If an applicant can prove income, why the banks need to have preference ?

How do banks or you then classified a business person ?

A sole prop can also contribute to epf and that makes him also an 'employee'. What about estate agents, insurance agents etc who contribute to epf ?

Will the bank give less preference because he is a business person ?

Or is it that income is 2nd consideration during loan application now

This post has been edited by mini orchard: Aug 16 2021, 07:45 PM

100% gone case TS

End of thread

500k property as investment? What's the expected rental yield?

Sole proprietor must have 2 years of income tax filing with tax payments (sorry, if u r tax waivers). Salary paid by a company solely owned by oneself will not be considered

Risk appetite. There is a group of a actuaries running the numbers

Depends on your income docs(borang b for business, be for employed) If you contribute to epf you can see the contributing party’s name at the back, which means which company is contributing to your employee provident fund.

To the bank, a lot of criteria is considered in approving your loan. Businesses tend to be riskier than employed. Age, education bg, nature of work, nature of business, position at work, income(capacity), character and even on the property level: location, feasibility factor, liquidity factor, age of building, developer reputations all played a part.

Income has never been a matter PROVIDED that the source of income is justifiable and meet the bank’s risk appetite.

Business can have 3 mil income in year 2019 and making a net 1 mil loss in 2020 (reference: bus transport industry)

To make it short, is the same criteria for an employed or self employed borrower.

There is no sufficient data to state that there are more self employed that defaulted on loans and vice versa. On face value, the self employed are.

If employers cannot make it, so are his employees.

This post has been edited by mini orchard: Aug 17 2021, 11:39 AM

Based on all ur comments got me thinking about these 2 scenarios for discussion sake:

A. Employed
- Attached to a company
- Some need to serve 2 or 3 mths notice if terminated or retrenched/ some 1 week if not confirmed in his/ her position.
- Earning gross salary of rm5K per mth. (got EPF, got LHDN)
- Only got a 3 yrs car loan to pay.
- Got 1 property fully paid.
- Age:30

B. Not Employed but has rental as monthly income
- Not attached to any company currently coz was retrenched last year.
- Tenants need to serve 2 or 3 mths notice if termination of tenancy agreement.
- Earning gross rental income of rm5K per mth. (No EPF, No LHDN)
- Only got a 3 yrs car loan to pay.
- Got 3 properties fully paid.
- Age:40

Objective here is to apply for a housing loan of 500K for 30 yrs to buy another property.

As per the above scenario, i think its illogical for banks to prefer the employed VS the not employed but has rental as mtly income, kinda obvious which one has a stronger financial background .... so what do u all think?

No right or wrong answer, just wanna learn from this because many of us dream of retiring early with many properties to collect rental from.... so how do these "retirees" manage to get bank loan just from collecting rental? Whats the threshold of their rental that will open a bank's eyes? rm10K per mth?
These "retirees" can't be all buying cash.....

Also its a known fact that some banks prefer self employed or free lancers to employed..... so which banks are for "retirees" friendly? (retirees here means these ppl are deriving their mthly income from rental of their properties, they maybe just 40+ yrs)

Honestly is difficult to give just 1 answer to your question.

You have to approach many banks through different officers. Some are more experience to handle yout situations. The juniors will just say no.

You can also approach the branches manager.

As mentioned earlier, is about mix and match on what the bank can offer and what you can compromise.

You can also refinance 2 properties for 1 loan.

Using the phone wont solve the problem. You need to be on the ground with all your supporting documents.

https://loanstreet.com.my/learning-centre/a...e-self-employed

This post has been edited by mini orchard: Aug 17 2021, 11:41 AM

can we refinance a land though? usually heard refinance a house. say the land is fully paid already. can refinance and take money which is a % of the land value?

You are entitled to your view and logic.

There is data and it is more than sufficient. Just that you do not have access to.

True that if employers couldn’t make it, employees would be affected. But if a company go bankrupt, I can move to another company while the bosses have to close down the biz

Can

Sorry to pop your bubbles. Banks look at the stability of your income. And banks play by the book because loan approvals are subject to audits.

Logically speaking, if I were a bank I would pick B. But in reality, you NEED paper work. You can try deviation approval WITH income tax statements. Go get your taxes done.

Bosses can always go back to be employees. Is not the end of the world where it stops when a company closes down.

Ya right. Hence this is the bank’s logic in imposing a stricter guideline on business owners. I think I over disclosed bank’s secret liow

On contrary to most feedback here, i think there is a different way to look at it.

Let say your current salary eligible for 300k loan and you already have a mortgage of 300k of a condo. Renting out the property @ RM2000 to cover your monthly installment.

And now want to buy another property with mortgage of another 300k (inclusive your current one is RM600k), technically the bank will reject you.

But if you can show proof of your Tenancy Agreement, you may be able to get the additional 300k mortgage loan for your second property.

Renting a property out is technically considered a source of income.

This post has been edited by p4n6: Aug 17 2021, 09:17 PM

Even if RM5k rental become net income, after deducting income tax, it will be lower than RM5k nett.

I think it's a matter of monthly loan repayment amount rather than rental not eligible as supporting documents for loan approval. Banks usually want to keep it to a certain percentage of your income.

cannot bro, income from investment or rental they dont want layan

You need regular income AND rental income for any rental income to be considered as your supporting income

For past records banks can always check CCRIS, to determine if he or her a bad pay master or is currently burden with other debts .... so many of the feedback here say a person need to have a steady income to get a HOusing loan.

My curiousity here is why banks do not take rental income with tenancy agreement as a stable income, can further back up with bank in statement as well for past 1 yr as proof its a real deal.... if they do not recognised rental income of rm5K per mth for a 500K loan then what is the threshold? RM8K rental income? Why do they discriminate a rental income from a employee.... both can be terminated by giving notices. Any diff?

From past records which is clean, zero credit card debt (all settled in full every mth), serving no other loan and with just a car loan of 3 yrs ( still serving got about 2 yrs left) this is still not eligible enuf for banks? if yes, why? any bankers can explain? whats the logic behind? really wanna know how u all "discriminate" ur potential customers.... lets reveal the logic behind.... and learn together....

This post has been edited by Afterburner1.0: Aug 20 2021, 10:14 AM

Do you pay or declare taxes for the rental?