Many people are enthusiastic about making money from property investment. After all, who wouldn’t want a reliable safety net for the future? Property can indeed offer financial security, but this is only true if you plan properly and do your due diligence before buying. While it may sound lucrative, without the correct approach, it can quickly turn into a financial disaster.
I recall an incident that starkly highlights this point. After one of my seminars organized by a property developer, a couple in their 30s approached me. They shared a heartbreaking story: they had declared bankruptcy and had a 6-year-old child to care for. Their downfall began when they followed advice from a so-called property expert and started purchasing properties beyond their financial means. The rental income from these properties was either too low or non-existent, and they couldn’t find tenants. To make matters worse, the so-called expert was nowhere to be found, leaving the couple to face the harsh realities alone.
What lesson can we draw from this? The pursuit of wealth through property investment can sometimes turn into a nightmare, even if you believe such misfortune won’t happen to you.
Let’s rewind a bit. Had this couple engaged in proper financial planning, their situation might have been very different. A crucial aspect of financial planning is understanding your monthly income against your expenses. Personally, I wouldn’t consider purchasing a property unless I had at least 12 months of installment payments saved in advance, especially if I had to take a loan from the bank. There is much more to financial planning, but diving into the details would be lengthy. The key takeaway is this: invest within your capacity. Don’t let greed drive your decisions, as it might be too late to turn back once you’re down that road.
The desire to become a successful property millionaire is understandable, but it’s essential to think carefully before making such a bold step.
I hope this article opens your eyes to the realities of property investment.
If you need expert advice on your property investment journey, please email us at info@miichaelyeoh.com.
Many individuals aspire to become property millionaires. They immerse themselves in books, seminars, and courses, each with their own pace – some favoring quick success, while others opt for a slower, steadier approach. What’s your preference?
But caution is warranted. Sadly, many who aspire to property wealth end up with a different outcome – becoming “property millionhairs” instead. Take Jerry, for example (not his real name). Despite a net income of RM5K, he impulsively purchased five properties at once, enticed by promises of a RM200k cashback per unit. With five units, he envisioned instant wealth. However, blinded by the prospect of millionaire status, he overlooked critical details, such as the absence of the cashback clause in the contract.
To realize his dream, Jerry enlisted his girlfriend’s help to secure mortgage approval, as his income alone wasn’t sufficient. The terms seemed promising – the cashback would be disbursed upon the bank’s final payment release, just a few months away. Jerry was ecstatic, anticipating wealth raining down on him.
When the cashback arrived, Jerry felt like royalty. His eyes gleamed with newfound riches, and he indulged in extravagant purchases – a RM300k car, luxury watches, jewelry, and more. He also spent a substantial sum renovating his properties for potential tenants.
Yet, eight months later, reality set in. Jerry’s million was dwindling rapidly, with vacant units generating no income to offset his hefty RM12k monthly mortgage payments. Facing financial ruin, he discovered his properties were valued 40% below their purchase price, rendering them unsellable without further financial strain.
Do you want to emulate Jerry’s fate? Consider these warnings:
Packages like Jerry’s often involve properties with poor marketability.
Jerry’s scheme of securing multiple loans or called compression method with a single income is fraudulent and can lead to legal consequences.
Jerry may have salvaged some funds, but others haven’t been as fortunate. I’ve encountered individuals on the brink of bankruptcy, struggling to provide for their families, a heartbreaking reality.
Banks are now more vigilant, scrutinizing loan applications meticulously to prevent such misfortunes. Yet, at the heart of it lies human greed, fueled by promises of grandeur.
For me, prudence reigns supreme. I advocate for careful planning, eschewing shortcuts for a methodical approach. If I can’t cover at least 12 months of mortgage payments, I refrain from purchasing, no matter how enticing the property. Financial responsibility dictates my decisions. To everyone out there, heed this advice: stay within your means. When deals seem too good to be true, exercise caution. Protect your financial well-being, for our lives are invaluable.
In the picture, what do you think I am doing? Praying for the money to drop
I do not really depend on these. I don’t think money will suddenly drop from the sky or hoping for a miracle to happen. If a car were to break down, you will need a mechanic to fix the problem. He will have to follow a series of steps in doing repair and to make sure your car is running again.
Likewise, in mortgage approval you cannot wait for miracle things to happen. To me, luck have nothing to do on mortgage approval. Many borrowers and agents, prefer to photocopy many stacks of financial documents and give to every bank they know off or can find and submit to them for approval. Is this the right way?
Do you know that every time your documents are submitted, the banks will record and send to Bank Negara which in turn will update the Central Credit Information System (CCRIS) every month? No matter whether your loan is approved or rejected it will be updated on the last page of your record. Let’s say Bank A rejects your loan, Bank B,C and D also rejects but Bank E actually can approve your loan but seeing so many banks rejected your loan the chances are they will also reject your loan.
Never expose yourself. Every bank have different approval criteria. Some banks might not like you but some does. I have a case once, his Debt Service Ratio is very high at 150% in which is higher than the normal 70-85%. Either the banks rejects or do not want to waste time processing his case. I reviewed his documents and to cut things short, I managed to get 70% loan approval. This case is a fine example where the borrower will have to do the following:
Do a Know yourself (KYS) test.
Check your credit status
Check which bank is suitable for you.
You will have to do more work on the last step. You will need to find out each bank approval criteria and also the different types of documents for approval. You are not buying a RM1,000 property but hundreds or even millions worth of property. It is good to do a research first. It is hard to go back when your loan had been rejected. It is easier to diagnose a problem first.
Bank Negara Malaysia (BNM) has announced today (9th May 2024) that the Overnight Policy Rate (OPR) will remain steady at 3%. This rate has remained unchanged since May 2023, marking a year of consistent monetary policy.
The monetary policy meets six times annually to deliberate on the OPR.
Source: BNM
Looking ahead , there is uncertainty surrounding whether the OPR will stay at 3% or increase further. Historically, the highest OPR since April 2015 was 3.50%, and the lowest was 1.75% in July 2020 during the COVID-19 pandemic. Typically, changes in the OPR are made in increments of 25 basis points (0.25%).
As for the likelihood of an OPR increase this year, it appears unlikely that there will be a reduction in the near future. Instead, the OPR will either hold steady or increase depending on several factors:
EPF Withdrawals: Starting May 11, 2024, contributors to the Employees Provident Fund (EPF) can withdraw from Account 3 at any time, potentially leading to RM25 billion (around 1.3% of GDP) in withdrawals. This could result in increased demand-driven inflation.
Civil Service Salary Hike: There may be a raise in civil service salaries by over 13% beginning in December, which could also contribute to inflationary pressures.
Fuel Subsidy Rationalization: Implementation of fuel subsidy rationalization could occur in 2025 or earlier, which may further increase inflation risk.
Given these factors, my prediction is that the OPR is likely to remain unchanged at 3% this year, but it could increase in 2025 due to inflationary pressures. This would allow BNM to maintain stability in the economy while also addressing any potential inflation concerns.
Without a doubt, your mortgage represents one of the most significant financial commitments you’ll undertake. Over its lifespan, the interest paid to the bank alone can skyrocket into tens of thousands. Consider this: by adhering to a 30-year home loan term, you may ultimately shell out twice the original loan amount in total.
Did you know that within the first five years of a 30-year loan, you’re likely to reduce only about 7% of the principal? Even by the 20th year, you might still be grappling with less than half. It’s high time to reclaim control over your loan and expedite its repayment to save substantial sums in interest.
Gone are the days of rigid loan structures prevalent from the 1960s to the 1990s. Today, borrowers have access to a plethora of tools and flexible bank policies, enabling them to slash down loan tenures.
The sooner you bid farewell to your home loan, the sooner you’ll inch closer to retirement and debt-free living. While myriad methods exist to accelerate repayment, not all may be a perfect fit for your situation. It’s imperative to conduct thorough research and select the strategies best aligned with your needs.
Here are some actionable ways to expedite home loan repayment:
Making Extra Payments: Witness the magic unfold by utilizing a mortgage calculator to see how even modest additional monthly payments can drastically reduce interest and hasten home loan repayment. Remember, every dollar directed towards the principal shrinks the interest burden and speeds up loan clearance
Refinance: Take advantage of prevailing lower interest rates by refinancing your loan. Use a mortgage calculator to gauge potential interest savings, but don’t forget to factor in associated costs like penalties and legal fees.
Negotiate Interest Rate Adjustments: Keep a keen eye on interest rate fluctuations and consider negotiating with your bank for a reduction. Maintaining current installment amounts despite rate reductions can substantially reduce repayment years
Utilize Flexi Mortgages: Explore flexible mortgage options like the Flexi Mortgage or Money Merge Account, where daily interest calculations and account consolidation accelerate principal reduction, thus shortening loan tenure.
Interest Rate Adjustments: Strategize responses to fluctuating interest rates by either increasing monthly installments to maintain repayment duration or maintaining installments to reduce repayment years.
EPF Withdrawals: Tap into your EPF Account II to swiftly reduce principal and expedite loan repayment. This can even be arranged on a monthly basis for added convenience. In Malaysia it is called EPF or Employee Provident Fund. Its a retirement saving account.
Continuous Monitoring and Adjustment: Regularly monitor your loan progress and financial situation, adjusting strategies as needed to optimize repayment efficiency.
Bi-Weekly Payments: Divide your monthly installment into bi-weekly payments, effectively making 13 monthly payments annually. This simple adjustment can shave off at least four years from a typical 30-year loan term, although availability may vary by region. Please take note that not every country has this package.
By diligently implementing these strategies, you can significantly alleviate the burden of your home loan and pave the way towards financial freedom.
After all the searching, surveying and checking, you have finally found your perfect home. Now comes the hardest part. The property is not yours to call home yet. Unless you buy it in cash, like most homebuyers, you would need to rely on a bank loan to turn your dream into reality.
Applying for a home loan can be quite nerve-wracking especially for first-time home buyer. What’s more, it can be very frustrating if the application is unsuccessful. If your loan is rejected, it’s not the end of the world, but it is human nature to put the blame on someone else. In a way, pointing the finger may also help you understand why your application was rejected, and what you can do differently in your next attempt. We have made a list of the top 3 contenders for the blame game:
Plenty of people blame Bank Negara Malaysia (BNM) for the many loan rejections in Malaysia. Are they the culprit, though? Well, BNM is the one making all the loan policies in Malaysia and most people may feel that the ever-tightening policies are making it more difficult to borrow from banks.
However, we need to look at this from another point perspective. If BNM did not have all these policies in place, we will most likely face a subprime mortgage crisis, as what occurred in the USA in 2008. How did this crisis come about? This happens when banks get greedy and start lending to anyone, even to borrowers who have a history of low credit scores and problems with debt. In time, these high-risk borrowers will default on their loan repayment and this will have a ripple effect and evolve into a national issue.
The Solution: Keep tabs on Bank Negara Malaysia’s latest borrowing regulations
With the country’s current slow but fluctuating economic growth, it’s beneficial to keep yourself updated with the latest Bank Negara Malaysia (BNM) borrowing regulations and not depend on word of mouth from friends or relatives.
Prior to that, homeowners were allowed to get their homes refinanced for up to 90% of their value with a maximum repayment tenure of 35 years and were able to use the cashed-out portion for investments. But in the 2014 revision, BNM capped the tenure of personal loans at 10 years.
So why does this matter? Well, take this example: your existing home loan with Bank A is RM400,000 and perhaps because of lower interest rates, you want to refinance your home for RM550,000 at Bank B. The additional RM150,000 would be classified as a personal loan and the 10-year repayment tenure would kick in.
This means that the DSR of the cashed-out portion would be calculated using the 10-year tenure, resulting in a much higher DSR and thereby affecting your overall credit score and potentially leading to your loan application getting rejected.
Besides that, BNM recently shared that many banks were using unfair T&Cs in housing loan contracts. BNM has assured that it will be releasing a set of standard T&Cs soon to keep Financial Service Providers in check – where they must act in good faith by ensuring the fairness of contract terms, provide clear and concise product information as well as offer appropriate advice/recommendation based on the needs and financial circumstances of loan applicants.
As a savvy consumer, you would want to equip yourself with these standards once it is out and study your rights as a financial consumer before approaching a bank for a home loan.
Therefore, we must remember that under BNM, we have a prudent and balanced lending policy. We need it to protect our country. Best to think again before pushing the blame onto BNM.
If we do not blame BNM, can we blame the banks instead? After all, they are the ones who approve or reject the loans. Let’s try this – put yourself in the bank’s shoes. Say you are the lender, and your friend the borrower, wants to borrow RM50,000 from you. You know that your friend earns RM5,000 a month. Each month, most of his money goes into paying off his debts. The big question here is, will you lend the money to him? The risk of not getting your money back is very high. Logically, most people would think twice or not even consider lending their friend that sum of money. A bank thinks the same way – they are not a charity, but a profit-driven organization who are accountable to their shareholders.
Some banks have their own internal policies in lending on top of the existing BNM policies – such as having their own scoring system. As different banks have different lending policies you need to know which bank is the most suitable one for you by conducting your own research and comparison. But do keep in mind that even before they look at your documents, they will first check your credit rating. If your rating is low, it’s not hard to see why your application may be rejected immediately. Do you still think we should be blaming the banks?
But do keep in mind that even before they look at your documents, they will first check your credit rating. If your rating is low, it’s not hard to see why your application may be rejected immediately.
The Solution: Determine the best bank DSR (which will match your DSR)
To reduce the chances of getting your home loan application rejected, you should first calculate your Debt to Service ratio (DSR), which is the calculation of your debt against your monthly income.
DSR = (Total commitment ÷ Nett Income) x 100
One of the most common reasons why banks would reject a home loan application is if the applicant’s DSR is above the bank’s maximum allowable DSR. This can get tricky as every bank will have its own respective guidelines for the maximum allowable DSR that they are willing to accept.
It could be affected by various factors such as income, age, qualifications and even your net worth. The most ideal DSR range would be between 50%-60% as it would hit below the maximum allowable DSR of many banks and thus the likelihood of loan approval would increase.
If your DSR is the reason why your loan application was rejected, don’t worry! You can start improving your DSR by either reducing your current debts or by consolidating your unsecured loans and credit card bills. Check out LoanCare, which calculates and uses your DSR to help you compare home loan products across at least 10 banks in Malaysia.
3. The borrowers
How about if we blame ourselves, the borrowers? Plenty of people are laden with debts from credit cards, personal loans, luxury cars and such. Would it be fair to ask the banks to lend them more money? The risk of non-repayment is very high.
The Solution: Determine your CCRIS report pitfalls
If your home loan is denied, the first thing you want to do is to check your CCRIS report. However, these days it’s rare to find anyone who isn’t aware that they must first check their credit score via The Central Credit Reference Information System (CCRIS). This system reflects your past 12 months of credit activities and shows the bank whether you are a good or bad paymaster.
However, the buck does not stop at having a great credit score. There are other factors which might skew your report. For instance, there is always the question, “If my loan is declined, when can I apply again?”
Did you know that all of your loan rejections are also reflected in your CCRIS? This can prove to be fatal for those that cast a wide net by submitting loan applications to multiple banks. Banks would usually be aware of any prior rejections via their CCRIS record, and thus, applicants would have to wait between 3-6 months before attempting to apply for another loan.
As such, it’s wise to improve your credit score before your next attempt. If you have multiple credit cards and loans attached to your name, making timely payments could help show that you are able to manage your commitments and are a good paymaster.
Besides that, zero obligations are not necessarily a good thing either. Keep in mind that banks would also be reluctant to approve your loan application if your CCRIS report is blank or ‘clean’ – where there are no credit cards/loan/overdraft facilities under your name. Better to have at least one active credit facility with timely payments to prove to the bank that you are able to take on and handle debt obligations responsibly.
The Next Step: Prepare at least 6 months of documentation
After fixing your credit score, the next thing you want to do to prove to the bank that you will be a good paymaster is to prepare at least 6 months’ worth of documentation. Regardless of whether you are a salaried employee or a freelancer, keeping meticulous records of all your financial documents is especially beneficial as the bank requires proof of financial capability.
In order to make your life much easier when it is time to submit your loan application, it’s advisable to keep on hand a record of the latest 6 months’ documentation of the following:
(a) EA Form/Form BE/Form B: Always file and pay your income taxes within the prescribed dateline.
(b) Salary slip/proof of income: Banks will require a continuous monthly record of your proof of income whether it’s salary slips or business banking statements. As such, make sure that your records are well organised with every month accounted for.
(c) EPF statements: This will not be a problem if you are a salaried employee as both you and your employer are required by law to make monthly contributions to your EPF. However, if you are a freelancer, consider making voluntary monthly contributions as a way to boost your credit portfolio.
(d) Bank account statements: Having either a current account or a separate saving account with a steady and consistent balance is another method that can help bolster your image as a responsible and credible borrower.
What exactly is a reverse mortgage, and could it be introduced in Malaysia? This financial product, which has been in use in the West for quite some time, allows senior citizens who own property to leverage it for a loan without the burden of monthly repayments. Instead of the borrower making payments to the bank, the bank pays the borrower based on a percentage of the property’s value, typically around 50 to 60%. Repayment is due upon the borrower’s passing, property sale, or refinancing.
How does the bank pay me?
Homeowners can choose one of three ways to obtain their borrowing from the bank: a fixed monthly payment with a predetermined number of months/years of payout, a lump sum payment upfront, or a combination of both.
Who owns the house?
Just like any mortgage taken from the bank, you are still the owner of the house. You mortgage the property to take out a loan. The agreement will terminate when the borrower passes away, sells the house, or refinances with another bank.
How much does it cost?
Here are some of the costs that you will need to pay: legal fees, valuation fees, mortgage insurance, and monthly maintenance fees. Depending on the bank you apply to, some will advance the costs and put them into the loan.
Pros and Cons of Reverse Mortgage: In any mortgage borrowing, there are advantages and disadvantages. Borrowers are advised to choose wisely when applying.
Pros:
You do not need to pay monthly installments.
Funds can help with living expenses such as medical bills and debt repayment.
The fund can help homeowners enjoy their retirement.
With the fund, homeowners will be able to maintain their current lifestyle.
Cons:
The closing costs, such as legal fees and insurance, can be steep.
The property will be mortgaged with the bank.
Will Reverse Mortgage come to Malaysia?
Banks need a healthy mortgage portfolio, and reverse mortgage could provide them with a new avenue to expand their products. Currently, in Malaysia, it is under Cagamas (Mortgage Corporation of Malaysia) and is called Skim Saraan Bercagar (SSB) and SSB Islamic (SSB-i).
Here are the criteria for borrowers:
a) Malaysian
b) 55 years old and above
c) Owner or joint owners of a residential property
d) For a joint loan, the joint borrower can be a partner, parent, sibling, or child, subject to age limit
Do take note of the property criteria:
a) Residential property in Malaysia held in Borrower’s or joint borrowers’ name(s).
b) For a joint Skim Saraan Bercagar Loan, joint ownership of property is required.
c) Property must be owner-occupied and be the primary place of residence.
d) Freehold property or leasehold property with remaining lease tenure not less than 90 years
e) Free from encumbrances such as mortgage and other financial liabilities.
For more detailed information on SSB and SSB-i, interested individuals can visit https://ssb.cagamas.com.my/. It’s essential to thoroughly understand the terms and conditions before applying for a reverse mortgage.
Securing a mortgage nowadays presents more challenges compared to two decades ago. During my tenure in the banking industry, a loan could easily be approved with just a photocopy of an identity card and salary vouchers. However, in today’s landscape, a more comprehensive set of documents and detailed borrower reports are required. We must acknowledge that we now live in a world of enhanced technology.
Twenty years ago, when borrowers approached us for loans, we primarily checked their CTOS records for bankruptcy. If they passed this check, I would submit the loan for approval. However, today, the CTOS system has evolved, incorporating many other borrower details. It’s astonishing that, in most cases, the system possesses more information about individuals than they do themselves.
Today, I’ll discuss the CTOS report. Another platform providing similar reports is called CCRIS, which we’ll cover in upcoming articles.
In simple terms, your CTOS report serves as your financial health assessment, aiding loan providers in evaluating your eligibility for borrowing.
Whether you like it or not, when you apply for a loan, banks will scrutinize your financial health. Instead of leaving this research solely to the banks, why not check your CTOS report yourself beforehand? This way, you’ll be better prepared when submitting a loan application and won’t be caught off guard.
There are two types of CTOS reports: a free version and a paid one.
The free report offers basic information, while the paid report, costing RM27.00, provides more comprehensive and useful details for borrowers. For our discussion, we’ll focus on the full report.
What’s included in the report?
Personal Information
Directorship & Business Interest
Litigation & Bankruptcy
Trade References
CTOS Score
CCRIS Record
Dishonoured Cheques
For today’s discussion, we’ll delve into sections 2, 3, 5, and 6.
Directorship & Business Interest
This section lists any companies associated with the individual. Banks use this information to determine the number of companies an individual is involved with. Sometimes, individuals may disclose only one company, but upon checking, banks may find out about several undisclosed companies. If banks require unbiased information on these companies, they can conduct a CTOS search on them. As mentioned earlier, banks often know more about individuals than individuals do about themselves.
CTOS Score
What is it, and how does it work? These are common questions you may have.
The CTOS score determines your creditworthiness for the loan you’re applying for, indicating the likelihood of defaulting on repayments. Scores range from 300 to 850. If a borrower falls below the “fair” range, loan approval becomes more challenging. Banks become concerned about the higher risk associated with granting such loans. If borrowers discover that their score is below “fair,” it’s prudent to reassess their financial situation.
You might wonder what factors influence the score. They include:
a) Payment History (45%)
b) Amount Owed (20%)
c) Length of Credit History (7%)
d) Credit Mix (14%)
e) New Credit (14%)
CCRIS Record
The Central Credit Reference Information System (CCRIS) is established by Bank Negara Malaysia’s Credit Bureau, offering standardized credit reports on prospective borrowers.
CCRIS acts as a centralized database, providing insights into your financial status. Monthly updates from relevant institutions furnish essential data such as banks, insurance providers, and government agencies. This process enables financial institutions to evaluate borrowers’ creditworthiness effectively by referencing their financial history records.
This section offers a detailed breakdown of each facility, including:
Status of the facility
Capacity
Lender Type
Facility Type
Total Outstanding Balance
Limit/Monthly Repayment
Repayment Term
Collateral Type
Conduct of Account
Legal Status
Special Attention Account
Credit Application Details
If the conduct of the account consistently shows a number higher than zero, say 3, it indicates the borrower is in a three-month default. Banks use this information to assess the likelihood of future defaults.
That’s a detailed overview of CTOS. I hope you find it helpful. Stay tuned for my next write-up, and don’t forget to subscribe.
Prior to diving into the mortgage application process, it’s essential to heed this advice, which could potentially spare you valuable time and considerable financial resources. Delve into these 10 commandments before embarking on your property journey to equip yourself with the knowledge necessary for a successful and cost-effective experience.
Thou Shall not cheat the bank
If you are thinking of buying many properties with just 1 income and well above your eligible limits, please think again. Now the banks do check the CCRIS again before releasing the loan. The have the right to reduce the loan limit as stated in the letter of offer you signed.
2. Thou Shall notfake documents
Some people have difficulties getting their loan approval. Thus, they resorted to doing fake documents. There are even companies specialized in this area to do it on behalf of the borrower. Let me tell you, banks are not stupid. They always double check before approving any loans. Currently, the check are getting tighter. Once caught, it will be a police case.
3. Thou Shall not be greedy
The word GREED seems very familiar to everyone. Now instead of buying 1 property within your capacity, you instead buy 5. You have been thought how to achieve a lifetime goal of financial freedom at a very short time. If you are lucky you can be an instant millionaire but if you are not, you end to be an instant millionhair.
4. Thou Shall not be guarantor
Do you know that been a guarantor for someone else loan can be lead to loan rejection. Many years back, I have this case where a couple were planning to buy a house because they are getting married 6 months later. They told me that all installments are promptly paid and they do not have any problem with the banks. Their loan was actually rejected by the bank because the lady stand as a guarantor for the brother’s loan. The brother’s car was repossessed by the bank. Her property loan is affected also.
5. Thou Shall not incur debts
The more debt you have the more difficult to get loan approval. Debts such as personal loans, car loans and etc are calculated in Debt Service Ratio (DSR) and will be part of approval. High personal DSR can either cost you your loan rejection or a very low margin of finance approval. The smart way is to minimize your debts or to repay all debts.
6. Thou Shall not use credit card
Do you know that credit card is the main culprit for loan rejection? Out of 10 loan rejected 65% are from credit card usage. Credit card function like a free money. Use now pay later. As in the term and conditions,
your only required to pay 5% of the usage every month. Many people also resort to buying things in credit via credit card. All these will be calculated as your debts. The banks will take 5% of the outstanding amount as calculation. If the credit card usage is more than 70% of the approve limit, you are deemed as a high risk person even though you paid the minimum 5% monthly. Your loan approval will be affected.
7. Thou Shall pay all yourloan promptly
As a bank, they will reject a loan if they were to find out that you have not paid your existing loan promptly. They can see from your CCRIS record. The bank will be worried as they are going to lend you some more but you have already showed to them you are not a good paymaster. They will assume that in future they will have the same problem. They rather not lend to you.
8. Thou Shall only buy whatyou can afford
Many people especially youngsters because of peer pressure buy property that they cannot afford to pay. The person can only afford RM300,000 property but end up buying RM600,000. The installment will be double. As the bank have their strict calculations on approval, the loans might be rejected or the margin slash. We cannot blame the bank for this as they are not charity organization.
9. Thou Shall not change job
You might think that what changing job have to do with loan approval. Please do not take this lightly. To the bank you are new to the company although you’re already working for years in your previous company. As you are new, your job is not secured and you might be terminated in 3 or 6 months period. So, the right way to do it is to apply the loan while you are at the existing company. After approval you move on to another company will not affect your loan.
10. Thou Shall do at leastone facility
Why you may asked? Isn’t no debts at all easier to get approval? You are wrong. To the banks, if you do not have any facility at all you are too cleaned. They do not know who you are. Your CCRIS is too clean. Yeah, I agree getting a loan nowadays are very troublesome. Well very simple to overcome this. Apply for a credit card, make sure you use it (every month fully paid is ok) then the banks will grant you the loan.
Miichael Yeoh 