BANDAR SERI BEGAWAN
Tuesday, April 21, 2015
APPLYING for a home loan is one of the biggest decisions in a person’s lifetime as one needs to religiously commit to the payments, which can cost thousands and above per month.
As financial institutions, banks play an important role to assist an individual to achieve one’s dream home.
Unless money grows on trees, making the bigger upfront payments and completing transactions to contractors would be impossible without the help from banks.
Banks usually offer lending products to consumers and prior to applying, it is important to understand the fees involved and the amount of monthly repayments that you are going to make.
Being the largest Islamic Bank in the Sultanate, Bank Islam Brunei Darussalam (BIBD) is one of the banks opted by locals to go to for personal and business banking services.
According to Dk Rodzi Pg Hj Abd Rahman, Corporate Communications of Bank Islam Brunei Darussalam (BIBD) Berhad, the bank refers to the service as BIBD Home Financing, which can be applied by only Bruneians and Brunei permanent residents (PR).
“BIBD Home Financing is a financing platform to enable customers to acquire their dream house at an affordable and reasonable rate. BIBD offers the most comprehensive range of home financing such as construction of property; purchasing land and financing construction of property on that land; purchasing of property from developer (proposed, under construction or completed); mortgage or equity financing of an existing property; and refinancing an existing mortgage financing from the Government or other financial institutions.”
She added that applicants must be between the ages of 18 and 55 years old for non-TAP recipients and 60 years old for TAP recipients. Applicants must also be earning a fixed income and employed with the Brunei Government, semi government or private employers approved by the Bank.
Meanwhile, the documentation required from applicants includes identity card (IC); latest three months salary slip; confirmation of service (if applicable); house plan; land title deed; and quotation from vendor or letter of intent from seller.
“Our Home Specialist will provide you an indicative amount of how much you can finance. We will also help you to obtain the indicative market value of the property from our panel of valuer, propose you the options of the panel of external lawyer for the legal documentation; and also the Takaful providers for MRTA coverage. Upon submission of completed documents, your financing application will be processed and may be approved within a week,” said Dk Rodzi.
When asked if one’s monthly salary affect the financing amount that a customer applies, the BIBD officer said, “BIBD Home Financing finances according to the open market value or selling price of the property. The financing entitlement will depend on your monthly income and other financing obligations, and the final financing amount that can be applied depends on the open market value or the selling price of the property you intend to purchase.”
“BIBD provides the best financing entitlement in the market by providing of up to 100 per cent of Open Market Value or Selling price of the property, whichever is lower. We can also package the financing by including the start-up costs (of up to $15,000) of the home such as legal fees, Mortgage Reducing Term Assurance (MRTA) and valuation fees. This can help you to pay off all the related fees of the home application.”
In BIBD too, it is very rare for an HF application to be rejected.
“…Unless the customer does not entitle to the financing amount that he/she is applying or if the selling price is much higher than the open market value and the customer does not have sufficient funds to cover the balance. It is also possible for customer’s to apply for a joint financing with another applicant to acquire a property,” she concluded.
“During the discussion with our Home Specialist, customers would be informed of the eligibility and the requirements of the application. Customer’s eligibility and entitlement would depend very much on their current financial status such as their monthly income, monthly deductions or commitments such as personal financing, credit card and car financing.”
If customers are entitled based on BIBD current net income and debt service requirement, then the customers would be informed of an indicative financing entitlement for the home financing. Other factors that may affect the entitlement will be customer’s age, the remaining tenure of service, employer category, value of the property, etcetera.
Meanwhile, the increasing number of young professionals, or yuppies, considering to invest on properties is becoming a healthy trend to get more from their wages.
Zahrah Latiff, a young professional in her early 20s said, “I think it is better to start investing on properties while we are still young as we are eligible for a longer loan tenure. There is also a high chance that we get to finish the loan early, hence will give time for us to buy the second and third property!”
She added that the property can later be rented out and this is one way of earning extra income to pay for the housing loan.
Another yuppy, 25-year-old Ishmal Hadinas, advised that one should begin by assessing his income and expenses in order to figure out what repayments are affordable. Some other factors that should be taken into consideration are the interest rates and the type of lifestyle one wants to live while paying off his home loan.
“I plan to apply for a home loan, so as a general rule of thumb, I am making sure that total mortgage repayments should be no more than 30 or 40 per cent of my total gross income. This is because you will definitely have other commitments to pay later on. I also allow a buffer of around two per cent of the payment in order to protect myself in case of any emergencies.”
– The Brunei Times [click here to view article]