After countless viewing of different properties, your client has finally found his dream home. Nothing could be more satisfying for an agent than knowing that their clients have chosen a place they would like to purchase. All that hard work into looking for a suitable property for your client has finally paid off!
But wait, your client just found out that his mortgage application was not approved by the bank. What happens next? You’d probably need to re-start the process to find another property that your client can afford.
To prevent such scenarios, it’d be helpful if agents have a deeper understanding of the home mortgage process to ensure that their deal gets through.
Do Your Homework Before Viewing
Before your clients start any viewing, it could be helpful to have them understand what they can afford first. This will minimise frustration on both sides in case they find a property they like but cannot afford. To do that, simply make use of PropertyGuru’s affordability calculator to find out their property budget, which can help them to narrow down their choices.
Through its interactive interface, you can easily adjust your affordability by sliding on the scale – and watch the numbers change right before your very eyes, so you can witness the impact firsthand! Plus our affordability calculator also uses 3 scenarios to calculate your affordability, based on MAS regulations.
So what you see there, is as close to what you’ll get in reality.
After finding an ideal property that fits their budget and other criteria, the next thing you need to do is to help them get through the loan application process. This can be easy but may require you to let your clients understand the criteria and documents needed to make the process a successful one.
1. Obtain an In-Principle Approval (IPA)
An IPA allows your clients to know what their borrowing capacity is before going ahead with a home loan application. It is a non-binding approval issued by banks that is usually valid for 30 days. According to PropertyGuru’s Consumer Sentiment Study H2 2020, it is found that an ‘Approval in Principle’ gives property seekers greater confidence in their home search. Nearly half apply for getting quicker loan approvals. Older Singaporeans are less likely to apply for it at all.
Potential buyers usually go through the processes below before obtaining an IPA:
- Work out a rough estimate of the loan amount
- Have an idea of the type of property they are intending to purchase (HDB/Private)
- Compare different mortgage packages and shortlist a few
- Send in a few applications for IPA to different banks at the same time
- Check to ensure they meet the prevailing Mortgage Servicing Ratio (MSR) limit before committing to a purchase of an EC or HDB. You can direct them to PropertyGuru’s MSR calculator.
These are usually the documents that will be required when you apply for an IPA.
- Completed and signed property loan application form
- Copy of NRIC/Passport of applicant(s)
- Income documents which include the latest 3 computerised payslips/IR8A form
- Option to purchase
- Latest CPF statement of account (if CPF usage is involved)
- Latest CPF withdrawal statement for existing property (if applicable)
- Option of sale for existing property (if applicable)
2. Choosing a Suitable Home Loan
First-time home buyers may consult you regarding the type of home loan they should take up – bank or HDB loan, fixed or variable rate? Alongside, there are other considerations they should take note too, including:
- Loan-to-Value ratio
- Loan tenure
- Income ceiling (for direct HDB purchases or those with grants)
- Early repayment penalty
- Interest rates
- Minimum loan amount
- Total Debt Servicing ratio
- MSR (for HDB properties)
The list can go on, especially with ever-changing policies. So it’s best to consult with your Personal Home Loan Assistant for the most updated recommendations!
Banks will process your client’s application while checking their credit-worthiness and all relevant documents.
Typically, an IPA approval takes around 1 week and is valid for a month. If all goes well, your clients will get their mortgage approval easily with the steps mentioned above. The good news is, PropertyGuru Finance is able to help with securing your client’s IPA; be it from banks that likely have the highest chances of approval or from a bank of your choice.
You just let your Personal Home Loan Assistant know, and he/she will take care of the rest for you. He/she is dedicated to making sure your clients enjoy the best rates applicable to them and keeping you updated along the entire process (so you never lose touch of your customer and your income).
While as an agent, you may not need to know in detail the mortgage process, it helps to give you credibility and improve your personal brand and reputation.