Before you go shopping for your dream condominium, it’s essential to get preapproved for a mortgage. Many real estate agents won’t work with buyers who haven’t received conditional approval. It’s also hard to set a budget for your condo search when you don’t know what loan amount you’ll be able to qualify for.
If you’ve never applied for an in-principle approval, you may not know where to start. Here are the steps you’ll need to take to find out if you qualify for a condo loan.
What is In-Principle Approval or IPA?
If you’re not familiar with in-principle approval, it’s basically a conditional agreement from a lender to give you a mortgage of a certain amount. An IPA lasts for between two weeks and three months so you have time to find a condo within your budget and formally apply for a loan.
If there aren’t any major changes to your financial situation and the condo you choose meets the bank’s standards, it’s highly likely that you’ll be approved for a mortgage. However, an IPA isn’t legally binding on either side. You can go with a different lender, and the bank can still deny you if they determine you aren’t qualified after taking a second look at your finances.
Applying for an IPA is different from getting prequalified, so make sure you let the banker know which option you want to pursue. A prequalification is less thorough than an IPA. It doesn’t involve a credit check or a review of your financial documents, which means the results may not be as accurate. So if you want to know exactly how much you can borrow, it’s better to get an IPA.
How to Apply for an IPA
Check Your Credit
Bad credit is one of the most common reasons for loan denials. So it’s a good idea to check your credit score before you apply for an IPA.
If you have a BB credit rating or below, you may have trouble qualifying for loans. You can raise your credit score by disputing any errors you see on your credit report and making payments on time. Getting a small loan or credit card and paying it off diligently can help you establish a positive credit history and get approved for home loans more easily.
Select a Lender
Before you can apply for an IPA, you’ll need to choose which lender you want to work with. Although you can get an IPA from multiple lenders, you’ll have to fill out several different applications, which can be time-consuming.
The loan amounts you’re offered by each lender probably won’t vary much because all banks follow the same MAS guidelines. So it may not be worth the effort to apply with more than one lender.
Whether you want to send in one application or several, sites like Money Smart can help you compare banks and find loan packages with competitive interest rates. You could also hire a mortgage broker to review your financial profile and assist you in selecting the best mortgage for your situation. Many brokers work on commission, so you may not have to pay them for their advice.
Gather Up Your Documents and Apply
You’ll need to submit financial documents during the application process, so it can help to gather them in advance. Here are a few of the statements you may want to have on hand:
- 12 months of CPF contribution history
- 3 months of payslips
- Latest credit facilities statements
- IRAS tax forms
Most banks allow you to apply for an IPA online or in person, so choose whichever option is most convenient for you.
After you submit your application, it usually takes anywhere from two days to a few weeks to hear back. If it’s approved, then you’ll be ready to start shopping for your dream condo.
If you’re looking for a beautiful new development to call home, check out LIV at MB. It’s a luxury condo complex located in District 15 with fantastic amenities like a relaxation pavilion, state-of-the-art gym, sky garden, tennis court, and more. It’s also centrally located and is just a 4-minute walk away from the upcoming Katong Park MRT Station.
Register for the early bird flat preview today so you don’t miss out on direct developer pricing and discounts.