Buying a house isn’t just between you and the seller. It’s between you, the seller, your property agent, the seller’s property agent, the valuation officer, the mortgage banker…that’s all just the tip of the iceberg. There are more real estate people involved in buying your house than there are responsible for food safety in a Chinese soup factory. These are the four most annoying ones:
The lawyer who handles the conveyancing
Conveyancing refers to the legal paperwork for your home loan, and the ownership deed for the house (the Certificate of Title, or CT). It’s a very complicated and time consuming process to handle.
Depending on which lawyer you engage, the experience can range from “mind-numbingly dull”, to “amateur kung-fu”. What’s most annoying, though are the conveyancing fees.
These can range from between $1,500 to S$3,000. In the past, banks would often offer to absorb these fees, to persuade you to take their loan. However, this is no longer allowed, as it’s an enticement. So now, you need to pay it yourself (although you may be able to use CPF, check with the law firm in question).
Most banks will pick the law firm for you. What they won’t tell you is that you can go out and look for your own; as long as a law firm is on the bank’s “board”, you can use them. And some law firms charge less than others, which can mean saving a thousand odd dollars at times.
You can choose to use your own law firm for HDB purchases as well, instead of their default law firm.
Some of these lawyers live in fear that you will read the document, and ask questions afterward. As far as they’re concerned, explaining the clauses to you is like trying to teach Shakespeare in Swahili. You can be sure they’re rolling their eyes internally.
The mortgage banker’s credit officer
Luckily, chances are low that you will meet these real estate people face-to-face. There are dark rumours in Singapore’s property market, that bank credit officers are really just soulless computers, or three headed demons that mortgage bankers must sacrifice animals to persuade.
Whatever the case, the credit officer is the one who ultimately determines whether your home loan gets approved. They also get to decide how much of a loan you get, within legal boundaries. For example, even though they’re permitted to give you an 80 percent Loan to Value (LTV) ratio, they might decide to give you only 75 percent, because your financial status doesn’t satisfy them.
The mortgage banker will be on your side, and teach you ways to placate the credit officer. Remember, the mortgage banker makes a commission from giving out the home loans, and as far possible will try to push your application past the credit officer.
Different banks have different standards. The credit officers from some banks may not like you for being self-employed, whereas others may not mind. You should try out different banks to get the loan you want.
The mortgage broker
Mortgage brokers are some of the most benign and harassed real estate people you will ever meet. They don’t mean to be annoying, and they have the best intentions; but after a while you’ll associate their call with the need to dig out 70 old documents, and give up your lunch hour to hear their long winded (useful) recommendations.
Mortgage brokers are like your secondary school tuition teacher. You’ll loathe having to meet them and do extra work, but you’ll probably regret not paying attention later. The difference between a mortgage broker, and a mortgage banker, is that the broker doesn’t work for a bank.
There can be over 50 different home loan options on the market at any one point. Some are cheaper than others: as a bank nears the quota on how much it wants to lend, it jacks up the interest rate. So the trick is to keep scanning the various options, to find which one is cheapest at the time.
The mortgage broker is the one who sifts through all those loan packages. Their service is usually free to you, as brokers earn via a referral fee from the banks.
Just remember they’re on your side. Even if they make you listen about SIBOR rates and hybrid loan packages for two hours at a time.
The property valuer
Another behind-the-scenes figure, because they’ll never come near you. When you’re buying a house, these are the real estate people sent down by the bank to make a valuation.
That seems harmless, but gets annoying when you realise something important: the valuation doesn’t always match the seller’s price. And the maximum LTV is pegged to the valuation. For example:
Say the seller wants $1.6 million for her condo, but the valuation comes back and it’s worth only $1.4 million. Now, the maximum possible loan is $1.12 million, leaving you to top up the difference in cash.
If you’re not happy with the valuation, you can go look for another bank. But that means you may not be able to get the loan package you want, and that you’ll be having further conversations with your mortgage broker (see point 3).
Of course, with 99.co’s listings and map based systems, you can get a good sense of property values before the valuer even turns up. So check on there before you start talking price.