Reply to What is the possible reasons for rejections ? on Fri, 29 Nov 2013 08:44:16 GMT

cherrygal — Fri, 29 Nov 2013 08:44:16 GMT

Many reasons can be possible for housing loan rejections...

1) Total debt servicing ratio for private properties (60% of income)
2) Mortgage servicing ratio for HDB (new curbs)
3) Bad location of new property (banks sometimes view certain properties as risky investments)
4) Bad payment records in the past, overdrafts, late payments etc
5) You are self-employed with no fixed income (even with 2 yrs IRAS docs, the bank may only loan you an amount based on 70% of your reported non-fixed income. Let's say you earned an average of $10K per month, they will base on $7K income. So your TDSR may be hit.)

Credit card approvals do not mean your credit rating is solid. HOme loans look at a whole lot of things nowadays. Putting big purchases on credit card instalments will also affect the home loan rating. Having late payments or making minimum payments only will also affect that rating. Best is to pay off all your credit bills every month. Car loans, study loans, reno loans etc also affect the TDSR.

So it is now very important to get the Approval in-principle (AIP) from banks BEFORE signing the option to purchase. Banks will take up to 2 weeks to give you that AIP nowadays due to the massive amount of background checks required.

Read these:
http://www.stproperty.sg/articles-property/legal-guides/total-debt-servicing-ratio-tdsr-and-how-it-affects-your-loans/a/132838

http://www.todayonline.com/singapore/hdb-shortens-homebuyers-loan-tenure-25-years