What Is High Margin Housing Loan?
If you plan on purchasing a home, then the goal is to get approved for the largest amount on the loan as you possibly can right? You would want this because it would mean not having to pay as much out of pocket. It would mean you having more money on hand in order to take care of moving expenses or any other expense related to purchasing a home. The perfect option for you in this case might be what is called a high margin housing loan?
Now we just spoke of moving related expenses. A high margin housing loan can enable you to build some of these expenses into it. What this would do is offset your out of pocket cost even more, although it would lead to a bigger level of debt. If the key is getting access to the home you want, then you can’t go wrong here.
A high margin housing loan is simply you being able to get a high loan to value ratio for the property you’re looking to purchase. The margin is shown as a percentage of a property’s value. The smaller the margin of financing is, then the higher the equity usually is with a property. You might be able to get a high margin loan that can go all the way up to 95% in some cases. Just understand that this is going to be based on several factors. Here are a few of them:
- The specific type of property you’re looking at getting into
- Where the property is located, because this will certain impact its value
- How old a borrower is, because age plays a part in financial trustworthiness to a lot of banks
- How much income a borrower is bringing in on a consistent basis
- Your risk profile in terms of how much risk would a bank is taking on with you.
- Your debt servicing ratio, meaning the amount of money you spend each month versus how much you make.
Won’t every bank be willing to provide you with the same level of financing?
With a high margin housing loan the amount you can get is going to differ from bank to bank. Yes, some banks are going to have certain maximum amounts they will loan out, but depending on the banks credit policies you might find one bank is willing to do more for you than another.
One way to help yourself in this regard would be for you to understand the different credit guidelines for a given bank you’re going through in Malaysia. In any case it’s going to be tough to fully understand the total loan amount you can get, particularly if you’re a foreigner, a business person or a native who is employed overseas.
Is a high margin housing loan the most preferable option for you?
Understand that the more money you’re able to get in order to finance the purchasing of a home, the more you’re going to owe. Now this might not be an issue for some, but for others it will be. You really need to have an understanding of what your finances are and what it’s going to mean for you to take on a high level of debt. If you are purchasing a home that does have equity in it already, then this would be preferred. It gives you an advantage from the start.
People who have higher income or more money in savings might not need as much financing as someone with lower income or less savings as well. In any case, a high margin loan is but another good way to grant access to Malaysian property for those who qualify.