Are you checking at property for sale in Malaysia as you plan to buy a property on your own?
Buying your first own property to be called home is another milestone achieved in your life . Whether it is for investment purpose or own stay, most people are still confused with the steps of buying a new house in Malaysia or a home.
Buying your own property may seem easy but when it comes to going through the procedures of buying a home, you then realize that you have missed out on many steps and wished you know the steps earlier so you could avoid the unnecessary troubles.
But first, you will need a credible background to secure a bank loan before you are able to purchase a house.
This article will guide you through the factors that most banks will look through before deciding whether you are creditworthy or not.
Spending Habits and Payment History
Bear in mind that lenders and banks will be able to get as much information on your payment history.
Your spending habits will definitely determine whether you secure a bank loan or not. Make sure you pay your credit card bills on time.
Delaying your bills payment will give the banks or lenders the impression of you being a bad paymaster who delays the payment.
This will then affect your chances of getting your loan approved. However, that is not the end of the world. You can still rebuild the payment history as your payment record will only stay in the record for a period of 24 months after you paid your bills or debts.
After 24 months, your payment history will then be cleared from the credit report. Hence, if you are planning to apply for a bank loan, you may start being a good paymaster and pay your bills on time.
It does not matter how much you earn per month. Even if you are earning a huge sum every month, if you are caught up with many commitments or credit facilities such as car loan, personal loan, mortgage loan, credit card bills and other installment accounts, the chances of you getting a bank loan approved is low as the bank will not be convinced that you are able to repay the loan.
As a rule of thumb, it is advised that your accumulated debt should not cost more than 60% of your net income.
We all know that the lesser you owe, the greater the chance of getting your loan approved by the bank.
Duration of Your Credit History
Credit history refers to the number of years the applicant has a credit facility, such as car loans or credit cards accounts.
Although banks still consider lending money to people who have just started on their financial lives, such as fresh graduate or applicants that apply for the first time, banks still view people with a longer period of credit history as low-risk borrower as compared to first timer or fresh graduate.
A credit mix is the types of credit that you have under your own names, such as car loan, student loan, mortgage loan, credit card and installment loans.
Banks would normally prefer applicants with different kinds of credit as they are deemed as being a low-risk borrower.
However, that does not mean you should apply as many as you can just to boost your credit record.
New Card Application
Do you often apply for new credit cards in short period? If yes, you might want to stop doing that as doing so will decrease your chance as getting your bank loan approved because you are deem as having low creditworthiness.
In other words, you are deem as a high-risk borrower because the banks will then assume you as having financial issues or cash flow issues. Therefore, do not apply for numerous credit cards in a short span of time.
Other than the above factors, you should also get yourself familiarized with CTOS. Most people get confused between the difference of CCRIS and CTOS.
CCRIS is a platform managed by the Credit Bureau of Bank Negara Malaysia, where it provides credit reports. As for CTOS, it is a Credit Reporting Agency (CRA) in Malaysia under the Credit Reporting Agencies Act 2010.
CTOS is a platform that creates transparency and provides confidence for people (bank and lender) to make transactions, as both parties will be able to get the applicant’s credit information.
You can also use the services at CTOS to check on your own credit report before applying for a bank loan . In conclusion, you should understand and get yourself familiar with CTOS before deciding to buy a house.
Make sure you are free from debt and not in many financial commitments to get a higher chance to secure a bank loan.
Once you manage to secure yourself a mortgage loan by the bank, the remaining steps will be so much easier and you can start planning on which interior designer to engage and which furniture to buy for your house.