So what after the signing of the Sales and Purchase Agreement? Time to find ways to finance it, right?

No! Utterly wrong! Though there’s no hard and fast rules, but this is one mistake you could make, based on our experience. And this is THE mistake we almost committed.

Why?

Because by the time you have signed the Sales and Purchase Agreement, the clock has started ticking. You have limited time (how much, partner please help me to fill in) to get the method of financing in order.

And if you do not manage to secure a loan from any banks and when the first drawdown, meaning the developer is asking for money, you are liable to pay the interest of usually (how much again partner… hehee).

Usually, if you have a clean financial record and have a good relationship with all banks, the likelihood of you not being able to secure a loan is rather low.

Let me share with you the mistake we made.

After putting down the booking fee for the house, we went shopping for home loans, which is a correct thing to do. But the uncertainty we had was that we did not know when is the signing of the Sales and Purchase Agreement, as the developer was yet to receive their developer’s licence.

It was about 5 months wait, before we received a call asking us to sign the Sales and Purchase Agreement in 2 weeks’ time.

What went wrong was that, during the 5 months, after the initial hype of looking for a home loan and finally narrowing down to two banks, we did not sign any offer letter, despite one bank having generated one for us. We did not know that the offer letter will lapse if we do not sign it and thus making the offer invalid.

And so, after the lapse, we still continued to wait for news on the Sales and Purchase Agreement signing.

What we should have done was that, during that period of time, continue to monitor the banks for better offer on home loans and promotions given out. At the same time, find out the panel lawyers for both the banks and the developer. This information will come in handy when you need to decide on which lawyer to take.

Even though the uncertainty of a date for the signing of SnP was a challenge, we should have still decided on the bank we want to take home loan from, and then to generate the offer letter and sign it, meaning locking in the competitive interest rates. This way, makes it easier for you to decide on the lawyers.

Choose a lawyer who can handle both the SnP and the loan documentation, meaning the lawyer can represent both the developer and the bank. There’s always the option of using an outside lawyer, which could be to your advantage as well. More analysis on this in the coming posts.

So, our advise, based on our own experience (disclaimer: use this with your own discretion. Owner of the blog is not responsible to any loss incurred from using this advice.) to be on the safe side, to start shopping for home loans from all banks from the day you put down the booking fee.

Better still, secure an offer letter from the bank, a letter which states how much is the interest rate the bank is willing to offer to you, based on the buying price and the type of property.

But, be aware that if you do not sign the offer letter, it will lapse after a few days to 2 weeks, depending on banks. And once it lapses, you would have to submit an application for loan all over again through the banker.

And the banker would have to get approval from the headquarters again. The disadvantage to this is that you have to endure the paper work and getting documents in order again - hassle and inconvenience.

But again, do take note also that the rates on home loans are very competitive. The rates offered by a bank can vary within months, maybe even weeks! One advantage of securing a deal after the signing of Sales and Purchase Agreement is that you might get better rates for your home loan.

And yet again, there’s the risk of time running out. So you have to weigh the pros and cons.

Look out for the nutshell steps to what you should do when you buy a new house in the next post.