10 mistakes Papua New Guineans make when applying for a housing loan

  • When a loans officer tells you that the chances of success is low for your loan application, don’t give up.  Ask them to give reasons why


    When it comes to buying a house, many Papua New Guineans do not have the funds to pay for the full purchase price plus associated costs.  As such, homebuyers resort to banks and financial institutions for loans to assist them make the most important purchase of their lives.

    Unfortunately, not everyone who applies for a homeloan gets the outcome they want from the lender. Each applicant has its own reasons behind the rejection but there are common mistakes that Papua New Guineans tend to make which often denies them the opportunity to realise their dream of owning a home.

    We list below some of those mistakes and hope that by identifying them, borrowers can take them into account the next time they seek home loans.

    1. They do not prepare their application well

    Borrowers do not prepare well when completing their loan applications.  They are so excited at the prospect of owning a home, they rush through the application and hope for the best.  This often leads to incomplete applications and loans officers who come across incomplete applications tend to brush them aside.  Applicants should make sure that they thoroughly go through the lenders requirements and provide everything that is required.

    1. They do not some idea of their borrowing power

    Many Papua New Guineans complete their application and submit it without having a rough idea of what their borrowing power is.  Online calculators can give you an idea what your likely borrowing power is.  Give it a go here on Hausples.

    1. They do not ask the right questionsAsking the right questions is critical.  If you don’t ask, you may not know and if you don’t know, how can you be sure that you know what you’re getting yourself into? Many borrowers tend to ask more about how long it will take to process the application but do they first ask about the loan features such as the interest rate, term, deposit and so on? The excitement gets the better of them and critical questions tend to be brushed aside.
    2. They pump up income and reduce expenses

    Most loan officers have a fair idea of what is reasonable and what is not.  Overstating your income and understating your expenses to provide a more favourable picture is not a good thing to do. Be honest when completing the application.  You don’t want to be in trouble down the line when you realise that the income figures you stated in your application are overstated and you start feeling the pressure on not meeting your loan obligations.

    1. They do not know that there are associated costs beyond the purchase price

    The purchase price is one component of the cost.  There’s legal fees, valuation fees, stamp duty and a whole host of other charges that will be added on to the purchase price. Potential buyers tend to get a surprise when costs go well beyond the selling price agreed to with the seller.

    1. They do not understand the real market value of a property

    Many buyers are so excited about buying a home, they have little regard to what the true market value is.  Like any good or service, you do not want to buy it at a price that is more than what it is actually worth.  Consult a valuer and get the current market value of a property before taking the plunge.

    1. They focus on a single property

    Many home buyers tend to be infatuated by a single property they forget about other opportunities on the market.  Papua New Guineans should open up their minds to explore the opportunities available rather than concentrate on a single property.  Know your budget, make a short list and negotiate. It’s amazing how negotiating successfully can further reduce the price of a property.

    1. They focus on a single bank

    There’s this misconception that other banks or financial institutions will turn your application down if you bank with a competitor.  Keep this in mind that all banks and financial institutions are there to lend and make money. If you have the financial capability to get a loan, surely the lender will welcome you with open arms. That said, shop around. Find out what other banks offer, their loan product features and compare.  You want to get the best loan that meets your needs so don’t be afraid to shop around.

    1. Reject is the end of the matter

    When a loans officer tells you that the chances of success is low for your loan application, don’t give up.  Ask them to give reasons why and consider whether those hurdles can be overcome.  You see, loans officers are there to examine your application and consider alternatives. Yes, you may not qualify in the assessment stage but you can still ask if there is any way in which your loan application could get a tick. Could it be reducing the amount applied for or could it be clearing up your current personal loan before applying again. Bottom line is, ask why your loan may be rejected and find out if there are ways to get around the reasons of rejection.

    Good luck!

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