An IPA, sometimes referred to as an AIP, is essentially a promise by a lender to provide you with a home loan for a certain amount and term based on your options, and obtaining an IPA can help you budget for the property you are about to purchase.

For example, if you obtain an IPA for $900,000, then you may be able to purchase a property worth up to $1.2 million.

A typical IPA is valid for 30 days.

Here are the three steps you need to follow to secure an IPA

1. Choose your lender.

As a first step, you will need to compare the various home loan options offered by various banks and narrow down your choices to one or two.

For your convenience, you may choose to speak with your advisor for a free, personalized recommendation.

2. Apply for your IPA.

The documents required here are generally similar to those you would need to provide for a standard home loan, such as proof of income, CPF contribution history, etc.

You used to have to submit credit card statements, but now this requirement has been largely eliminated because your credit report can also provide such information.

3. Wait for the IPA to be issued.

If you pass the review, they will provide you with an IPA, but the evaluation process is different for each bank and there is a wait.

In addition, if you want to skip the IPA step, you may spend tens of thousands of dollars for nothing.

If you do not have an IPA , the following may also happen:

Make your home search less efficient

An IPA is not required up front, but it can be very difficult to really narrow down your home purchase without knowing how much loan you can get.

Real estate agents may give preference to other buyers who have an IPA.

Having an IPA basically means they are one step closer to a successful transaction. If they don't, the likelihood of the listing agent working for nothing is high.

Bargaining will be more difficult.

Without an IPA, it will be difficult to determine the maximum amount you can pay for the property. If you don't know this, how can you bargain effectively?

The process of completing the transaction will take much longer.

Even if you manage to overcome all the previously mentioned hurdles and get approved for a loan, the entire process will be extended indefinitely and time will be wasted.