How Much I Can Borrow From Bank?
Before you go for house hunting, you should check on what your maximum loan eligibility is. If you have list this process into your property purchase, you can avoid disappointment at the final stage of the process. So, first, you will need to find out whether you are eligible to borrow the full amount to make the purchase.
I need to tell you that, the loan amount that you’re able to borrow is not based on your salary only, but the bank would list out other several factors into consideration when they assessing your eligibility for borrowing the loan amount that you need to buy your house.
These are the factors besides of salary that determines your loan eligibility;
1. Your Debt Serving Ratio (DSR)
Debt Servicing Ratio is a percentage of the debts that you are servicing over the income that you earned (DSR= commitment/income). For your information, every each bank have different methods of determining your DSR in spite of its based on the same information that you provided.
2. Risk Profile
Besides of your credit score, the bank will assess your creditworthiness based on job stability, spending habits and etc. The likelihood of defaulting which is your inability to pay-off your debts or service, it is an important factor when you apply for mortgage loan.
3. Property Valuation
Sometimes, a property could be overpriced compare to current market price. So the bank need a property valuator to confirm the property that you’re applying a loan for is worth the money that you are paying for.This is done as in the event of you default , the bank will still be able to compensate the loan amount that you borrowed by selling the property back into the market.
4. Maximum Loan-to-Value (LTV) Ration/ Margin Of Finance You Can Access
Usually, a 90% of LTV ration could be anticipated on a Malaysian mortgage loan. However, if you holding more than 2 housing loans then the LTV ration on the following housing loan is lower and is capped at a 70%. At the same time, LTV rations are even lower for foreigners as these are the restrictions to those that have less attachments to Malaysia.
Usually, the period of loan repayments is up to 35 years from the first day of your loan or until you have reached 65 or 70 years old (different bank have different age limit), whichever occurs first. The youngsters who age between 21 to 25 may have a higher chance of getting the housing loan approved compared to somebody in their 60s.
6. Number Of Dependants
The number of dependants can affects your loan eligibility as they would be spending parts of your income. It would also affect your capabilities to pay-off your housing loans. Should you have a spouse and five children dependent solely on your wages it may raise a concern with banks.
7. Your Joint Applicant
The housing loan which is supposed to be borne by you and your joint applicant, hence, the bank would access them to judge your joint creditworthiness before getting your loan application approved. Your relationship with the co-applicant may be matter also, it is less likely for children or parents and or spouses to have disputes compared to other type of relationships such as friends or siblings.
8. Employee or Employer
This information will help the bank to determine whether you have a stable income. A people with full time job, fixed monthly income are considered as more stable. Besides, to those who work for themselves is considered less stable as there is no job security and as their monthly income isn’t fixed.
9. Past Relationships With Bank
The applicants who are loyal customers of the bank they are applying to may have an added advantage. However, if you’re not, not fret, as long as you don’t have significant conflicts with any banks or being blacklisted from any banks.
In addition, when you’re planning for buying a house, it is advisable to have enough money to pay the deposit, valuation fees, documentation fees, legal fees and stamp duties on the housing loan. For your information, some of the banks can provide up to 5% (for insurance) and 2% (for legal fees) additional margin of finance to finance your valuation and documentation costs.
Last but not least, before buying a house, you should find out what the maximum loan amount that you can borrow from bank.