the bank’s fixed deposit rates
Apply for Approval-in-Principle (AIP)
An Approval-in-Principle (AIP) is a conditional approval for home loans
An AIP lets you know your eligible loan quantum and monthly mortgage payable
Having an AIP before booking prevents the forfeiture of your booking fee should there be hiccups in the process of mortgage approval
Some sellers will not proceed with a sale to buyers without an AIP
The bank will need to know details such as the type of property you intend to buy and your debt obligations including housing loan, car loan, personal loan and study loan
Submit documents such as recent pay slips, income tax statements and documents of credit facilities
An AIP is non-binding. You are free to shop around for the best interest rate
Submitting too many applications (more than 2 or 3) might affect your credit rating
Receive AIP
The bank will inform you on your loan eligibility after evaluating your application
The validity of the AIP ranges from bank to bank, typically one month
You can reapply if the AIP expires
Obtain indicative valuation
The bank will need the full address and built-in area of the property to give an indicative valuation
The amount of loan granted (LTV) is based on the lower of the purchase price or bank’s valuation of the property
The borrower will have to fork out more cash for the down payment if the purchase price is higher than the valuation as the bank will only loan up to 80% of the value of the property
Pay booking fee to seller or developer
Obtain Option to Purchase (OTP) and submit OTP to bank
Receive Letter of Offer (LO)
The LO is a contract stating the terms of the loan offered by the bank to the borrower
Sign Letter of Offer (LO)
This forms a binding contract between the bank and the borrower
Exercise OTP
Bank makes loan disbursement to seller upon completion of the Sale and Purchase of the property
Completion of Sale and Purchase typically takes about 12 weeks from the date of exercise of OTP
The bank will send a Loan Disbursement Advice and notice to start monthly repayment
Start monthly repayment for your home loan
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Should you be thinking of selling, or would simply like an update of where your property sits in today's market, book a non-obligatory discussion with one of our TemasekClass consultants.