Purchasing a house soon? Do you have the required funds for that beloved property? Instead of approaching other banks, perhaps you might want to consider approaching our in-house mortgage specialist for a free consultation on your loan eligibility for an In-Principle Approval (IPA).
With an IPA in hand, many benefits await you in the process of shopping for your new property. You will be more attractive to agents. Your house hunting journey will be expedited. Also, your purchase will be better protected once you can pay the booking fee. Need we say more?
Buying a Flat 101: The Loan In-Principle Approval
What is In-Principle Approval?
Simply put, an IPA refers to a home loan agreement between the bank and you based on your overall financial health and credit history, which can be used to purchase either an HDB flat or private residential property. You will typically have 30 – 90 days to purchase a home with guaranteed financing, once granted an IPA.
The pre-approved home loan will usually not be deposited into your account, but instead establishes as a formal confirmation on the maximum amount a bank can loan you as well as your monthly instalment.
Leave the legwork that is approaching the different banks to our mortgage specialist who’ll provide unbiased advice on the best rates to suit your needs. Think of all that extra free time!
How long will you take to obtain an In-Principle Approval?
Depending on the bank and factors such as your credit history, financial health, the accuracy of your information, and if all required documents have been handed over, the length of time to get an IPA will vary. It could take a day or two, or even a few days or weeks. But you can expect a pretty quick response rate, if your application looks good. Also, do double check on the processing time to be safe.
What is the validity of the In-Principle Approval?
Similarly, the validity of the IPA will differ across banks, up from 14 days to two or three months. To prevent the hassle of going through the process again, you should confirm the validity of the IPA so that you will be better informed on how long you will have to commit to a property before it expires.
How can you obtain the In-Principle Approval?
To apply for the IPA, here’s a quick breakdown to get one:
- Get efficient and unbiased advice from our in-house mortgage specialist on the best home loan with competitive interest rates across all banks suited to your needs, all without consulting other banks.
- Once you have settled on a preferred home loan package with our recommendation, our Mortgage Specialist will contact you and send the IPA application form and list of necessary documents. Documents will be submitted for you on your behalf thereafter and approval expedited for free. Only one IPA will be sent to one bank at a time.Rest assured that Ohmyhome will be doing the heavy lifting upfront and you will not need to get in touch with the bank rep personally.
- Once all is clear, you can sit back and wait to receive your IPA from the bank, which acts as a guarantee that the bank will finance your home loan. All you need to do is wait till the deal is finalised and get ready to sign the contract.
What if you are denied In-Principle Approval?
Unfortunately, being rejected for an IPA is possible, especially with a bad credit history or high Total Debt Servicing Ratio (TDSR). Instead, you will be handed an estimated maximum amount you can borrow at this stage, if the requirements for your current loan amount are not fulfilled.
Your request for an IPA will usually not be met, if the bank is unsure of your capacity to handle the financial responsibility of your targeted amount. Without an IPA, it may result in the following problems:
- You will not be able to negotiate a good price on the house
- You will have to forfeit your deposit assuming you paid your booking fee
- You are unable to effectively work out your financial planning
With a valid IPA, it will show your commitment as a buyer. Each bank may offer a slightly different max loan amount, but one IPA can sufficiently provide you a good estimate of what you can afford. As we have our mortgage service in-house, rest assured that you do not need to shop around for a bank loan as we get you the best home loan rates across all banks.
Need assistance in applying for an IPA? You can engage Ohmyhome’s experienced mortgage advisory service for free to help determine your loan eligibility before buying your dream home.