Key plans and schemes towards owning your first home

Whilst property prices have been steadily increasing over the years,  household income remained largely stagnant. This is aggravated by  the pandemic situation nationwide which has stifled salaries of the  general population. Earning power of families has greatly dwindled  and this has significantly affected their prospects of buying a house.  According to a 2015 affordable housing report by Khazanah Research  Institute, the housing market was described as gravely unaffordable with a median house price that was almost five times the median  annual household income. Upgrading to bigger and better homes is  also not within the financial reach of average Malaysian homebuyers.

Obtaining a loan from a bank might be a real challenge for potential home buyers. Rejections constitute a substantial part of home loan  applications. Of course, one can always seek out developers who  offer ownership-friendly home purchasing schemes. Suffice to say,  housing loans these days provide a seventy percent loan margin  which improves one’s chances of loan approval. The low margin rates  also mean you will have excess cash in hand for other expenditures.

Preparing sufficient money for a down-payment is no piece of cake.  Major banks require a ten percent down-payment of a property’s  final price. Let us say your home costs RM500,000 so you have to  fork out a down-payment of RM50,000. Thus, before undertaking  any exercise in homeownership, it is recommended to implement a  robust financial plan to identify one’s underlying financial status and cash-flow situation. You do not wish to be caught off guard with poor financial planning that leads to the failure of securing your home.

Jumping on the homeownership bandwagon for the first time can be a great financial commitment which utterly translates to cutting back on luxury spending, and minimizing non-essential splurges and  indulgences. It takes discipline to budget one’s personal finances.  Nonetheless, there are many homeownership schemes available  nowadays which ensures lifestyle quality is not compromised despite paying for bargain property prices. And with such low prices, capital  gain or appreciation is pretty much expected to happen over time.

Good news to millennials! There is now a homeownership scheme  that caters specifically for youths which offers a 100% loan to single person or newlywed couple to own their first home. Eligible for the  purchase of properties worth between RM100k and RM500k. Strictly  limited to 20,000 buyers on a first come, first served basis. Monthly  financial assistance of RM200 to borrowers for the first two years.  100% stamp duty exemption on the transfer of ownership and facility  documents for properties priced up to RM300k. Maximum financing  tenure is 35 years provided the borrower's age does not exceed 65 years  at the end of the tenure. Malaysian citizens aged between 25 and 40  years old are qualified to apply; first-time homebuyers with a monthly  salary or total household income of no more than RM10k per month.

MyDeposit assists first-time homebuyers to own a house by paying  the deposit amounting to 10% of the purchase price or a maximum  of RM30,000 per unit for private housing, and housing projects on the secondary market priced at RM500,000 and below. The house in  question is not allowed to be sold in the property marketplace for a  period of at least 10 years. The owner is also not permitted to rent  out the house, but to use it for own-stay only. Strictly eligible for  Malaysian citizens aged 21 and above; first-time homebuyer with a  total household income of between RM3k and RM15k per month.

Bank Negara Malaysia (BNM) established a RM1 billion fund in early  January 2019 to assist first-time homeowners among lower-income  citizens to purchase an affordable house priced at RM150,000 which is far below its primary market value. The maximum financing rate  has been fixed at 3.5% per annum. Maximum loan tenure is 40 years  or up to 70 years of the applicant’s age. Terms for eligibility include  Malaysian citizens with a monthly household income of RM2,300; salaried workers or self-employed with no record of flawed financing  for the past one year. Participating financial institutions are AmBank,  Bank Simpanan Nasional, CIMB Bank, Maybank and also RHB Bank. 

This is a special scheme carefully curated or crafted for first-time homebuyers to obtain 100% financing from banks and other financial  institutions without the added burden or liability of a conventional 10% down-payment fee. Limited to residential properties valued  between RM100k and RM500k. The home itself must be for own stay only and not for investment purposes. Financing tenure must  not exceed 35 years subject to the borrower’s age not exceeding 65  years at the end of tenure. Eligible for Malaysian citizens or private  sector employees of up to 40 years of age; first-time homebuyer with  a monthly income not exceeding RM5k for lone applicant (single) or  a monthly income not exceeding RM10k for joint applicant (family). 

After examining and evaluating the myriad of housing schemes  available in the property market, it is clear not all homeownership  plans are created equal. It really depends on your personal budget,  household requirements and infrastructure upgrades. Whatever your  user preference, always choose a plan that fits your budget as well as suits your lifestyle. If you are still unsure or remain uncertain on how  to proceed, you may hire a professional valuer or a real estate agent  to ascertain the merits and prerequisites of the scheme that actually favours you best. Best of luck in your homeownership quest cheers!