The mortgage application process requires considerable paperwork. First there is the application form, which asks for detailed information about you, your employment record, the house you want to purchase, etc. The lender will need documentation pertaining to your personal finances--your earnings, your monthly expenses, and your debts--to help gauge your willingness and ability to repay the mortgage. Lenders also will examine your file at the credit bureau to learn if you pay your bills on time. A lender may reject your application if the report shows that you have a poor credit history. Thus, you may want to make sure your credit file is accurate before you apply for your mortgage. You have a right to know what information is contained in your credit report and to have someone from the credit bureau help you understand what the report says. A copy of your credit report can be purchased in person at any Singapore Post branch for S$5.15.

To figure the mortgage payment, the lender will begin by asking how much you want to borrow. The maximum loan amount will be determined by the value of the property and your personal financial condition. To estimate the value of the property, the lender will ask a real estate appraiser to give an opinion about its value. The appraiser’s opinion can be an important factor in determining whether you qualify for the size of mortgage you want. Lenders usually will lend the borrower up to 90 percentage of the appraised value of the property, and will expect a down payment making up the difference. If the appraisal is below the asking price of the home, the down payment you planned to make and the amount the lender is willing to lend you may not be enough to cover the purchase price. In that case, the lender may suggest a larger down payment to make up the difference between the price of the house and its appraised value.

For private residential properties, you will be required to pay the first 5 percent of the appraised value in cash. The remaining 5 percent can be paid either in cash or from your CPF ordinary account funds fulfilling the 10 percent downpayment which is a statutory requirement. You are also allowed to utilise your CPF ordinary account funds to pay for stamp duty and legal fees incurred in the conveyance of the property.

Once your application is approved, the lending bank will offer you a formal Letter of Offer stating your loan quantum, interest rates, your monthly investment and pre-payment penalty (if any). Understand what your are agreeing to and ask for explanation if unclear. Most banks will charge a penalty if you fail to take up the mortgage loan after accepting the Letter of Offer. Most banks also offer a one-time conversion of the loan in the event the interest rates happen to fall before the loan is disbursed.

Now that you have secured your loan, you can safely excercise the Option to Purchase and begin the conveyancing process. We at Century 21 have established business partnerships with POSB, DBS, UOB, OCBC, HSBC, Citibank, Standard Chartered, ABN Amro, Hong Leong Finance, Sing Investment and Maybank. If you have any queries or wish our help in arranging a home loan or help you with re-financing your existing loan, please call us and we will arrange for a mobile banker to give you professional financial advice and the latest loan package.