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Consumer Property Financing
Application


Eligibility


Standard & Ultimate Home Financing-i

Individuals and non-individuals, Malaysian citizens and non-Malaysians citizens

My First Home Scheme-i

Malaysian citizens applicable only for first time home buyer purchase property of up to RM500,000

My First Home Scheme-i - FTHB

Malaysian citizens applicable only for first time home buyer purchase property of up to RM300,000


For more information on the eligibility criterion, please refer to Property Financing-i at MBSB Bank.


 

EXPLANATORY NOTES OF APPLICATION FORM
FOR PROPERTY FINANCING-i FACILITY FOR INDIVIDUAL


SECTION A and SECTION B

PERSONAL PARTICULARS OF MAIN APPLICANT, CO-APPLICANT, AND GUARANTOR
Notes
You know these two sections better than anyone. Sorry, we can’t help you with them.


SECTION C

FINANCING DETAILS

Facility Applied

Package Applied    Notes
Check the available packages of Property Financing at MBSB Bank. Choose the package that matches the value of the property as well as your financial situation.
Shariah Concept    Notes
Product Bundling    Notes
These are other MBSB Bank’s products that you have to apply to under Property Financing application.

Information on Takaful Coverage

Takaful Coverage    Notes
MRTT is a Takaful scheme to cover a customer who is a covered member against death or permanent disability. MRTT coverage is used in either of these two events to settle the outstanding financing balance. For more information, check Security measures.
Contribution paid by    Notes
Indicate whether the Takaful coverage is paid by you, included in the financing, or partially included in the financing.
Insured Applicant(s)    Notes
Name the covered members of the Takaful policy.

Details of Financing

Basic Financing Amount    Notes
This is the value of the property as requested by its seller. MBSB Bank will disburse this amount to the seller/developer of the property under the terms of the applied facility.
Open Market Value    Notes
This is the value of the property as evaluated by a professional party.
MRTT    Notes
This is the single contribution, lump sum payment for the MRTT coverage.
Valuation Fee    Notes
Valuation process is needed for a completed property to ensure the fairness of the home sale deal.
Legal Fee    Notes
This is the fee paid for MBSB Bank’s solicitors for completing financing documents and doing necessary legal checks. It is different from the fee of the attorney helping you with the Sale and Purchase Agreement (SPA).
Purchase Price    Notes
This is the total Financing Amount, which is equal to the basic Financing Amount plus incidentals, see Closing costs.
Profit Rate    Notes
This is the reference rate used by MBSB Bank for pricing this facility.
Effective Rate    Notes
This is the overall rate of profit payable to MBSB Bank. It represents the profit rate plus a margin rate.
Tenure    Notes
This is the period of your monthly payments, including the Grace Period, if any, as stated in you Sale and Purchase Agreement (SPA).
Total Financing Amount    Notes
This is the sum of the purchase price plus the profit and the Grace Period Profit, if any. It is also called the selling price.
Monthly Instalment    Notes
This is the payment you will be making every month during the tenure to pay the selling price.

For financing that extends beyond retirement age (if applicable)

   Notes
Indicate the financial source that you plan to use after retirement to settle the balance.


SECTION D

PARTICULARS OF PROPERTY/SECURITY
Notes
A straight forward language; just read and indicate your preference.


SECTION F

DECLARATION/DISCLOSURE BY APPLICANT/CO-APPLICANT/GUARANTOR
Notes
Please read carefully and declare your stand accordingly.



 

How is your Application Evaluated?

Even though the situation of an applicant does not fully determine the acceptance or otherwise of his/her Property Financing application, it is useful to be aware of the factors considered by the bank officer upon evaluating your application. Generally, the approval criterion considers and is affected by three types of factors: the developer and the property, your financial situation and credit score, and the status of the economy and the bank attitude. The following briefly discusses these factors:

  1. The legal stand of the developer: If the developer has filed for bankruptcy, being sued in a court, or did not show commitment in a previous involvement with the bank, the bank will obviously be reluctant to approve your application.

  2. The risk level of the property: Banks do not favor properties in landslide or flood-prone areas, or properties with poor structure or foundation.

  3. Your employment history and credit score: Financiers like to see stability. Steady employment with a single employer for several years is a positive factor. On the other hand, late credit card, rent, or mortgage payments are not. The Central Credit Reference Information System (CCRIS), managed by BNM, shows the applicant’s financing payment record for the last 12 months. Checking the CCRIS report before submitting a Property Financing application is a good idea.

  4. Your income level: Banks want to see a high chance of paying the financing over the long tenure. The Debt to Service Ratio (DSR) gives an indicator that your income is likely to enable you to pay the financing. Your ongoing commitments towards other financiers have to be considered too, as they subtract from your financial liquidity. An income proof, accompanied by tax declaration documents, EPF contributions, and savings account statements all count in favor of your application.

  5. The status of the economy: Banks do not usually approve many property financings when the economy of the country is struggling or going through a recession. For example, US banks became very stringent in their approval criterion after the 2008 financial crisis.

  6. The bank’s risk appetite: Banks differ in their willingness to accept risk. Their approval criteria reflect how careful or open they are towards your application.

References
  • “9 Reasons why banks reject your home loan,” by Michael Yeoh, viewed at iProperty.com.my, on Mar. 28, 2020.
  • “How Mortgages Work,” by Lee Ann Obringer and Dave Roos, viewed at howstuffworks.com, on Mar. 28, 2020.


 

Common Questions

  1. What is the difference between conventional financing and Islamic financing?
    Under conventional financing, your outstanding loan consists of principal plus the interest charged on you. The interest is actually the financial institution's cost in obtaining the funds. Islamic financing works on the concept of buying and selling where the financial institution purchases the property and subsequently sells it to you above the purchase price.

  2. How much can I afford?
    This depends on your income and other financial obligations. As a rule of thumb, most house buyers buy houses that cost 1.5 and 2.5 times their annual income. For example a house buyer earning RM40,000 a year would buy a house between RM60,000 and RM100,000. Furthermore, the monthly installment should not exceed about 1/3 of your gross monthly income. In assessing your payment capability, the financial institution would also take into account your other debt payments such as car financing, personal financing and credit cards.

  3. How much can I apply to?
    This depends on the value of your property, your income and your payment capability. Margin of financing can go as high as 95% (inclusive of MRTA). The higher the margin, the higher you will have to pay per instalment. Also, at a given rate, a shorter tenure will require you to pay higher instalment.

  4. How long does it take to process a financing application?
    It usually takes about one to two weeks for your financing application to be approved from the time you supply full documentation. You should ask the financial institution for the checklist of documents required for the application to avoid any delay.

  5. Why do I need a valuation?
    A valuation is required if you are buying a completed property. The financial institution requires a valuation to ascertain whether the property provides sufficient security for the financing given. It also provides an indication that the property is worth what you are paying for.

  6. Do I need to appoint a lawyer? Can I choose my own lawyer?
    Yes. You need to appoint a lawyer to draw up your financing documentation. Normally, the financial institution will provide a panel of lawyers who are familiar with their documentation requirements for you to choose from. If you prefer to engage your own lawyer, you should discuss this with your financial institution.

  7. Who pays for the legal fees?
    Generally, legal fees are borne by the buyer. However, certain developers and financial institutions may offer to pay the legal fees on the legal documentation as part of their marketing package. In addition, some financial institutions also extend financing for the financing documentation fees.

For more information/clarification on the above, please contact the nearest MBSB Bank branch or sales personnel.