Finding a first home loan that best suits your needs is always different from one person to another. When it comes to getting a home loan, the process of choosing it from a bank can be complicated. With more than 35 commercial banksoperating in Cambodia, it takes time to find the best home loan offer. Before deciding to borrow from any bank, it is recommended that you be aware of some crucial tips to avoid any frustration down the line.
Below are a few necessary tips for you first time home loan borrower to know before choosing a particular bank, thanks to Realestate.com.kh:
Loan Limitations:
The volume of loan size depends on how much you can earn and your ability to finance your dream home through a loan. Loan limitation can vary from one person to another.
Normally, banks allow you to borrow only 70 percent of the total property value. Depending on your financial status and capabilities, different lenders will be able to provide you with different loan packages.
Legal Documents:
Before applying for a home loan, initially you need to check what documents and information you need to prepare before you apply.
In order to get the banks approval for a home loan, you need to have a set of legal documents including: collateral equivalent to the loan value, a salary confirmation letter, a valid identity card. and the information of your guarantors.
Sometimes a guarantor is not required if the bank finds that you are qualified enough to handle the loan yourself - the bank will consider your access to capital, character, collateral, and other indicators that show your capacity to return the payment.
Repayment Term:
Variations in loan terms and interest rates will affect how much your repayments will be. In general, banks offer three options for home loan repayment: 1: 3 month payment interest upfront; 2: interest payment with fixed principal; 3: and interest payment with variable principal.
The loan payment term can be up to 20 years, depending on your agreement with the bank. But if you want to change your payment options by paying before the schedule of the agreed term, you will be fined 3 percent for your remaining principal - so be careful that you understand each option clearly before your agree to any terms!
Loan Processing:
Processing a loan application can be very time consuming and requires a lot of paperwork and supporting documentation on the part of the borrower. When you request for a home loan, first the bank will do pre-qualification check - then after it finds out that you are qualified, you need to think about the loan program and interest rate that suits you best (and the bank agrees with).
After the loan application is submitted to the bank, the loan processing starts. And the underwriting document is sent for loan approval. Once the loan is approved, the document is transferred to the closing and funding department and borrower will sign the loan documentation.
The duration of processing the loan can take a short or long time. If the borrower uses an existing hard title as collateral, it will take a shorter time than using the home you intend to purchase as collateral. This is because, if using the home which is being bought as the collateral, it will take some time awaiting the transfer of full ownership of the title to the new owner at cadastral office, which can take up to 14 weeks.
Need a home loan calculator? Check out Realestate.com.kh's clever finance calculators, and weigh up your next loan!
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