In Malaysia, the overall housing loan approval rate in 1H 2021 was 73.2% (which is considered pretty high), except for properties priced above RM1 million.

If your application for a home loan has been rejected before, or you are planning to apply for a housing loan for own-stay or property investment, here are five simple tips you can follow to increase your chances of getting your home loan application approved:

1. Submit the right documents

Make sure you submit all your income-related properties in order to show that you are capable of repaying your loan. If you have multiple sources of income such as from property rental and your full-time job, do attach them in the application form. Make sure the application form is also filled up correctly such as your house address, employer’s details, and NRIC; additional referrals will also go a long way.

2. Have a healthy credit and track record

The bank can trace your credit report via your CCRIS report where they can see information such as your outstanding credit, application for credit and special attention accounts. You can obtain your CCRIS report online or request from the financial institution itself. Thus, always make sure you pay off your outstanding debts promptly. Banks also use the CTOS report where information from you are compiled across different channels such as the Malaysian Department of Insolvency (MDI), Registrar of Societies (ROS), Companies Commission of Malaysia (CCM) where they can trace information such as whether anyone has taken legal action against you, your holdings in incorporated companies and etc.

3. Understand your Debt-to-Service Ratio (DSR)

Banks use a Debt-to-Service Ratio (DSR) to determine whether or not you can afford the loan that you’re applying for. Start reducing your large debts so that you have an ideal DSR range. All your monthly commitments are traceable via the Central Credit Reference Information System (CCRIS) report. Even study loans like the National Higher Education Fund Corp or PTPTN are captured.

4. A good employment record

A good employment record gives more confidence to the banks and shows that you are able to pay your loan. The banks can also see that you have a healthy EPF contribution and continuity of your employment and how long you’ve worked with an employer is an important factor in the approval process.

5. Have at least ONE credit record

Having a credit record – be it a credit card, car loan, home loan, PTPTN, etc – shows that you are a good paymaster if you service your loans on time. If you have no records at all, it is difficult for the bank to know whether you are paying your loans on time as there are no past records for them to refer to. A tip would also include utilizing one of the banking facilities of the bank you are applying for a loan from such as a fixed deposit account or savings account to instill a higher confidence level in your lender.

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