What do you need to do to get approval on your mortgage loan? In general, the bank officer will assesses your borrowing power based on the following 4 points;
1. Debt Servicing Rate (DSR)
2. Individual Risk Profile
3. Property Valuation
4. Loan To Value
The DSR is shows how much of your income is used to pay off your debt and a healthy debt serving rate is represented a 30% of total income, but normally banks will allow up to 70%-80%. In order to let bank officer stamp “approved” on your mortgage loan application, you need to increase clean profit as well as decrease your total debts, it is to lower your DSR.
Besides a low DSR, bank office will also check on your credit history to evaluate your personal risk profile.
6 ways to increase your debt capacity and personal credit rates
1. Lower Your Total Debts
Be sure to pay off all of your debts on time. e.g., personal loan, car loan, credit card, PTPTN etc.
Do note that PTPTN loan stand an important role which can affect your credit score. If you do not pay your PTPTN loan on time, you might be in the blacklist of CCRIS. Once your name is in the list, bank office will direct reject your mortgage loan application and you have to pay off the loan at a time (no more installment allowed). You may check whether you are in blacklist here.
2. Maintain Your Credit Score
Bank office will check on your credit score/ history to determine your repayment capability. They usually check your credit score through these 2 major systems:
1) Central Credit Reference Information System (CCRIS)
CCRIS can only display your personal credit record for pass 12 months. The report has include 3 types of your transactions;
- Outstanding loans, repayment habits
- Non-performing loans (NPL)
- All loan applications (approved, rejected, pending)
These rejected loan applications that you should avoid;
- Late payment
- you’ve been applied for more than 1 loans
- Excessive use of credit card
2) Credit Tip-Off System (CTOS)
CTOS records are kept indefinitely;
The following bad records will affect your loan application:
a) Bankruptcy Information
b) Unresolved legal action
c) Being other guarantor
d) Unpaid utilities and telecommunications bills
You should check whether the following information are correct;
a) All of your personal information
b) All of the records are up to date
c) There is no legal issues against you
d) If there is any legal issues or payment have been settled but CTOS did not update in the system, you need to contact them immediately
3. Make Sure Your Credit History Is Good
Before you submit any loan application, you should check on your credit record before lenders do. It is important for you to understand your repayment history first before lenders rejected your loan.
Don’t think that if you do not own any credit card or taken up any loan means that your credit history is in good condition. Oppositely, your credit rating is as terrible as the poor one because you are a blank page for the credit rating agencies. Such situation mostly happened on those fresh graduate, therefore, start to getting a credit card or apply any telecommunication package for your own, and be sure you have pay those bills on time. (Click here to check your credit score/ history online)
4. Keep Your Credit Card Balance As Low As Possible
High balance can affect your credit history. The bank office will think that you are unable to manage your financial well mean low repayment capability.
5. Show Your Saving
Having a saving account can prove to the bank officer that you have sufficient funds to repay the debts. When submitting your loan application, be sure all of your documents are up to date as well.
6. Combined Finance With Your Spouse
Combining finance with your spouse can increases your net income and also reduce the debt ration, which is beneficial to your loan application. However, be sure that both of you are fully understand individual right under common ownership.
(Click here to read more how to get approved for mortgage loan)