A Quick Guide To Approval in-Principle For Home Mortgages

A Quick Guide to Approval-in-Principle for
Home Mortgages

Join us | Login for Financial Advisors | SMS us at +65 – 9782 - 8606
Home Loan | Commercial Loan | Refinance Loan | *Financial Planning | *Insurance
(AIP) for home loans, or mortgage prequalification, are
conditional approval.
AIP can be required for loans of private residential properties or
HDB flats.
The outcome of an AIP application can be as fast as 15 to 60
minutes.
You have to submit the financial documents between 14 to 30
days.

If the loan is approved a Letter of Offer will be issued.
If the required documents are not submitted within this period,
you can still re-apply for the AIP
Having an AIP lets you know the loan quantum you are eligible for
and the monthly repayment amount.

An AIP is non-binding for both the applicant and the
financier
You are allowed to change financiers even after obtaining
an approval-in-principle loan from the financier
You may change loan package with the same financier
So
Even

Why you should have an AIP?
•Narrow down the property search
•Fast commitment
•Forfeit of booking fee

Narrow down the property search
AIP lets you know the property you can afford to buy.
Thus you will not be wasting time viewing properties that you
later find to be out of your budget when you apply for that loan.
This also explains why some property agents only work with
buyers who already obtained an AIP.

Fast commitment
you can commit immediately when you have found your ideal
property.
There is no waste in time between obtaining the loan and closing
the transaction.
During that interval, some other buyers may beat you in buying
the property.
But

Forfeit of booking fee
To prevent other buyers from buying, you may choose to
Sign the option to purchase and lay down the booking fee, before
you have obtained the loan.

But this may not be the best course of action Why?
You may not be able to obtain an ideal loan with a favorable
rate, or even if you do it may be with a lower loan quantum.
In the latter case, the deal may fall through if you do not
have sufficient cash or CPF fund to top up the shortfall.
Should the deal fall through, you will have to forfeit part or
all of the booking fee.

In another scenario
You may be able to obtain the maximum loan-to-value ratio
(LTV)
The valuation of the property has fallen during the interval in
which you had signed the option and obtained the loan.
But

The purchase price you agreed on is $1.5m, but when you have
obtained the loan the valuation of the property has dropped to
$1.2m.
Assuming that you are eligible for a 80% LTV, you thought you
could obtain financing up to $1.2m, but because of the lower
valuation you can only secure $960,000.
If you do not have the means to make up for the $240,000
difference, you cannot seal the transaction.
For example

Things To Be Cautious About
As an AIP is provisional, the bank still can reject the application if
there are any changes to your financial status.
Avoid taking other loans or changing jobs before the Letter of
Offer is issued.
So

Just because an AIP is provisional does not mean you should
randomly select a bank from which to obtain an AIP, thinking
you can secure the same loan quantum from other banks later.
That particular bank may be offering uncompetitive rates and
loan features.
And you may later discover that you are not eligible for the
same quantum from other banks.

About Property Buyer Mortgage Consultants
Property Buyer Mortgage Consultants is a research focused independent mortgage broker. We
emphasize a consultative approach where we match our client’s financial situation with the best
fit mortgage loan, not simply a cheap loan.
We also help property buyers in their buying process helping them avoid pitfalls from
unscrupulous property agents. (We are not property agents, therefore there is no conflict of
interests.)
We also developed our proprietary home loan reporting tool which provides amongst other
things, 23 years Sibor history as well as 6 years worth of SOR.
Our service is free to you as banks pay us a commission on loan deals completed. Banks in turn
save on staffing cost as we are not on their payroll.
www.PropertyBuyer.com.sg/mortgage
www.SingaporeHomeLoan.net
www.iCompareLoan.com/consultant/

A Quick Guide To Approval in-Principle For Home Mortgages

Recommended

Recommended

More Related Content

Recently uploaded

Recently uploaded (20)

Featured

Featured (20)

A Quick Guide To Approval in-Principle For Home Mortgages