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Just to ensure that you can get the most out of the information for that property you are eyeing, try to get familiar with mortgage terms and talk to some banks on their housing loan promotions. It is important to develop a financial plan so that you not only save money for the down payment, but for other costs that will come along later like the credit check, the mortgage application and the closing.

Listed below is a set of criteria that governs the end-financier’s evaluation of housing loan applications:

Income & Credit
The Applicant should have adequate income to qualify for the loan. The normal requirement is that the monthly loan repayment should not exceed 1/3 of the applicant's monthly income or in the case of joint purchasers, their joint monthly income.

Example: For a RM 200,000.00 loan over a period of 20 years, the monthly loan payment (at 10% per annum x monthly interest) is RM 1958.00. Thus, the applicant must have a minimum monthly income of RM 5,874.00 (RM1,958.00 x 3).

Applicants are required to supply evidence of their income, such as pay slip, EPF statement or income-tax return form to enable the end-financiers to ascertain their ability to repay the loan. However, for those who are self-employed, they should produce bank statements, sales invoices, receipts or other documentary evidence to verify their income claim.

Having an established credit history is also an important criteria in a smooth house buying process. Pay your loan on time, limit your debt, reduce the amount of credit cards you have and use them responsibly. It is also important to reassess your credit report - a record of past and current debt that states when and how you paid.

Generally, the age limit for the loan payment is 55, which corresponds with the normal retirement age. It is possible that some end-financiers might extend the age limit to 60. (Depending on Individual Banks’ Policies or Package)

If your income or credit are not so convincing, the end financier may require you to provide a guarantor or guarantors whose joint income should meet the above mentioned minimum requirement.

Evidence of additional income
To avoid guarantors and you may have a substantial amount in your savings or fixed deposit account you can use it as evidence of additional income which the end-financiers may take into account during evaluation.