Last time we talked about what is a Sales & Purchase Agreement (SPA). We will see it at the beginning of purchasing a house. Other than SPA, we will also see Loan Agreement too.
Loan Agreement, we also called it LA in short. Basically you will see both SPA & LA at the same time for signing housing agreement.
Why should we sign LOAN AGREEMENT? How does it affect us from buying a house?
What is LOAN AGREEMENT?
LOAN AGREEMENT (LA) is the agreement that is signed between Purchaser & Bank. It will list out the information of the property: How much you lend from the bank, the period of the loan payment & the total amount you need to pay for the loan.
Bank will reviewed all the documents & your personal information to evaluate your ability to make the payment of house loan. After they approved your loan, the total amount of loan & interest will depends on your ability to pay it & prepare the Letter Offer. Therefore, you will have to pay the down payment of the house loan.
Now we know what is an Loan Agreement. But how does it affect us for buying a house?
How LOAN AGREEMENT Affect us when Buying a House?
When we talk about the amount of loan, it won't always lend fixed percentage of amount. For example, the SPA price of the house is RM 500,000. According to the ability, Person A is able to get 100% of the loan. For Person B, he can only gets 80% of the loan, which is RM 400,000. In this case, Person A is able to buy the house with ZERO down payment. However, Person B has to pay the down payment of RM 100,000. The affect a lot to Person B, because Person B has to prepare RM 100,000 for the down payment.
Moreover, it is used to protect both Purchaser & Bank to honor the Terms of Agreement. Which helps purchaser that Bank is unable to change any terms in the agreement like Total Amount of Loan, interest, period of loan payment etc. For Bank, it helps to ensure Purchaser have to pay the loan in time & correct amount.
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