The banks will look at three things when giving you a new loan:

1. Your ability to repay your loans

Banks will check your ability to pay back your loans by looking at your credit score. Your credit score will tell them if you’ve been meeting all your repayments on time. So, make sure your credit score is always good. Read this blog to find out why a healthy credit score is important.

2. The duration

Most banks will only approve loans until you are 70 years old. For example, if you’re now 38 years, the maximum loan duration you can get from a bank is 32 years. If you’re 50 years old, you can only get a loan for 20 years or less. In 2013 Bank Negara issued guidelines to cap refinancing to 10 years. However, not all banks have implemented it, so do check with your banks to see how long you could get a loan for.

3. Your debt to income ratio

Your debt-to-income ratio tells you how much of your monthly income goes towards paying your debt every month. A good estimate is to keep your total debt repayments (this includes your credit card repayments, personal loans, car loans and so on) to below 40% of your monthly income. The banks will look at how much your monthly commitments such as credit cards, and personal loans are to see if you can afford a new loan before approving it.