Updated: May 8, 2020
Why Is Getting An In Principle Approval (IPA) for Your Home Loan From The Bank Important Before Committing Into Any Home Purchase?
is a non-binding pre-approved home loan by financial institutes to determine your borrowing capacity. It allows future home buyers to know how much they can loan to make a purchase for a house before signing the papers to purchase one. IPA typically lasts for 30 days after it is granted. Before the ‘expiry date’, the bank will offer an indicative that they will loan you a sum of money for your home purchase. However, the actual amount might differ slightly from the stated amount on IPA after the bank thoroughly review at the borrower’s credit history and finance wellbeing. With an IPA, purchasing a house will be a much smoother journey – here’s why:
Property agents can help to negotiate on the price of the house and settle the paperwork which might be confusing to some. With an IPA on hand, agents will be more willing to accept you as a client as there will be lesser hassle and the probability of you closing the deal is much higher. Adding on, agents and sellers will deem that you are more sincere in making a purchase since you have already gone on the extra mile to get an IPA from a bank.
An estimation of the home loan amount can aid in financial planning. After deducting the necessary expenses, the remaining amount can help both you and the property agent to find a suitable house which you can afford. This will help to narrow down the houses that you can afford too.
In the event where there is spare cash left, you can consider putting it into a savings account. Considering whether to use to use the spare cash to repay your loan? Here’s why you should not.
After setting your eyes on your dream house and proceeding on to get a loan from the bank, you will see that your loan is being approved much faster when you have an IPA. This is because the bank has already looked through your basic financial information. For properties that only offers a discounted price for a limited time, this will prove to be useful.
Without an IPA, you will be left to worry about how much loan you can get. If you saw your dream home, you might hesitate to sign it as you’re uncertain of your ability to pay for it. However, if you have an IPA, you will be able to know your financial capabilities and will be able to decide if you want the house or not.
In order to ensure that the house will not be sold to anyone else, a deposit is needed. Betting on the chances that a bank will loan you the amount to purchase a home is definitely not a wise choice. A better option will be to get an IPA. This will guarantee that your deposit will not be forfeited.
Contact Mortgage Consultancy now to get the smartest financial bank loan advice specifically for your home. We are able to provide more than 100 loan packages from 16 banks for you to compare and choose from! Feel free to contact us at +65 8556 5271 so that we will be able to help you make an informed decision, suited to your needs.