Buying a home is a huge step in anyone’s life. It’s not just about finding the perfect space to call your own; it’s also about navigating the often complex world of home loans. In Cambodia, where the real estate market is rapidly evolving, understanding the ins and outs of the home loan approval process is important. ប្រាក់កម្ចីខ្មែររុងរឿង។ guide from 0 to 100 about how the loan approval process works and what to be aware of at each stage in Cambodia.

Importance of Home Loan Approval

For most Cambodians, getting approved for a ប្រាក់កម្ចីទិញផ្ទះ is super important because they can’t make a lump-sum payment to purchase a new house like in other developing countries. A home loan is their only option to disburse the amount you wish to pay off the purchase price from a financial institution. Approval or rejection becomes the key to deciding if the bank will send the desired amount to the home seller as a settlement. Therefore, an applicant’s loan request should be achievable and within their financial ability to turn the dream home into a reality.

Overview of the Cambodian Real Estate Market

Before going into the home loan approval process, we suggest you know the current Cambodian real estate market. Phnom Penh property prices in Cambodia’s bustling capital are projected to experience a 5% increase in 2023. While each industry is expanding at a fast pace, Cambodians have more demands on real estate, especially in Phnom Penh, with tons of high-paid tourism opportunities. Other than that, the real estate market has experienced significant growth because of economic development, foreign investment, and urbanization.

Types of Home Loans in Cambodia

Fixed-Rate Mortgages

A mortgage loan type known as a fixed-rate mortgage has an interest rate that stays the same for the duration of the loan. As a result, the borrower will continue to make equal monthly principal and interest payments, offering stability និង predictability throughout the loan’s term. You can get a loan from ប្រាក់កម្ចីខ្មែររុងរឿង។ by using a 6.99% low fixed rate to avoid any fluctuating repayment amount. We apply this feature to different loan products ចូលចិត្ត ប្រាក់កម្ចីរថយន្ត ដូច​គ្នា។

Variable-Rate Mortgages

As an alternative to conventional fixed-rate mortgages, variable-rate mortgages (VRMs) give borrowers the adaptability they need to adjust to fluctuating interest rates. VRMs have variable interest rates that are subject to change depending on the state of the Cambodian market, in contrast to fixed-rate mortgages, where the បរិមាណ is fixed for the duration of the loan approval process. ប្រាក់កម្ចីខ្មែររុងរឿង។ suggests you not choose VRMs unless you have a high និង steady income to support the fluctuating repayment. Don’t be allured by the short-term low interest and cause the long-term unrealistic high interest afterwards.

Eligibility Criteria

Citizenship and Residency Requirements

The first checkpoint in your home loan approval process is understanding citizenship និង residency requirements. Generally, loan providers prioritize Cambodian citizens, but there are options for expatriates, too. Foreigners will not get the best offer on a property because the Cambodian government has set some conditions for them to stabilize the price of property in Cambodia.

Age and Tenure Constraints

In practice, most of the employees determine retirement age 55 or 60 in their regulations in Cambodia. This statistic reflects that most Cambodians don’t have sustainable income, which supports the fundamentals of the loan approval process. Finance institutions understand this situation is happening in Cambodia, so they generally set an age requirement of 18 to 60. For example, Maybank Cambodia limits their borrower age between 18 and 65 during the loan period.

Besides age, applicants have to be aware of the tenure that is offered by the loan providers. Longer loan tenure may affect your monthly repayment to ease your burden. Try to make sure banks make an offer that fits within your financial ability. For example, Maybank Cambodia allows applicants to do their loan transaction for up to 25 years (300 months), while PPC Bank only offers 20 years (240 months) to their housing financial product. A $70,000 property will have at least a $53 repayment gap every month. Each constraint differs from lender to lender; check your financial situation or needs to make sure everything is in order.

Employment Stability

In Cambodia, as in many other countries, employment stability is an important factor that loan providers consider during the loan approval process. Whether applying for a ប្រាក់កម្ចីផ្ទាល់ខ្លួន, ប្រាក់កម្ចីកសិកម្ម, or any other type of credit, borrowers’ employment stability plays a significant role in determining their creditworthiness. These loan documents are only applicable to employees but not ម្ចាស់អាជីវកម្ម និង SME company loans; they have to provide a copy of a letter of offer or employment letter to the loan provider before the process begins.

Loan-to-Value Ratio (LTV) and Its Impact on Home Loan Approval

LTV stands for Loan-to-Value ratio. It is a financial term used in the context of lending, particularly in the real estate and mortgage industries. The Loan-to-Value ratio expresses the relationship between the amount of a loan and the appraised value or purchase price of an asset, often a property. LTV is expressed as a percentage and is calculated by dividing the loan amount by the appraised value or purchase price of the property and then multiplying by 100.

LTV often appears in the real estate and mortgage sectors to calculate the loan ratio between the loan amount and the appraised value or purchase price of an asset. Before starting the loan approval process, loan providers have already set a certain percentage of property. Applicants prepared without taking more than the LTV, which was already stated by the financial institution. Besides, ប្រាក់កម្ចីខ្មែររុងរឿង។ will give you some insight about how to use LTV to get notification of pre-approval letters without going through the steps of the application in the usual way. 

A lower loan-to-value ratio (LTV) suggests that the borrower has more equity or a higher down payment on the home. For instance, an 80% LTV indicates that the borrower has promised to make a 20% down payment after successfully going through the loan approval process. 

Loan providers use LTV as a metric to assess the applicant’s risk because the borrower has less equity in the property; a higher LTV indicates a higher risk for the loan providers.

Here are the maximum permissible LTV ratios for various banking loans:

• Maybank Cambodia: Up to 80% of property value
• PPC Bank: Up to 80% of collateral value
• SBI LY Hour Bank: Loans of up to 95%

Applicants who have a good ពិន្ទុឥណទាន can negotiate with អ្នកផ្តល់ប្រាក់កម្ចីដែលអាចទុកចិត្តបាន។ because their chances of loan approval are almost 100%. In such cases, borrowers can lower the LTV to 50% to request a pre-approval feature. Typically, this privilege has to be requested manually, so the documents are signed and funds are disbursed earlier than other applicants do in the loan approval process.

Understanding the Loan-to-Value ratio is essential for both អ្នកខ្ចី និង អ្នកផ្តល់ប្រាក់កម្ចី, as it influences loan approval, interest rates, and mortgage insurance requirements. Lower LTV ratios generally result in more favorable lending terms for borrowers, while higher LTV ratios may lead to increased scrutiny and potentially higher costs.

Loan Application Process

Steps Involved in the Application

• Submit Your Application: Complete the ពាក្យស្នើសុំប្រាក់កម្ចី, providing accurate and detailed information.
• Document Review: The loan provider checks your financial documents, verifying your លក្ខណៈវិនិច្ឆ័យសិទ្ធិ.
• Property Appraisal: A professional assesses the property’s value to ensure it aligns with the loan amount.
• Credit Check: Your credit history takes center stage. A thorough examination ensures your financial reliability.
• Loan Approval: Once everything checks out, you receive the loan approval, paving the way to homeownership after completing the loan approval process.

Property Valuation and Legal Considerations

Importance of Accurate Valuation

Risk Assessment for Loan Providers:

Accurate valuation helps គ្រឹះស្ថាន​ហិរញ្ញវត្ថុ assess the risk associated with providing a home loan. They also consider the ចំនួនប្រាក់កម្ចី to align with the actual value of the property when there are immoral deals done before. Some sellers try to mark up the purchase price to get a higher loan amount.

Protection for Borrowers:

Accurate valuation protects borrowers from overpaying for a property. If the property is undervalued, it may lead to the borrower paying more than the fair market value, causing financial strain. The value analyst is to protect the buyers by proving the property has a certain value so it can show to the following buyer to complete the selling next steps. It is not a supporting document but an essential document for all real estate transactions in Cambodia.

Legal and Regulatory Compliance:

Proper property valuation is often a legal និង regulatory requirement. It ensures that the lending process complies with local laws and regulations, protecting both the loan providers and the borrower from potential legal complications.

Facilitation of Property Transactions:

Accurate valuations facilitate smoother property transactions. Both buyers and sellers benefit from knowing the fair market value of a property, reducing the likelihood of disputes and ensuring a fair and transparent real estate market.

Investor Confidence:

Reliable valuations enhance investor confidence in the real estate market. Investors are more likely to participate when they can trust that property values are accurately assessed, minimizing the risk of financial loss.

Loan Approval Process

Average Processing Time

• Varied Processing Times: The loan approval process varies. While some loan providers work swiftly, others may take more time. As a home lending specialist at ប្រាក់កម្ចីខ្មែររុងរឿង។, we’re here to help you complete the loan approval process within 24 hours.
• Proactive Communication: Stay in touch with your loan providers for updates. Proactive communication can expedite the process.

ដំណើរការផ្តល់ប្រាក់កម្ចី

Follow our professional advice to receive the loan disbursement correctly will save you much time:

• Completed Documentation: Ensure all necessary paperwork is in order, including signed documents. This is your green light for the disbursement process. Some of the loan providers will also need you to visit their branch for final verification after completing the loan approval process.
• Satisfactory Appraisal and Inspection: The property’s appraisal និង inspection should meet the loan provider’s standards. You’ll need to be well prepared for your property because the inspector might visit there without giving any notice. Any illegal activities like drugs and scams, which are stated in the terms and conditions, will lead to failure disbursement.

Closing Costs: Property Verification for Lenders

Congratulations! You’ve gone through so many steps to get to the final stage – closing the loan account. Typically, there’s a charge for account closing. After paying off the entire loan, the contract of sale is going to stop here, and borrowers should go to the branch and request a settlement letter on any business day.

• Legal Fees and Stamp Duty: Budget for legal fees and stamp duty. It’s like the admission fee to the homeownership club.
• Property Taxes: Be aware of property taxes and allocate funds accordingly. Read the details announced by the Cambodian government from time to time to enjoy tax returns by submitting the supporting documents and bank statements in order.

សេចក្តីសន្និដ្ឋាន

After reading this comprehensive article, I see that getting an instant housing loan is not a challenging task. You will have a better understanding of LTV and why it is important to complete all real estate transactions. Unlike ប្រាក់កម្ចីរហ័ស, housing loans need additional steps to make sure the deal is fair and transparent. Contact your trusted financial advisor, Khmer Prosperity Loan; we can help you find the best-fit broker, or you can get a low-interest-rate housing loan to turn your dream home into a reality.

FAQs (Frequently Asked Questions)