First Step Before Buying a House
Easy way to buy a house
This information can help you to buy / own a house by using mortgage loans (mortgage). The right and the best way is directly contact with mortgage lender. Mortgage is a complex transaction, and mortgage lender is the right place to be asked. So, please do not hesitate to ask them. They Consumers Service units will be happy to help. They will help to predict the size of mortgage that suit to your financial capabilities, to not “Large pegs than the pole”. By being aware of the financial capability first, finding a dream house will be more focused.
Tips to choose the mortgage lender
To be known that the mortgage lender is your friend! Not just a place to borrow money. You will be dealing with it for a long period of time, which is period of mortgage. And this is not a short time. Therefore you should be able to choose the mortgage lender that can make you feel comfortable and you must be sure of your choice.
List the names of the mortgage lender. Ask some friends about their experiences dealing with your friends. Look for information from newspapers or magazines about the mortgage products they offered.
Meet customer service unit from several mortgage lender. Convey your wishes and expectations. Compare services from one and another in answering your question. You can certainly feel the difference of how they serve you.
Mortgage is a complex transaction, but mortgage lender who experienced and uphold business ethics and service, will be able to explain the good and less pleasant in the mortgage process.
Start by visiting several mortgage lender
Each of the mortgage lender have different products and mortgage policies. Therefore, you need to compare mortgage products and services provided by them, before making your choices:
The important things that you should consider in selecting the mortgage lender are: (1) mortgage products, which in accordance with your abilities. (2) Services, which can provide a sense of comfort.
With a mortgage product that suit with the ability, you have avoid potential problems in the future. Service is important, because you will be dealing with them during the period of mortgage, for quite a long period of time.
Important information that should be obtained from the mortgage lender
Estimated the size of mortgage
Once you explain amount of your income / wife or husband, then generally the mortgage lender can provide an estimation size of the mortgages that you can get.
It is important to be known, that the amount of the estimated size of mortgages is uncertain and are still subject to change. Surely number of mortgages, will be listed in the letter of credit after you officially submit the mortgage application.
Mortgage lender providing installment table (example attached). You can ask them how to read the table so that you can understand how to use it.
Estimated price of affordable homes
If you already know the estimated size of mortgages and reinforced with an estimated amount of down payment you can provide, then home prices accordance with the ability can be calculated.
List the name and location of developers
Mortgage lender already has a list of residential locations that can be financed following with developers name and type of house prices in these locations. You can obtain this information to facilitate you in finding the house of choice.
Estimated cost of mortgages
If you already know the estimated amount of the mortgage and the estimated price of the house, then you can also ask for the amount of the estimated cost of the mortgage. Thus you can find out what are the estimated funds are supposed to provide beside the down payment.
Mortgage cost generally including costs of notaries, PPAT deed of sale, deed of loan agreement, deed of installation mounting mortgage, insurance premiums, fees, administrative costs and the cost of the house assessment.
List of required documents
The mortgages lenders have provided a list of documents/data required as a completeness of mortgage application, which will be given to you.
What other benefits by visiting the mortgage lender first?
By visiting the mortgage lenders first, after knowing your financial capability, you do not need to waste time to look at price of the house that beyond your capabilities.
The home search process will be easier
With an estimate on the amount of the mortgage and the amount of down payment, then you have to start looking for a home by visiting a residential location.
You need to explain to the developers about the estimated amount of mortgages that you will earn and also the amount of down payment that you can provide. Thus it will be easier for developers to offer a house that suit with your capability.
Then you/developer can submit the completeness data of your house of choice to the mortgage lender for further process.
HOW TO SELECT MORTGAGE PRODUCT AND A HOUSE
Choosing a mortgage product that suit with the capability
Buying a house by using mortgage could be the greatest deals and the most complicated transaction. Availability of various types of mortgages, can make you get confused. However, variety of offers, can also mean as an opportunities to choose, as long as you know what you are looking for and how to get it. The following information will help you to choose the right mortgage.
Tips for choosing a mortgage product
The most easy way is to compare the amount of installment mortgages offered by several mortgage lender. With the same mortgage amount, the same time period, you can find out which lender that offer mortgages with smaller installments.
Comparisons should not be made to the interest rate, because it could have the same interest rate, and the same amount of mortgage, but different ammount of installments
The fixed or not fixed of interest rate
Fixed interest rate or fixed. With a fixed interest rate, the mortgage installments do not change during the mortgage. Make sure the validity period of the fixed rate. The mortgage lender generally offer a fixed rate mortgage for a certain time, after that floating rate will be apply.
The not fixed interest rate or floating, it means that interest rate can change depending on market interest turmoil. Usually the floating rate is lower than a fixed rate. If the mortgage lender offering floating rate, then when the market rates down, mortgage rates offered to the public will also be dropped. And vice versa. When market interest rises, mortgage rates go up.
Sometimes the mortgage lender offering mortgage products “fixed installments” which can lead to longer or shorter mortgage period.
Mortgages with fixed installments, it means that the number of mortgage installments paid every month will be fixed, but mortgage term could change, longer or shorter, depending on fluctuations in market interest rates.
The changes in interest rate
Each mortgage lender has a different policy of channeling mortgages on changes in interest rates. You should ask if they have the right to change the interest rate at any time or based on criteria / or certain benchmarks.
You also need to ask, if there’s a decrease in mortgage interest, whether this reduction will also apply to mortgage that have already disbursed in advance. Sometimes, if the interest rate goes down, then the new interest rate only applies to new customers and do not apply to mortgage borrowers who already have mortgage. Make sure that the conditions listed in the loan agreement.
Declining the rest of mortgage installment due
Installment payments you make every month, consists of the principal components that will reduce the remaining mortgage and the interest component is going to be the income of mortgage lenders. In the early period of the mortgage, the interest component will be greater than the principal and interest components will be increased until the mortgage is paid off.
There is a bank that calculates a decline of outstanding mortgage each month upon receipt of the monthly installment payments. There is also bank who calculates the reductions of the outstanding mortgage annualy after receiving 12 times installments. How to tell the differences is that the reduction of monthly installments is smaller than the reduction of annually installment even though the amount of the interest rates are the same.
Mortgage lenders generally gives you the opportunity to pay off the mortgage before his time with certain conditions.
Mortgage costs including the cost of the assessment, the costs of notary, deed of sale and purchase PPAT, deed of credit agreement, registration of a mortgage deed, fire insurance premiums, credit life insurance premium, etc. Mortgage costs must be paid before the credit agreement.
The things that would be considered by mortgage lenders
Most people feel frightened contact mortgage lender because felt worried that if the application of their mortgage will be rejected. In fact, the institution will find the best way to be able to provide mortgage fit in with the ability, because it is their business. In the process of mortgage application, they want to know :
Income and expenditure
They want to know how much income, source of income and how far stability of your income. If you have income than salaries, or wife/husband also have income, you should tell so that they can extrapolate this extra money in the stability of your income.
They also want to know your expenses, including long-term loans such as installment loans on motor vehicles, electronic equipment as well as the ways and habits of using credit cards.
Discipline pay debts
They want to know your level of discipline in returning mortgage loan. If you ever have any problem in payment of debts in the past, you should discuss this openly with them to submit the required evidence. With this transparancy, most likely there is nothing to worry about.
Habit in saving
They want to know how your habits of saving and managing those savings.
The assessment of the house
They will also consider the result of assesment over the house follows with the land that will become as collateral of mortgage. The assessment was carried out on house that are ready for habitation. Assessment results can be greater than the sale price, or less than or equal to the selling price.
The amount of down payment depens on the policies of mortgage lender regarding the maximum mortgage loan that can be given, and the results of assessment of the House and land to be purchased.
Example: if you are eligible to get a mortgage for Rp.21 million and want to buy a house worth Rp.30juta while KPT maximum that can be awarded is 70%, how much down payment do you have to provide? Is Rp.9 million? Not necessarily, whichever is the lower between selling price and the assessment results. Let us consider the following example calculation:
If the results of the assessment is Rp 28 million despite selling price Rp.30 million, then the amount of the mortgage is Rp.19,6 million (70% x Rp 28 million). Means you must provide a down payment of Rp 10, 4 million (Rp.30 – Rp.19,6 million)
If the result of assessment is Rp.35 million despite the selling price Rp.30 million, the amount of the mortgage is Rp.21juta (70% x Rp.30juta) means you simply provide down payment in amount of Rp.9 million (Rp.30juta – Rp.21juta).
For more details, you can look an advice from customer service unit of mortgage lenders if you are dealing problems of down payment.
Tips for choosing a house
The things you need to consider when choosing a house:
The distance of the location of residential with workplace or family residence; flood-free location; is there any Channel High Voltage PLN, how far the distance to the location of residential.
The availability of adequate transportation facilities.
Environmental infrastructure such as traditional markets, supermarkets, schools, places of worship, health centers, hospitals and others.
Environments facilities including drain dirty water at the location, availability of electricity, clean water and telephone network.
Quality construction including drain dirty water, clean water installations and also septic tank and the absortion area.
For the former house, then check:
Taxes (Land and Building Tax)
PLN, PAM, Phone bill,
power meter, etc.
Submission of mortgage application
Mortgage application submission process can be an experience as the most complex financial transactions. It is reasonable if the impression that occurs is that as if mortgage lenders want to know all things about yourself and your financial circumstances. Indeed, you do not need to tell the whole aspect of life, but not impossible in some situations, the mortgage lenders felt the need to ask about it.
Generally, which wanted to be known among others are the personal identification aspect, occupational, financial and information about the house that you are going to buy. Therefore prepare a complete document related to these three things.
Properly prepare all necessary documents completely
The best way to get mortgage application submission process easier and faster is to prepare all documents of you and your wife/husband. Generally the mortgages lenders have provided a list of what documents you need to prepare, including:
Letter of identity such as ID card, driver’s license, your passport and your wife / husband
Letter of marriage (for those who are married)
Education and employment history
Proof of income
Sale and purchase binding agreement with the developer/seller
Proof of down payment
The loan agreement if you have other loans.
What will be done to your mortgage aplication ?
For you, submit mortgage applications would be a big step. But for the mortgage lenders, this is just the first step. Application, along with the all data and supporting documents, will begin to be processed by outline stages as follows:
Verification is a process of re-examination for the righteousness of data and information provided, including re-examination of the related parties. If the information provided was different from the results of the verification, then the mortgage lenders will resolve the difference matter first before the process continued. Therefore, it is important before the process continued. Therefore it is important to provide correct information, true and accurate.
Risk analysis stage
Credit analysis officer, will analyse the application and the result of verification. This is where all the information will be reviewed and taken into consideration, especially regarding with the data about income, expenses, assets and financial obligations.
Mortgage decision stage
Results of the risk analysis and the recommendations will be sent to the competent authorities for decision whether the mortgage application are approved or rejected. Each mortgage lenders have different standard mortgage policy. Your application may be rejected, but approved by other mortgage lender.
How long does the process of mortgage decision issuance ?
Waiting time from submission of application until the issuance of the decision, are the most worrying.
The length of time of the process are different from one mortgage lenders to the other. Sometimes the length process issuance of the decision caused by something beyond mortgage lender ability such as the verification process.
If you provide complete and accurate information, it means that you have helped to accelerate the application process.
You shouldn’t get upset, if after waiting, turns out there’s still a requested data or information. It can be happen because mortgage lender desperately need additional information and would like to help you. Asked for extra information is not a thing that needs to be feared.
If you’re traveling, you must always be prepared to be contacted. If you want to find out to which process your application are, you may contact the mortgage lender. But keep in mind that the mortgage process takes time, calling each time will not accelerate the process.
If your mortgage application is approved, you will be notified by letter of credit decisions.
Generally, letters of credit decisions given in two duplicate; original sheet is for you and a copy or photo copy is returned to the mortgage lender after you signed. Along with the letter of credit decisions, generally you will be informed about the certainty of the mortgage cost that must be paid off prior credit agreement executed.
Generally, the mortgage lender also inform you about what documents that you should bring and who should attend at credit agreement.
If the mortgage application is rejected, then the rejection will be notified in written notice.