Getting a mortgage to buy a new house in Singapore isn’t as easy as it may look. You need to be great at a lot of things such as your job and your credit record to obtain a good mortgage at low interest rates. You need to fill the application form accurately, provide all the necessary information, and submit it to various mortgage lenders providing decent interest rates. In fact, you will need these things with you to increase the chances of getting pre-approved for your mortgage application.
Mortgage Application
It is obvious that the biggest requirement for mortgage pre-approval is a mortgage pre-approval application or a standard mortgage application. This document requires you to list personal information including financial information like account numbers and balances. You must also mention the desired amount of the mortgage, known as the target loan amount. Then sign the application, indicating the truthful completion of the form, and submit it to the lender.
Valid Identification Proofs
Your valid identification documents are critical to letting your mortgage lender know that you are a genuine person and not applying for the mortgage with a fake identity. Provide a valid form of identification such as a driver’s license or passport whenever the lender asks for it for reference checks. Note that the school identification documents, birth certificates, social security cards, voter card, photocopies of any identifications, or expired identifications of any kind aren’t considered as official identification proofs and won’t be useful for the mortgage application.
Good Credit Score
One of the most important things, in order to qualify for mortgage pre-approval, is a good credit score and credit history. Lenders use this three-digit number that indicates overall credit reliability, to determine whether to offer a mortgage and what interest rates to offer. Most lenders require a credit score of 620 or above to approve a mortgage. Lenders typically reserve the lowest interest rates for customers with a credit score of 760 or above.
Permanent Job
No mortgage lender will give you a mortgage in case you don’t have a fixed job. A permanent job in an established company tells your lender that you will be able to pay back the mortgage loan. In fact, lenders can’t count on future prospects or expected income. Instead, they look at current income levels and work history. So, apply for a mortgage only when you have a permanent job and proofs of that job. You will have to produce your employment proofs to your lender to back the information you mentioned in your mortgage application form. The proof of employment can be your two most recent pay slips or the electronic equivalent, that shows your year-to-date earnings. The lender will also use tax records to verify your earnings.
Tax Documents
There’s a 99% chance you will have to provide tax documentation at some point. Most lenders want to see your W-2 statements and tax returns for the last two years. So make sure you have all these documents ready before applying for a mortgage. Among other things, your W-2s show how much money you earned over the previous year/s.
Bank Account and Statement
This is another standard mortgage document for pre-approval, and all lenders require this. When you apply for a mortgage pre-approval, the lender will want to know if you have a bank account. In addition, if you have an account (which you should), how much money you have in the bank. They need to ensure you have sufficient funds for your closing costs, down payment, and cash reserves (if applicable) to see in case you can repay your mortgage. So they will probably ask you for account statements and balances for any checking, savings, or money market accounts.
Proof of Assets
Your lender will also want to see information about any of the other assets you have, apart from your income. Your proofs of assets include bank account statements as well as information about investments you’ve made. These proofs will be required to prove that you have funds for the down payment and closing costs, as well as cash reserves. In case, a family member or friend is giving you money, bring documentation of this information as well (including a gift letter, which shows the money is not a loan).
Time and Patience
Lastly, you need to have a lot of time and patience with you. Understand that getting pre-approval for a mortgage can be a time-consuming process. Typically a lender takes between seven and fourteen days to verify income and run a credit check. The duration of getting the mortgage also depends on your credit report and the availability of the things mentioned above. In case, you don’t have a good credit score, you may have to spend some time to make it better and then apply for a mortgage. Don’t expect to obtain mortgage within days of applying. Have patience and wait for the best.
Monthly Expense Statement
Although this rarely happens, some mortgage lenders may even ask for an itemized list of your monthly payments. This list might include your rent, credit cards, other loans, various investments, etc.
Make sure you have all of these well in advance before you apply for a mortgage. Preparing in advance will save you a lot of time after you have applied and also increase the chances of getting pre-approved.
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