Understand The Home Loan Process Step-By Step

June 6, 2025
Quick Tips
2 min read

Step 1: Assess Your Financial Health

  • Check your credit score via CCRIS (Bank Negara) and CTOS for the past 12 months
  • Calculate your Debt Service Ratio (DSR) – should ideally be below 70%.
  • Ensure your income is stable and documented.
  • Know how much loan you can realistically afford.

Step 2: Choose Your Property & Make a Booking
Now that your finances are in order

  • Decide between:
  • Primary Market: Direct from developer
  • Secondary Market (Subsale): From a property owner or agent
  • Pay a booking fee (2–3%) to reserve your chosen unit.
  • Sign the Letter of Offer or Offer to Purchase.
  • You typically have 14 working days or up to 21 days to confirm sign the Sale and Purchase Agreement (SPA).
  • A land search will be conducted to verify property status.

Step 3: Apply for Your Mortgage Loan
Submit your loan application to one or more banks. Required documents:
For Salaried Individuals:

  • NRIC copy
  • Latest 3 months’ payslips
  • EPF statement
  • 3–6 months bank statements
  • S&P Agreement (if signed)
  • Employment letter (optional)
    For Self-Employed:
  • Business registration (SSM)
  • 6 months bank statements
  • Form B & tax receipts
  • Profit & Loss or audited financial reports

Step 4: Bank Processing & Property Valuation

  • The bank assesses your income, DSR, property type, and loan amount.
  • The bank will get a verbal valuation for the property (subsale) or refer to pre-approved developer projects (primary)
  • Approval typically takes 5–14 working days.

Step 5: Receive and Sign the Letter of Offer

  • Once approved, the bank issues a Letter of Offer.
  • Carefully review terms:
    • Interest rate (fixed/floating)
    • Tenure
    • Monthly installment
    • Lock-in period (early settlement penalty)Sign and return the letter to confirm your loan acceptance.

Step 6: Legal Documentation & Further Payments

  • Sign the Sale and Purchase Agreement (SPA)
  • Appoint a lawyer (bank panel lawyers are common).
  • Sign key documents:
    • Loan Agreement
    • Deed of Assignment / Charge Document (depending on property type)
  • Pay remaining down payment (usually 7%, after booking fee to make up 10% total).
  • Settle the legal fees, stamp duties, and other charges such as:
    • Legal fees (For SPA and loan agreement)
    • Stamp duty (For SPA, loan agreement, Memorandum Of Transfer (MOT)
    • Valuation fee (bank valuation of property)
    • MRTA (Mortgage Reducing Term Assurance)/ MLTA

Step 7: Loan Disbursement

  • Once all documents are signed:
    • The bank will disburse loan funds in stages to the seller or developer.
  • Timeline:
    • Full loan disbursement must be completed within 3 months + 1-month grace.
      -3 months use to settle the remaining amount
    • If delayed beyond 3 months, an 8-10% will be charged.
    • If payment is not completed within 4 months, the whole dealing will be called off.

Step 8: Collect Your Keys

  • After full disbursement, you’ll receive the keys to your new property!
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