Are you planning to buy a house or apartment in Malaysia but you’re self-employed? These tips may help you secure a home loan.
Buying a property in Malaysia can be a challenge if you’re self employed. Many banks in Malaysia are making the assumption that self-employed people or freelances are high risks and may not be able to service their loans.
However, if you’re able to do the following, you will increase the chances of securing a home loan. Mind you that these tips are solely based on my own experience and should be used for reference only.
1. Identify Your Budget
First of all, you must know your budget and your financial capability. There are a lot of costs involved when you make the purchase especially the down payment, stamping fees etc. If you do know the roughly how much you earn a month that will give you an indicator on how much you’re able to pay a month. Knowing the average is even better because you can create a pay slip as stated in point number 7 below. This useful loan calculator will give you some ideas on your monthly repayment.
2. Register Your Business
It’s extremely important that you register your business as this is to show that you have a legit business. It’s extremely fast to register your business at Suruhanjaya Syarikat Malaysa (SSM). If you’re in the Klang Valley, they have branches in KL Sentral and Putrajaya.
3. Create an Income Tax Account
If you’ve been employed before, you should have your Income Tax account already. Otherwise, simply head to the nearest LHDN office and register yourself for an income tax account.
4. Get a Current Account
I’ve read somewhere before that banks will give serious consideration for individuals who have a current account compared to just an ordinary savings account. Regardless of what type of account you have, any income from your business must be deposited to your bank account.
Some banks have a silly calculation of calculating the income that goes into your account as gross income even if it’s a nett income so please be sure to let the bank know. Bank will need to see your income for at least 3 months and they may ask for up to 6 months.
5. Other Proof of Income
Do you have income from other sources such as rentals, ASB, fixed deposit or any other side income? Make sure you that you can prove it by banking in the income to your bank account. If you run an online business like me, be sure to show all the income proof such as the one from Google Adsense, PayPal or any online payment system that you use.
6. Good Credit Rating
This basically means you consistently pay all your loans or credit cards on time. If you have credit cards be sure not to maintain a healthy level and try your best to avoid the credit limit. Pay as much as possible and the fewer credit cards you have, the better.
7. Create Your Own Pay Slip
Even if you’re the only one running your business, some banks may want to see that you’re actually getting paid each month. It’s advisable that your do a proper pay slip for yourself, and make sure that your salary is reflected on your bank account. The pay slip must indicate the company name, amount paid, commission, overtime, benefits, company stamps etc.
I went through many obstacles and challenges before I was able to get a home loan for my first ever property in Malaysia. It’s absolutely crucial that you don’t blindly submit a home loan application. I hope these tips are useful and will help you secure a home loan in Malaysia. Don’t delay when buying a property because the best time to buy is today!
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