{"id":56058,"date":"2022-07-12T17:33:21","date_gmt":"2022-07-12T09:33:21","guid":{"rendered":"https:\/\/www.99.co\/singapore\/insider\/?p=56058"},"modified":"2025-01-03T19:55:40","modified_gmt":"2025-01-03T11:55:40","slug":"in-principle-approval-ipa","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/in-principle-approval-ipa\/","title":{"rendered":"In-Principle Approval (IPA) for home loans: What is it and how do you get it?"},"content":{"rendered":"
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Unless you’re planning on paying for your home in cold hard cash, you’ll need to take out a home loan. To get a home loan, you’ll need a bank willing to give you one, which is where In-Principle Approval (IPA) comes in. <\/span><\/p>\n\n\n\n

Note:<\/em> You may have read articles about Approval-In-Principle (AIP). To clear things up, IPA and AIP are the same thing.<\/strong> <\/span><\/p>\n\n\n

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In-Principle Approval: What is it?<\/span><\/strong><\/h2>\n\n\n\n

An IPA is a non-binding document from the bank stating whether they’ll lend you the money needed for your home loan. <\/span><\/p>\n\n\n\n

Think of it this way: An IPA to home loans is what an HDB Loan Eligibility<\/a> document (HLE) is to BTO flats.<\/span><\/p>\n\n\n\n

Read this: HDB concessionary loan \u2013 How to apply for HLE<\/a><\/i><\/p>\n\n\n\n

It doesn’t mean you secure a loan on the very day you get your IPA document; it just means that it’s guaranteed that the bank will give you a loan.\u00a0<\/span><\/p>\n\n\n\n

You’re not tied to a commitment to follow through with taking up the loan, so if the interest rate rises or you find a better interest rate elsewhere, you can let the IPA lapse and reapply for another loan. <\/span><\/p>\n\n\n\n

For example, you might set your sights on a S$1 million property. The down payment is 25%, so you’ll need the bank to lend you 75% (S$750,000). <\/span><\/p>\n\n\n\n

After applying for IPA, however, you receive results that the bank is only willing to approve a S$500,000 loan. This means you’ll need to cough up the balance of S$250,000 yourself. <\/span><\/p>\n\n\n\n

Here, you might decide to let the IPA lapse and either pick a different home that falls within the loan amount or regroup and figure out a way to either reduce your debt obligations or make more money.<\/span><\/p>\n\n\n\n

Keep in mind that if your financial standing changes, the bank reserves the right to cancel your IPA. <\/span><\/p>\n\n\n\n

So take baby steps. Secure your IPA, buy your house and ensure everything is in order before making another huge financial commitment, such as buying a car or another big-ticket item.  <\/span><\/p>\n\n\n\n

What will the bank look at for IPA?<\/span><\/strong> <\/span><\/h2>\n\n\n\n

The bank evaluates your overall financial standing based on your credit history and financial health. This includes your monthly debt obligations, such as:<\/span><\/p>\n\n\n\n