Required Documents for Home Loans
The loan purchaser is divided into 2 categories: Employer (Er) and Employee (Ee). Then the Ee is further sub-divided into salaried employee and commission earner.
- Cash purchaser
- Loan purchaser or Mortgagor
- Salaried employee
- Commission earner
For loan purchasers, the standard documents that banks generally require are:
- Copy of purchaser’s NRIC / Passport
- Sales & Purchase Agreement / Title of property / Booking form
- Pay slips and bank statements
For salaried employees, banks will need at least 3 months latest pay slips. For employers and commission earners, banks will need at least 6 months latest pay slips. This is due to the difference in the nature and the risk profile of the types of occupations.
After collecting the required documents from the borrower, the bank officer will then submit the documents and a report to the bank’s higher management for approval. Usually the bank loan approval will take 2 – 3 working days upon successful collection of all the required documents from the borrower.
Once approved, the borrower will receive a Letter of Offer (LO) from the bank. The bank is offering the borrower a loan plan at an interest rate on a loan margin for a tenure period.
After accepting the bank’s offer, the borrower then have to read and sign the Loan Agreement (LA). Its a binding legal document whereby the bank is going into an agreement with the borrower to finance the borrower for a property purchase.
After signing the Loan Agreement (and Sales & Purchase Agreement), it’ll take another 3 months for the loan from the bank to be disbursed or released to the vendor. After the loan has been fully disbursed, the borrower has to start servicing the instalment.
The above process applies to sub-sale or secondary market properties. For under-construction or primary market properties, the home loan procedure is slightly different, which will be explored in further detail in another article.