Homebuyers should find out how much the bank will loan before signing a purchase agreement

Purchasing a property to many people is a lifetime investment requiring substantial amount of savings. Most buyers will need to apply for a mortgage loan to finance their purchase. A well-planned budget and obtaining accurate information about a mortgage loan before committing the property purchase are therefore very important steps to take for the prospective purchasers.

When a client asks about a mortgage loan, a professional estate agency practitioner should not hastily provide mortgage information to the client, or assure the client that he will be able to obtain the mortgage loan he needs, or make any guarantees on the terms of the mortgage loan.

There have been cases of property agents assuring prospective purchasers that a certain amount of mortgage loan could be obtained, however, in the end, only a lesser amount of the loan was approved. This not only caused a loss to the prospective purchasers but subjected the property agents to disciplinary action by the Estate Agents Authority (EAA).

During the first 11 months of 2018, the EAA has received a total of 23 complaints regarding property agents providing misleading information on mortgages, which is an increase of 28 per cent compared to the 18 cases received in the same period in 2017.

Taking this opportunity, I would like to share two relevant complaint cases we received in the past. In the first case, a property agent introduced a new serviced apartment to a prospective purchaser and reassured the purchaser that she could definitely obtain a mortgage loan of 85 per cent of the purchase price from the lending institution appointed by the developer.

However, a mortgage loan of only 40 per cent of the property price was eventually approved due to the purchaser’s own financial situation. As a result, the purchaser was unable to complete the transaction and her deposit was forfeited to the developer.