Recently, it was reported in freemalaysiatoday.com that home loan rejection rate is as high as 70%. Well … applying for a loan can be a frightening task that will require a lot of your time and you need to figure out what documents to submit.
Actually, applying for a loan is not as complicated as you think it is.
Follow our 3Cs tips below to increase the chances of your loan application approval!
The first “C” is capability.
This refers to your ability to take a certain amount of loan based on your income.
First things first, if you want to apply for a home loan, you need to show proof of a source of consistent income.
What do I mean by that? Bank is in the borrowing business, and they want to reduce their risk to as minimum as possible. Therefore they will evaluate if you can pay back the loan. Thus, you need to support your loan application with proof of income source, such as a salary.
Another important point to note – you should know (approximately) the loan amount you can take. This will help you to decide on a budget for your dream home or investment property that you want to buy.
So don’t go dreaming of a RM1million property when your total income is less than RM5,000.
Bank evaluate our credibility from the CCRIS and CTOS report.
The Central Credit Reference Information System (CCRIS) is managed by Bank Negara Malaysia and collects credit information from banks. All this information is compiled into a credit report and is available to all banks.
It will contain credit related information of an individual such as:
- Outstanding credit
- Special attention accounts
- Applications for credit that have been approved or are pending
Another report that bank looks at when processing applications to verify your credit history is the CTOS report. This report shows an individual’s business exposure, business ownerships and directorships, if any. It will also show information such as bankruptcy, legal action and case statuses.
You too, can have access to both your personal CCRIS and CTOS report. So, make sure to check that your credit report is updated and is in the positive to increase your loan application chances.
Finally, the bank will evaluate your payment consistency.
In other words, bank looks at your payments habit. Do you pay your bills (instalments and credit card balance) on time, all the time? Or do you have a habit of making late payment?
If you are habitually making late payments, chances are the bank will reject your application.
Therefore, pay all your bills on time consistently, either on or before the due date.
It is not entirely the fault of the banks, financial institution of even the property price that our loan application is rejected.
More often than not, it is due to our own ignorance and not having the right knowledge that is the root cause.
Now that you know bank rejects or approve our loan by evaluating our income (capability), debt (credibility) and payment habit (consistency), start with looking at and improving your CCRIS and CTOS report.
If you have not yet seen a CCRIS or CTOS report, chances are you will not know how to read or understand one.
In my upcoming 4 hour property investment workshop, I have invited my partner MC Lee from Straits Advisors, who will assist you in getting your CCRIS and CTOS report (normally, you will need to pay RM25, but in this case it’s absolutely FREE for you).
Understanding and updating your credit report is an important first step in before you buy your property.
1. To attend my 4 hour property investment workshop AND get a copy of your credit report and a one-on-one session with Straits Advisors, fill in your details here:
2. My team will be in touch to let you know the next steps
3. Collect your credit report at the end of my 4 hour property investment workshop
I look forward to seeing you.