Friday, August 3, 2012

Mortgage Application - Market Value of the Property

One of the most important factor in a mortgage application, if the borrower need to get maximum loan, is the OMV (Open Market Value) accepted by the bank.

If seller asking for RM300,000 but the OMV by panel valuer (of the bank that the borrower want to get a max loan of 90%) is only RM250,000, then, the borrower will need to pay very large deposit from own money, i.e. RM300,000 - RM225,000 = RM75,000.

Bank only lends based on OMV, i.e. 90% x RM250,000 = RM225,000

Unless the buyer is prepared with RM75,000 ++ (other expenses like legal fee, Sale & Purchase Agreement stamp duty etc), the buyer will face a serious problem if he/she made the 2% or even 10% downpayment yet can't secure a loan to meet the balance payment.

Therefore, using an experienced mortgage consultant is important to eliminate possible problems.