1. When should I start applying for a bank loan?
It is advisable for the Purchaser to apply for a bank loan once the booking form/ sale and purchase agreement has been signed to prevent potential delay on the transaction later on.
2. Who should bear the legal fee of the bank loan documentations?
The Purchaser would be paying for the legal fees of bank loan documentations.
3. What are the fees that I should pay in advance to my bank before the bank loan is released to the vendor?
The borrower should pay for the valuation fees chargeable by the valuer assigned by the bank of the subject property so that a valuation report can be produced before the bank could release the bank loan to the vendor.
4. What would happen to my property if I have defaulted in the payment of the installment to the bank?
The bank would proceed to serve a notice of demand to the Borrower. In the event there is no response from the Borrower, the Bank would proceed to initiate necessary legal action such as auction of the property to recover the payment in arrears.
5. What is MRTA?
Mortgage Reducing Term Assurance (MRTA) is also frequently referred to Mortgage Life Assurance. MRTA provides for full settlement of the outstanding balance of the housing loan with the financial institution, in the event of TPD also known as total permanent disability or death of the borrower.
6. What kind of security does the bank want for me to obtain a bank loan?
For property with title, the Bank would register a bank Charge on the property to secure the bank’s interests. The original title of the property would be retained by the Bank until the property is fully discharged.
For property without title, the Bank would require a deed of assignment as well as a power of attorney to assign the rights of the purchaser to the Bank as a security. The perfection of charge would then take place once the title of the property has been issued by the land office.
The Bank would also execute a Facilities Agreement with the Borrower to secure their interests.
7. I would like to discharge my property to transfer the property to a third party, what can I do to discharge myself from the loan?
You may engage a solicitor to discharge the property by executing a Form 16N in order to redeem the original title from the Bank. The whole process would take around 1-3 months to complete.
8. I would like to borrow money from the bank under the name of a company, do I charge the property under my individual name? Is it necessary for the directors to be the guarantor for the bank loan?
You may choose to enter a first party charge or a third party charge. In the event it is a first party charge, the charge would be under the name of the company. A third party charge is a charge registered under the name of individuals other than the Borrower, eg. the Directors of the company.
More often than not, the Bank would also require the Directors of the company to be the personal guarantor for the repayment of the loan amount, in the event the company has defaulted in paying for the installment of the property.