Split-second home loans? Hold it
Getting an approval for a home loan by the United Overseas Bank might not be as instant as it was marketed to be, following a clarification from the Monetary Authority of Singapore (MAS).
MAS has put a dampener on the bank's latest offering, the Split-Second Home Loan approval service, by saying that home loan approvals cannot be done from temporary locations at property launch sites.
Launched earlier this week, the loan service, which is directly linked to the Credit Bureau of Singapore and UOB's credit evaluation system, is said to provide home buyers with a quicker credit evaluation and approval process using the latest technologies.
It allows instant loan approval for the purchase of new homes as well as the refinancing of private property home loans, HDB home loans and commercial property loans.
MAS issued a clarification yesterday stating: "MAS rules allow banks to set up a temporary location at a property launch site to receive applications for residential property loans. We do not permit loan applications for residential property to be approved at such temporary locations, whether in-principle or otherwise, verbal or in writing. MAS has instructed banks that this is not allowed under our rules."
The authority also highlighted that a residential property loan is a long-term financial commitment, and by allowing banks to approve applications at temporary locations, imprudent lending by banks might occur.
Said an MAS spokesman: "In granting residential property loans, MAS expects banks to conduct credit assessment of borrowers in a thorough and prudent manner. When banks entice consumers with loan approvals at temporary locations, consumers may be rushed into accepting a long-term financial commitment, even if a cooling off period is incorporated within the approval."
When approached by BT regarding MAS's statement about the service, a UOB spokesman commented: "UOB's new service assesses a serious homebuyer's eligibility for a home loan instantly at selected showflats.
"The homebuyer's eligibility for a home loan can be determined instantly because UOB has streamlined and automated some of its back office processes for faster credit evaluation. The bank continues to use the same strict credit review parameters, including a credit check with the Credit Bureau (Singapore)."
Process-wise, UOB's mortgage bankers use an iPad to input an applicant's information into the system. From there, the home buyer's loan application will continue to be processed and approved at the head office and will be subject to the terms and conditions set out in the letter of offer such as UOB's verification of the applicant's documents.
The bank also pointed out that should the home buyer ultimately choose to take up the loan, he will still have to go down to a UOB branch to submit and finalise certain documents in order for the bank to issue a letter of offer.
As such, the Split-Second Home Loan approval service still requires a fair amount of time and effort before a home buyer can indeed be sure of his home loan approval.
Source: Business Times – 4 August 2012