Abstract of Mr. Marshall Poh's Interview on Money FM 89.3FM (2 Sep)
In a recent interview on Money FM 89.3, Mr. Marshall Poh, CEO of MoneyMap, shed light on the challenges faced by Singaporeans in securing home loans and offered valuable insights for prospective borrowers.
Most people in Singapore have to take out a housing loan to finance their new home purchase. Obtaining a home loan is very time-consuming, with many obstacles along the way. From being outright rejected to not getting the desired loan amount.
Most people think banks are always ready to lend the money they want as long as they are willing to take the loan. However, this is not the case. Getting a home loan may seem easy on the surface but the reality is that that is not the case. Banks and financial institutions (FI) have their own set of eligibility conditions that the customers must fulfil to get a home loan.
Let me talk about the problems Singaporean homebuyers face when getting a home loan.
Too many home loan options to compare & choose
Difficult to check on home loan application status
Home loan application rejection in the primary stages
Long waiting time for the home loan application process
Approved home loan amount is less than your expectations
1. Too many home loan options to compare & choose
There are more than 10 banks offering home loans in Singapore, including DBS, OCBC, Maybank, UOB, HSBC, RHB, CIMB, Citibank, Bank of China, Standard Chartered Bank and Hong Leong Finance. Based on the property type, customers have the option to choose from one or more fixed and floating loan packages within each category.
As a result, customers are overwhelmed with choices, making it harder for them to make the right decision. Besides, the decisions you make when buying a new home, there are several other decisions you will have to make when purchasing a new home, including the home’s locality, furniture, renovation costs, etc. One benefit of having a lot of home loan options is that consumers get competitive interest rates and a high level of service from banks.
2. Difficult to check on home loan application status
Once you have applied for a home loan, you must keep track of your loan application status. Typically, it is time-consuming to check on your home loan application status as you have to go through various representatives. The real problem is that nobody tells you the exact status of your loan application while it is still under process.
Since a lot of paperwork is involved in the application phase, it is difficult for loan customers to keep a check on the status of the application. Paperwork is critical, irrespective of the customer’s income level and credit rating.
The application process can often be cumbersome unless the applicant has a clear-cut understanding of why a particular document is important.
3. Rejection of application in early stages
A lot of times when customers apply for home loans, their applications get rejected in the initial stages. they will obviously want to know why. Well, the reasons vary from case to case.
Sometimes home loan applications are instantly dismissed because of the wide gap between the borrower’s eligibility and expectations and what the bank is authorized to offer based on the borrower’s qualifications.
Similarly, the home loan application can also be rejected due to incomplete or missing requisites as well as for not meeting the minimum qualification or income criteria. If the bank is unable to verify the information given by the applicant, they may reject the application in the primary stages.
Another reason for rejecting your home loan application is poor credit history or credit score when applying for a home loan.
4. Long waiting time for the application process
One of the biggest challenges around applying for a home loan in Singapore is the time banks or FI take to verify the submitted paperwork.
This long waiting time can be attributed to a fair bit of paperwork involved and the in-depth assessment done by the banks before approval.
In case of missing or incomplete information in the submitted documents, your bank or FI may ask you further questions, which results in more time to complete the approval process.
5. Approved home loan amount is less than your expectations
Not getting the desired loan amount approved is another issue a borrower faces while getting a home loan in Singapore. Banks and FI can lower the amount to be approved depending on the borrower’s repayment capacity. However, it is not the only parameter considered. Other factors that help determine the amount of loan that can be sanctioned include the borrower’s credit score, other outstanding loans, total debt servicing ratio (TDSR), employment stability and mortgage servicing ratio (MSR).
The final call for your home loan approval is taken by the bank only after considering all these factors.
Applying for a home loan in Singapore can be a complex and time-consuming process. With numerous banks offering various loan packages, navigating the options and understanding the eligibility criteria can be overwhelming.
To ensure a smoother experience, it's essential to be prepared and proactive. Gather all necessary documents, be transparent about your financial situation, and patiently address any queries from the bank.
Remember, while the process may be challenging, the rewards of owning your dream home are worth the effort. By understanding the common pitfalls and taking proactive steps, you can increase your chances of a successful home loan application.
Comments