Securing a housing loan is a significant step towards owning your dream home. As an employed individual, figuring out all the documents and the loan application process might feel overwhelming. However, understand what you need and get your documents ready, it can make the process much easier.

Firstly, it's important to understand that there are upfront costs associated with buying a property, including a 10% down payment, SPA fees, stamp duty, and legal fees, among others. A housing loan can help cover these expenses and make your homeownership dreams a reality. But before you start applying the housing loan application, do remember that you'll need to compile and submit several standard documents to the bank. These documents serve as evidence of your stability and capability to manage loan repayments, ensuring a smooth and straightforward application process.

For employed individuals, the documentation process is relatively straightforward but requires attention to detail to avoid complications and unnecessary delays. In this article, we'll outline the essential documents required for a housing loan, specifically tailored for employed individuals in simple and easy-to-understand terms.

 

Essential Housing Loan Documents You Need

Identification Documents

For a smooth housing loan application process, it's essential to provide clear copies of your National Identity Card (NRIC) or Passport. These copies should feature both the front and back with all updated particulars.

We highly recommend preparing an extra copy of your I.C. to preempt any potential delays during the application process. This redundancy ensures you have a backup in case of unforeseen circumstances. Ensure the details on your ID card match those on your other documents to avoid mix-ups or problems during the application process.

Besides your NRIC or Passport, you can also include your PERKESO Card. This additional document helps prove your employment status and streamlines the loan application process.

 

Proof of Income

Your payslip stands as the primary document reflecting your monthly earnings, encompassing both your basic salary and any additional allowances you receive either fixed allowance. By providing the bank your payslip offers a glimpse into your financial stability and income level. or variable allowance.

Fixed Allowance:

• These are disbursed monthly, with a consistent amount received each month
• Examples include travel and mobile allowances

Variable Allowance:

• Distributed monthly, but the amounts fluctuate
• Types of variable allowances may include overtime pay

Lenders seek assurance of a stable income stream to ensure your ability to repay the loan. This assurance is often established through an Employment Letter from your employer, detailing your job position, length of employment, and monthly income. Another important document is your Employee Provident Fund (EPF) statement,  illustrating your savings for the future.

It's important to note that banks prefer steady, predictable income patterns. Therefore, maintaining a consistent earning stream is paramount. A helpful tip is to ensure you possess payslips from the previous six months. This extended timeframe allows the bank to observe the stability of your income over a substantial period, increasing the likelihood of loan approval.

 

EPF Contribution

When it comes to securing a housing loan, your EPF contributions play a crucial role, as they are mandatory under Malaysian labor law. Employers are obligated to adhere to minimum contribution percentages for both employees and employers. It's imperative to ensure that your EPF contributions are consistently paid on time and accurately. Any discrepancies in these contributions can potentially impede the loan application process.

To ensure that your EPF contributions are in order, you can conveniently check them online. This proactive approach helps preempt potential issues that could arise from delayed or inaccurate payments.

It's not uncommon for companies to encounter challenges in meeting EPF payment obligations, including delays or incorrect amounts. Therefore, it's essential to address any discrepancies promptly to avoid complications during the loan application process.

Additionally, understanding the components of your pay that contribute to EPF is beneficial. While basic salary typically forms the basis, it may also include other allowances or commissions, albeit subject to certain criteria.

 

Bank Statements

Bank statements serve as vital documents in the assessment process for housing loan applications. Typically, your salaries are directly credited into your bank accounts by your employers. 

However, what if you receive payments through alternative methods such as cheques, cash, or from a third party? Here's how to navigate these scenarios effectively:

1. Credited by the company (normal method):
   • Ensure that the credited amount aligns with your payslip. If discrepancies arise, promptly clarify with HR or Accounts and rectify them before submitting your application to the bank.
2. Cash:
   • It's advisable to avoid cash payments whenever possible, as they are often considered unverifiable by banks and may not be recognized as valid income sources.
3. Cheque:
   • Keep copies of your cheques as proof of payment. Ensure that the credited amount matches your payslip precisely. Try to deposit them into the same account to simplify documentation for your loan application.
4. Third-party company:
   • This situation commonly occurs in small businesses where the company uses the owner's personal account. However, it may complicate your loan application as proving ownership can be challenging. Ensure that your bank statement reflects the correct, registered name of your employer.
5. Large corporations and groups of companies:
   • If you receive your salary from a different entity within the same group of companies, it's crucial to provide clarification to the bank. Request a letter from HR or provide evidence from your company's website to demonstrate the relationship between the entities.

Additionally, you need to pay attention to allowances, commissions, and claims that may be paid separately from your monthly salary. Ensure that you receive proof of payment in the form of vouchers or slips, with figures matching your bank statement. 

Even if you receive payments by weekly, adhering to these practices and maintaining transparency with your financial records will facilitate a smoother loan application process.

Remember, bank statements are essential for demonstrating your financial stability and credibility. Resolving any discrepancies promptly and ensuring transparency in your financial transactions will strengthen your loan application.

 

These essential documents are vital for initiating a housing loan application and play a pivotal role in realizing your dream of owning a home. However, if you're self-employed or part of the gig economy, your documentation requirements may differ to accommodate your unique employment situation.

By compiling and organizing the necessary documents as outlined in this checklist, you can expedite the housing loan application process and increase your chances of securing financing for your dream home. Remember to consult with your lender or financial advisor for any specific requirements or additional documentation needed to complete the application successfully.

With the right preparation and documentation, you'll be one step closer to turning your homeownership dreams into reality!

 

Relevant Article:

• Your Ultimate Guide to Buying Property: Tips, Insights and Expert Advice
• Discover Property for Sale in Malaysia
• Financial Planning with Our Housing Loan Calculator Malaysia