By: Zeng Han Jun, CPCG, Singapore





Buying a property is always a stressful event. Searching for the right property is already a big challenge, not to mention the process of being approved for a home loan. These procedures can be so daunting that it is enough to keep buyers from applying for a private property mortgage. The good news is that, with a bit of preparation and organization on your part, you can be well on your way to securing that mortgage loan for your property while having a good nightís sleep. To increase your chance of approval, there are six things that you absolutely have to do before you apply for a home loan.





Number One: Determine how much to set aside for monthly installment.






Work out an acceptable amount of cash to set aside as mortgage payment every month. Do not let anyone tell you that just because your mortgage payment is only X percentage of your monthly salary; therefore you can afford a property purchase. Only you yourself can determine that, that is by adding up all your monthly expenses and savings. From there, subtract from your salary and work out a mortgage payment that you are comfortable with. Do not use any rule of thumbs as a guide because thatís probably the main reason why people end up in foreclosures. Different people have different kinds of finance; therefore work out your comfortable range of mortgage payment by yourself.





Number Two: Make sure you have enough liquid funds as deposit.






90 percent financing terms are rare now and even though some banks still offer it, it does not mean that they will extend such financing to you. Always prepare yourself to be offered an 80 percent financing or even less, for some people. As such, always ready yourself to have enough liquid funds to complete a deal financed with 80% terms so that you will not be caught in an awkward situation. The worse case is that you cannot even apply for a bridging loan and have to abort the deal.





Number Three: Do not let yourself to be committed to a deal too quickly.





One of the worst ways to enter into a deal is because the interest rate quoted by a bank is very low and attractive. We are often bombarded with mortgage deals every now and then through pamphlets, emails and calls. Letís say you saw a pamphlet stating that a certain bank is offering an interest rate. Pleased with that rate, you decide to commit yourself to a deal. When you request for that rate, the bank told you that offer has expired. Remember that rates change everyday so do not depend on any type of advertisements. The only accurate way that a rate is confirmed to you is through the completion of application form and submission of your financial documents, after which your lender has gone through your application and locks in your rate.





Number Four: Get your financial documents ready.






For all of your loan applications, your financial documents are the most important part of the application. Many people often do not submit the full set of documents, making the processing of loan very difficult. Bankers and brokers want to help you get your loan approved, but if you cannot even fulfill the simple step of submitting your loan application in full, they cannot help you process anything at all. Secondly, by having all financial documents ready, you are making their job easier. The next time they have a good offer, they will always offer to their best customers first, and hopefully in this case, it will be you.





Number Five: Determine how long you want to live in your new property.






By knowing how long do you want to live in your property, you can roughly make a decision as to what kind of housing loan you will be focusing on. This can help you filter away hundreds of packages that are available in the market right now. For example, if you planning to stay in a house for 3 years. You know you do not want to be locked into a loan for more than 3 years. You will choose one that gives you the flexibility to do a full redemption within three years. Just this simple step alone, you have already filtered away two hundred over home loan packages! If you know you are planning to stay in a particular house for a really short period of time, you might even consider an interest only mortgage, so you do not have to fork out too much cash to service your monthly installments





Number Six: Find an experience mortgage professional.






An experienced mortgage professional can save you a lot of trouble and can be especially helpful in mitigating certain risk in some situation. By leveraging on his or her experience, you can shortcut the search process while saving money along the way. Ask them about the loan process and how they can keep you abreast of the progress. Ask them to reveal all cost before engaging their service, because some of them do charge a fee for their service although most do not.






Purchasing a property is definitely not a simple process and requires you to do a lot of due diligence and preparation. This is especially important because properties, unlike stocks and bonds, do not have a liquid enough market for you to dispose of it as soon as you like. However, with the right mindset and preparation, owning a house is definitely a rewarding journey.


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