What is Developer Interest Bearing Scheme (DIBS), the term used when buying property from a certain developer?
Question: Could you explain to me what is DIBS? Is it really buyer don’t need to pay a single cent to developer? Answer: DIBS means “Developer interest Bearing Scheme”. Our basic understanding is (a better clarification and explanation can be made by a banker or developer) if you purchase a property under construction from a developer, let’s say Developer A which has DIBS, Developer A will bear the interests of the loan during the construction period. Make it simpler, You purchase your property for RM 300,000.00. You pay Developer A a minimum of RM 15,000.00 (as down payment of 5%, sometimes this can be 10% or more depending on your loan) and you borrow from a bank for the remaining RM 285,000.00. You opt for interest only loan package from the bank (that means, you only pay the interests but not the principal of the loan during the construction period). Under DIBS, Developer A will pay the monthly interests until completion of the property. In other words you don’t have to pay anything to the bank until construction completes. You only start paying the bank instalments after completion of the property. So, you only pay RM 15,000.00 and […] read more
20 Tips to Increase the Success of Your Home Loan’s Application
Update: Corrected the formula for Net Income calculations. Credit to www.propertywtf.com Loan’s application declined to RM45.26bil from RM47bil! The Bank Negara had showed on their website that loan approvals’ percentage for residential properties in the country declined to 46.8% in the first half of this year from 50.1% during the same period in 2011. While the application for loans for residential properties purchases increased by 2.9% but the actual loans approved during the six-month period declined to RM45.26bil from RM47bil in the same period in 2011. This is evident when our clients have to resort to different banks when they buy their properties and this prolonged the property transactions period. Why declined and how it is assessed? One of the reasons for the increasing numbers of bank loan disapproval is because of the recent change of policy by Bank Negara to use Net Income instead of Gross Income of borrowers in approving loans. From our recent meeting with a local bank manager on this policy, he explained that if a person: Has a salary/total income of RM3,000.00 a month (after deductions of EPF and SOCSO) Has a car commitment of RM500.00 a month Other commitments of RM1,000.00 a month (house, […] read more 