Friday, April 19, 2013

Mortgage Application - Approval Delayed or Rejected ~ Common problems

Getting a loan now is not easy, when the bank are tighten up the approval criteria and when the household debt is at sky-high.

What can cause the mortgage application be delayed for approval or not getting approval at all? I think the list is very long but the main factors are....

Application Rejected 
- Debt commitment too high i.e. the Debt Service Ratio is beyond the guideline set by the bank. (each bank has different threshold)
- Bad customer. Bad credit score. If you always pay your loan/car instalment/credit card late, due to insufficient fund, highly likely your application will get rejected.
- Lack of income documents. Bank likes salaried workers. Their income is easily verified via third party source, e.g. EPF and Bank (via bank statements). Further, income is stable, thus seldom have repayment default.

Approval Delayed
- Documents incomplete upon submission. Don't do shortcut which may end up with delay for approval.
- Slow in respond to bank's query or request for additional documents. I have seen some borrower takes days to come back with a simple documents and ask the next day if their loan approve or not.
- Not getting the right banker/mortgage consultant.