Unless you’re really making big money or own a business, a home loan is likely to be the largest loan you’ll ever take in your lifetime. The tenure is often several decades and you’ll usually be borrowing a few hundred thousand ringgit in one go. With such a heavy commitment, it stands to reason that you should think long and hard before applying for one.
We’ve written about the kinds of things to look out for and pay attention to before, but now we have even more important tips on what to do before you apply for that home loan.
Decide the Utility of Ownership versus Rental
As a decision like this will impact your financial management for years to come, it’s important to consider whether or not it’s the right choice to make. Ownership of a property might not be the best course of action for you if you value mobility, flexibility, or are thinking about relocating permanently some time in the future.
Take your time to sit down with yourself (or if you’re buying a house to start a family, sit down with your partner) and properly outline your goals, targets, and finances to be absolutely sure that purchasing a property is really what you want to go for.
Understand the Value of Your Property
Once you’ve decided that buying your own property is the best move, it’s time to study up on the property you want. Much like purchasing a car, you may want to consider the eventual resale value of the property you’re going for. There are plenty of factors that contribute to the value of a property, so be sure to consider them all.
Things like location, accessibility, future developments in the vicinity and the reputation of the developer are all criteria that you should examine closely to ensure that the property you want won’t just be good for you right now, but will also be a worthwhile investment for the future.
Know Your Loan Inside Out
Now that you’ve decided on the property, it’s time to shop around for the right kind of home loan. You can go to different lenders and ask their representatives or you can go to a comparison page like ours to see the kind of loans that best fit your budget, capacity, and price.
Remember that there are several different kinds of home loans out there including Islamic home loans where the profit rate works differently, flexi-home loans that link to your current account, and other variations that help you manage your commitments differently as well.
Figure Out if You Can Pay a Higher Down Payment
The standard 10% down payment is the typical amount to save for, but if you can afford it, we recommend saving up a little more so you can pay a bit higher than that amount. Why do this? A larger down payment is a strong indication that the borrower is a good enough paymaster, and this might improve your chances of getting the loan approved.
In addition, a higher down payment can help you save on cumulative interest charges, which is a good move if you want to keep your commitments low.
Make Sure Your Credit Looks Good
Paying a higher down payment isn’t the only way to help increase your chances of getting your loan approved. You can also make sure your credit health and credit score is up to snuff. A good credit score reflects well on your creditworthiness in the eyes of banks and lenders, so the best first step is to obtain your full credit report with credit score, such as the MyCTOS Score report.
The easiest way to get your full MyCTOS Score report is to visit the CTOS website and sign up for a CTOS User ID online (or via their mobile app). If you aren’t familiar with CTOS, it’s a credit reporting agency that helps to compile and provide credit information in Malaysia. It offers the MyCTOS Score report - a comprehensive credit report that can help you understand your credit health better and help identify the areas you need to work on to improve your creditworthiness.
A MyCTOS Score report contains your personal details, CCRIS records, directorships, legal action records, the number of times you’ve been searched, as well as your CTOS Score - a credit score that ranges between 300 (lowest) and 850 (highest). You can find out more about MyCTOS Score report and sign up for your CTOS User ID at ctoscredit.com.my.