Buying property is a major commitment, and small oversights can raise costs for years. Preparing properly helps you qualify smoothly and borrow on terms that match your needs. This guide highlights seven mistakes to avoid so your application for a housing loan stands up to scrutiny and your repayments stay predictable across market cycles. Treat each point as a short checklist you can complete before you submit documents.
1. Applying With An Untested Credit Profile
Banks price and approve based on your track record. Pull a credit report and correct errors well before you apply. Clear small balances and avoid new unsecured borrowing that can signal strain. Keep credit utilisation low and maintain prompt payments for at least three months. When the file is clean and stable, your chance of securing a competitive housing loan rises, and the assessment moves faster.
2. Ignoring Income Stability And Total Debt Servicing
Your payslips tell one story, but lenders also read year-to-date totals, variable pay patterns, and any side income you declare. Map all monthly liabilities to confirm you meet the Total Debt Servicing Ratio after you add the mortgage. If income is lumpy, request a longer income lookback from HR or provide past tax notices that show consistency. This preparation supports a realistic housing loan size and avoids late surprises.
3. Choosing Tenure Without A Repayment Plan
Longer tenures cut instalments but increase interest paid. Shorter tenures save interest but can squeeze cash flow. Test scenarios with buffers for rate rises and life events. Aim for a payment you can meet even during tighter months, then plan optional prepayments when bonuses land. A clear plan shows discipline and helps you pick a structure that fits rather than stretches your budget.
4. Focusing On Headline Rates And Missing Structure
The lowest advertised rate is not always the cheapest over time. Compare fixed, floating, and hybrid options over the lock-in and review periods. Note how often the reference rate resets and how margins step up after the promotional window. Ask for the cost over three, five, and seven years to see the real difference. A carefully structured housing loan reduces the risk of payment shocks when markets move.
5. Overlooking Fees, Legal Costs, And Insurance
Processing fees, legal charges, valuation, fire coverage, and mortgage insurance can add a meaningful sum to your outlay. Some costs are paid upfront, others are capitalised. Request an itemised schedule and check if legal panels are mandatory. Compare the total cost of borrowing rather than just the rate. A complete view prevents you from locking into a housing loan that looks cheap at first glance but proves expensive in practice.
6. Skipping Valuation Homework And Ltv Math
The bank lends against the lower of the purchase price and appraised value. If the valuation comes in short, you must top up with cash. Review recent transactions for the same development and stack, then budget a buffer for a conservative appraisal. Confirm loan-to-value limits based on your existing mortgages and age. Doing the numbers early protects timelines and avoids renegotiation under pressure.
7. Waiting Too Long To Plan Prepayment And Refinancing
You can save thousands by planning ahead. Mark your lock-in end date and set calendar reminders six months before it. Track break fees and partial prepayment rules so you can reduce principal during the term. Keep a small file with income proofs and statements ready for a quick review. A simple strategy ensures your housing loan stays efficient across changing rates and personal milestones.
Conclusion
Good preparation turns a complex process into a manageable set of steps. Clean your credit file, prove stable income, pick a tenure that fits your cash flow, and compare full-period costs rather than teaser rates. Add a clear view of fees, valuation, and prepayment rules, and you will borrow with confidence and control.
Speak with RHB Bank to review scenarios, compare structures, and lock in a housing loan package that aligns with your plans and budget.
