Praying for Luck, Mortgage Approval
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In the picture, what do you think I am doing? Praying for money to drop from the sky or hoping for luck to come by?
Well, I don't depend on them. I don't believe that money will just drop from the sky or for a miracle to happen. If a car were to break down, you will need a mechanic to fix the problem. He will follow a series of steps to repair the car and to make sure that your car is running again.
Likewise, when it comes to mortgage approval, you cannot wait for miracles to happen. To me, luck has nothing to do with mortgage approval. Many borrowers and agents like to photocopy stacks of financial documents and submit them to every bank that they can find for approval. Is this the right way to go?
Did you know that every time your documents are submitted, the banks will record and send them to Bank Negara which in turn will update the Central Credit Information System (CCRIS) every month? No matter if your loan is approved or rejected it will be updated on the last page of your record. Let's say Bank A rejected your loan, Bank B, C and D also rejected you, but Bank E approved your loan. However, because so many banks rejected you, there's a chance that Bank E will also reject your loan in the end.
Point is, never expose yourself. Every bank has different approval criteria. Some banks might not favour you, but some might. I had a case once, this person's Debt Service Ratio was very high at 150%, which is higher than the normal 70-85%. So of course, the banks rejected his loan. I, however, reviewed his documents and managed to get 70% loan approval. This is a fine example where the borrower:
a) Knows himself very well.
b) Checked his credit status.
c) Checked the best suitable bank for him.
On the last step, you'll have to do more work. You'll need to find out each bank's approval criteria and also the different types of documents for approval. You are not buying a RM1,000 property but hundreds or even millions worth. It is good to do extensive research first as it will be hard to go back from scratch when your loan has been rejected. It's always primarily easier to diagnose a problem first.
I hope this article will assist you in making the right judgement. If you want to read more on my articles, go to www.miichaelyeoh.com