One day after giving a talk for a property developer project launch, one gentlemen approach me and asked me this “Miichael, how do I get my loan rejected from the Banks?” I have all kinds of mortgage questions being asked during or after my seminar but this top the list. Interesting, that is why I am dedicating this article to the gentlemen.
Well, let’s look at 4 sure ways that can cost you your loan approval.
I was once approached by a couple after my seminar. They look very worried and pull me to one side for a private discussion. Guess what happen. They bought a RM3.5 million commercial property paid 10% and immediately sign Sales Purchase Agreement(SPA). Their biggest mistake is not securing the loan from the bank before paying RM350,000 down payment. After that, their nightmare started. They approached 5 banks 3 rejected 1 approved at 50% another at 60%. They need a margin of 85%.
Lesson to be learned: No matter how confidence you are, sometimes that are a lot of unforeseen circumstances that can affect your loan approval. Better make sure your loan is approved and you have sighted the Banks Letter of Offer before proceeding to sign SPA.
Giving Fake Documents
As the name suggest, this should NOT have been done in the first place. I have seen borrowers who are worried cannot get their loan approves by the banks have resorted doing such thing. I also had seen syndicates who are expert in this field. They can even make the EPF statement looks so real. I am not suggesting you do this to get your loan approval. Banks have ways to verify your documents. Like for EPF contributions by a loan borrower the banks will be able to do a cross check with EPF department.
During my time working in the bank, I have seen many altered financial documents submitted by loan borrowers to me. Sometimes, it is not difficult to spot these.
Even the loan is approved but when it reaches the disbursement stage if the banks finds out they have all the right to cancel the facility and report to the police. I have seen such cases happen before.
My 2 cents advised to all loan borrowers. Do not resorts to such way in order to get your loan approve.
Imagine yourself as a loan borrower. The bank rejects your loan. What will be your reaction? Most borrowers will PANIC. You will start to get worried especially time is not on your side.
The next thing you will do is photocopy 10 sets of your financial documents, then submit to every bank you can find. RED ALERT. This might make your chances in loan approval lesser. Banks can tract your loan submission and rejection to any other banks via Central Credit Reference Information System. In short we call it CCRIS.
You go to Bank A and Bank A rejects, Bank B also rejects, Bank C rejects and Bank D actually you have a slim chance to get approval but the problem is they saw 3 previous banks reject your loan. Your guess is correct, they will also reject this loan.
From my experience, different banks have different approval criteria. One bank rejection does not mean you are in trouble. Maybe you do not fit into what the bank is looking for as a borrower.
This brings us into the next discussion topic, No Knowledge on How the Banks Approves a loan.
No Knowledge on How the Banks Approves a loan
Many borrowers are complacent when it comes to loan application. They taught loan approval could not be that difficult. This is one of the main reason loans gets rejected. Well, if you look at the past few years Bank Negara have introduce many measures to curb lending. It will not be easy anymore and it is not going to be easy in the future.
You need to be a savvy loan borrower. Knowledge is power. With proper knowledge how banks determine credit approval, your chances in getting loan approval will definitely increase. You don’t even have to trouble yourself and send your documents to many banks. Choose the banks which you have the most likelihood to get approval. Some banks approval are more relax than others.
My personal advised to every loan borrower out there.
- Do your Research
- Plan your Mortgage Submission
- Know your Bankers
and lastly attend my talks where you will receive the latest updated information on the mortgage industry.