How to Get Mortgage Preapproval in Singapore

In Singapore's property market, securing an In-Principle Approval (IPA) is a crucial first step for prospective homebuyers. An IPA, also sometimes referred to as an approval in principle in Singapore, is a preliminary assessment by a bank or financial institution indicating the maximum home loan amount you are likely to qualify for.  

Understanding how to get pre-approved for a home loan is vital as the IPA serves several key purposes. It gives you a realistic budget for your property search, preventing you from looking at homes you cannot afford. Furthermore, having an IPA strengthens your negotiating position with sellers, demonstrating your seriousness and financial readiness to make a purchase.  

Knowing how to get pre-approved for a home loan also streamlines the actual mortgage application process once you've found your ideal property. It allows you to act quickly in Singapore's competitive housing market, giving you an edge over other potential buyers who may not have their financing in order.

Mortgage preapproval (IPA) in Singapore: Key takeaways 

• What is an IPA: An In-Principle Approval (IPA) is a preliminary agreement from a lender outlining the estimated amount you can borrow for a home loan. It's an indication of your borrowing capacity based on an initial assessment.

• Why it matters: Obtaining an IPA provides you, the prospective homeowner, a rough gauge on your budget, allowing you to focus your property search on realistically affordable homes and demonstrating your financial readiness to sellers.

• When to get one: It's advisable to secure an IPA early in your property buying journey, ideally before you start actively viewing properties, to understand your financial limitations.

• What it helps with: An IPA streamlines the final mortgage application process once you've found a property and strengthens your negotiation position with sellers, showing you are a serious buyer.

How to get pre-approved for a home loan in Singapore: 5 steps you need to take

So how do you get pre-approved for a mortgage in Singapore? Let’s review the steps.

Step 1: Choose your preferred lender or mortgage broker

When starting your journey towards getting a home loan, you have the option of approaching banks directly or engaging a mortgage broker. 

As a prospective homeowner, you want to compare mortgage packages offered by major Singapore banks such as DBS, UOB, and OCBC to find the most suitable interest rates and terms. Alternatively, a mortgage broker can assist you by aggregating and comparing offers from multiple banks, saving you time and effort.

Step 2: Gather all your necessary documents

To facilitate the bank's assessment of your approval in principle, you'll need to compile a set of essential documents in Singapore that provide insight into your financial standing. These typically include:

• Latest payslips for the last 3 months: To verify your current income.

• Latest CPF contribution history (12 months): To provide a record of your employment and CPF contributions.

• IRAS Notice of Assessment (last 1-2 years): To assess your income tax records.

• NRIC or passport: For identification purposes.

• Proof of existing loan obligations (if any): To evaluate your current debt commitments.

Step 3: Submit your IPA application

Once you've chosen your lender or broker and gathered the necessary documents, the next step is to submit your IPA application. This can often be done online through the bank's portal or with the assistance of your mortgage broker. 

It's worth noting that some banks may offer a preliminary pre-qualification process before proceeding with the full IPA application, giving you an initial indication of your potential loan amount.

Step 4: Wait for the bank to complete their internal assessment

After submitting your application, the bank will conduct a thorough internal assessment to determine your loan eligibility. This evaluation typically involves assessing factors such as your Total Debt Servicing Ratio (TDSR), and for HDB flats or Executive Condominiums, the Mortgage Servicing Ratio (MSR). 

They will also review your credit score and job stability. During this stage, the bank may contact you with follow-up questions or request clarifications on your submitted documents.

Step 5: Receive your letter of offer

If your application is successful, you will receive a Letter of Offer (LO) for your IPA. This letter is usually valid for around 30 days and outlines the indicative loan amount and terms. 

While the LO is not a binding commitment from the bank, it serves as a strong signal of your loan eligibility and provides you with a clear budget to shortlist properties that fall within your approved loan capacity.

>> Learn more: Find the best home loan lenders in Singapore

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Is pre-approval for a home loan the same as pre-qualification?

It's important to understand that pre-qualification and an In-Principle Approval (IPA) are not the same thing when it comes to securing a home loan in Singapore. 

Pre-qualification is typically an informal initial assessment, often done online or with minimal documentation, providing a rough estimate of your potential borrowing power. 

An IPA, on the other hand, is a more formal process that involves thorough credit and legal checks by the bank, resulting in a more reliable indication of the loan amount you're likely to receive. 

Since an IPA involves a formal credit check, it can potentially affect your credit score. Always clarify with the bank if you are following through with a pre-qualification or a pre-approval for a home loan.

>> Learn more: Calculate your debt-to-income ratio before you take out a loan

How far in advance should I get pre-approved for a mortgage?

An In-Principle Approval (IPA) in Singapore typically has a validity period of around 30 days. Therefore, it's advisable to apply for your IPA when you are serious about purchasing a property and are actively starting your home search. Applying too early might mean the IPA expires before you find a suitable property, requiring you to go through the process again.

>> Learn more: Reasons why your home loan application may be rejected