If Your Home Loan Is Turned Down

In some situations, financiers reject your home mortgage
application, here are some situations and suggestions to
resolve those issues
But these suggestions do not promise sure-work solutions
that will improve your chances of getting a home loan.
Thus you may prefer some professional advice from a
mortgage consultant to assess your financial condition

Reasons for rejection

1. Poor credit standing
Most financiers will check the credit history of borrowers
before granting a home mortgage
The repayment history, like default and late repayment,
on most of your credit facilities are recorded by the Credit
Bureau (Singapore), and released to credit providers on
the Bureau.

Even records for closed accounts are kept.
Any closed account, with defaults in payment, that comes
with the status of full or negotiated settlement will be shown
in your credit report for 3 years from the date of settlement
If you have a poor credit score, financiers will be more
cautious in lending. Even if they do lend, the loan quantum
may be smaller.

2. High DSR (debt-to-service ratio)
DSR = Monthly Debt Service / Monthly Gross Household Income
Before loan approval,
the financing institution will study
Total outstanding financial liabilities and income level,

An excessively high DSR
rejection

According to the latest cooling measures on 12 January 2013
The (MSR) is capped at
30% of a borrower's gross monthly income for loans by private banks
35% for HDB concessionary loans

3. Employment history
Fresh graduate who has only started work for a short time,
can be rejected
Why?
No demonstration of stable income-generating ability

Financiers take long-term stable employment,
usually two years, as proof of payment ability

4. Short reminding lease
A mortgage loan is secured against the property
The property is the collateral, whereby in the event of a
default, the financiers will foreclose the mortgage
If the property you wish to purchase has a short
reminding lease, it cannot be sold for much hence the
financing institutions may not be able to recover all the
loan disbursed

5. Low valuation
Any factors that will seriously depreciate the valuation of the property
result in loan rejection
The house could be sitting on an undesirable location,
in a dilapidated building, or in a location affected by future planning

How To Obtain An Approval?

1. Improve credit standing
Pay off any defaults and make prompt payments from now on
to pull up your credit score.
Hint: To read more about credit score,
you can browse “Tips to Make Your Mortgage Financing a Breeze”.

2. Longer loan tenure and lower loan
quantum
Stretch your loan tenure and reduce the borrowing amount,
this will reduce the monthly installment repayments, and lower the DSR.

3. Use a different lender
Some lenders may have more lenient borrowing
requirements

4. Get a guarantor
In the event of a default
The Financing Institution Can Hold The Guarantor Accountable
For The Loan Repayment.

5. Combine incomes
Apply for the loan with someone who is working and
drawing a salary. For instance, your spouse or a close relative.
The financier will have greater confidence of loan repayment
as there is now a higher income.

Whatever the factors affecting loan approval, remember
that at the end of the day,
The financiers just want to ascertain that you have the
ability to make prompt repayments.

About Property Buyer Mortgage Consultants
Property Buyer Mortgage Consultants is a research focused independent mortgage broker. We
emphasize a consultative approach where we match our client’s financial situation with the best
fit mortgage loan, not simply a cheap loan.
We also help property buyers in their buying process helping them avoid pitfalls from
unscrupulous property agents. (We are not property agents, therefore there is no conflict of
interests.)
We also developed our proprietary home loan reporting tool which provides amongst other
things, 23 years Sibor history as well as 6 years worth of SOR.
Our service is free to you as banks pay us a commission on loan deals completed. Banks in turn
save on staffing cost as we are not on their payroll.
www.PropertyBuyer.com.sg/mortgage
www.SingaporeHomeLoan.net
www.iCompareLoan.com/consultant/

If Your Home Loan Is Turned Down

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