By: Zeng Han Jun, CPCG, Singapore

The normal trend of conducting a house shopping goes like this:

1)Shop for a house
2)Contact the real estate agent
3)Pay deposit
4)Apply for housing loan

Almost everybody does that in Singapore, but this sequence for house hunting creates quite a lot of pressure on the potential home buyer and increases the risk of losing the initial deposit. Why is that so? Look at the third step. What if you are unable to find a home loan after you have paid your deposit? You lose it. Do not think that the possibility of getting housing loan disapproval is very low. It may just happen to you. The risk of losing your deposit is really unnecessary, and can be totally eliminated by applying for a housing loan first before shopping for a house.

The sequence would be much better if the list goes like this:

1)Apply for housing loan getting pre approval
2)Shop for a house
3)Contact real estate agent
4)Pay deposit.

A pre approval is a more formal process which requires you to submit relevant documents like CPF statements and other documents. Once you are approved, it means that you are eligible for a housing loan. With a pre approval letter in your hand has several benefits. Firstly, the risk of losing your deposit has disappeared. Secondly, with a pre approval letter in hand, both the agent and seller will pay more attention to you as they know the possibility of closure is higher.

If you know you will be looking for a house soon. Go ahead and apply for a pre approval. Even if you decided not to take up any loans, there is no loss to you. Save yourself from unnecessary troubles.

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