Due to rising costs, homeownership is fast becoming nothing but a dream to most Malaysians, but are there government assistance programs out there that could make this dream a reality for you?
Whether you are a first-time buyer, loan-reject, newlywed, or low to medium-income earner, there seems to be a fitting housing program with you in mind. With that said, it’s not necessarily as easy as advertised to successfully get in on such deals. But if you are eligible, why not give it a try? You may soon be able to afford a home of your very own.
Here’s a quick guide to four affordable housing initiatives of which you should be taking advantage:
My First Home Scheme (Skim Rumah Pertamaku)
Are you a young, working adult looking to purchase a home to live in but without enough savings stashed away to foot the deposit? If yes, then this might be just what you need. The program enables you to apply for a home loan from participating banks with a 100% margin of financing. This means that you would not have to come up with the 10% minimum deposit upfront as required by most loans. Instead, your deposit will be guaranteed (not borne) by Cagamas SRP Berhad.
* Note that if you are married and a first-time home buyer, you could opt for the Youth Housing Scheme (announced under Budget 2015) instead. The program has similar features but comes with added support in the form of RM200 monthly financial assistance for the first 2 years and financing for takaful insurance purchase.
• The feasibility of your loan – Think about the repayment and if you can even afford it in the first place. You will need to make sure that repayment does not exceed 55% of your gross income. Try to look for the best value-for-money home that is still within your budget.
• Loan approval factors – In the past, it was reported that a majority of applications under this scheme was not approved by banks. To give yourself the best chance for approval, ask your loan officer about what you can do to improve your probability for success.
PR1MA - 1Malaysia People’s Housing Programme
If you are looking for good-quality homes selling for 20% below market price, then try your luck with PR1MA. The homes are developed by Perbadanan PR1MA Malaysia (established under the PR1MA Act 2012) and are suited for middle-income earners; what’s more, buyers can still take advantage of the program even if they are already homeowners. However, they should own no more than one other home to stay eligible.
PR1MA works on a ballot system where you will register and apply for a home that you like (based on availability) as listed in the program’s official website, then wait to be successfully balloted. After which, you’ll need to look for a loan to finance your home which can also be arranged by the scheme’s panel of banks.
• Rent-to-Own feature – If your loan is not approved or if you simply prefer it, the scheme allows for you to rent the home for a maximum of 10 years, upon which you’ll be given an option to purchase. This works well if you need time to collect funds or if you have trouble getting approved for loans in general (being self-employed or having unsatisfactory credit history).
• Cannot be sold for at least 10 years –The moratorium is in place to make sure people aren’t buying simply for investment reasons as the program is meant to assist with homeownership for residence. Accordingly, PR1MA also states that the home is only for owner-occupancy, meaning you’re not allowed to rent it out either.
Government Housing Loan Scheme
Working for the government brings you many benefits, and this is one of them. These loans come with attractive interest rates, special subsidies and are much easier to get approved. While it is not technically a housing scheme per se, the interest savings along with other assistances makes it more affordable to own your home as compared with traditional bank loans.
The loan amount is dependent on the workers’ pay scale and can be considered rather decent. It ranges between RM120,000 and RM600,000, with the latter still making it possible to purchase a ‘nice house’ in the Selangor city area.
• Repayments deducted from salaries – Make certain that in addition to servicing this loan, you still have enough left over to maintain household expenditure and as well make payments toward your other commitments.
• Employment status – Plan out your employment tenure as government loan approvals require you to serve for a minimum of one year and be a permanent confirmed employee with at least a year remaining before retirement or end of service.
If you can only afford homes within the selling price of RM80,000 and RM250,000 (depending on location), then you may benefit from the MyHome Scheme which is under the supervision of the Ministry of Urban Wellbeing, Housing and Local Government. The program is aimed at first-time aspiring homeowners who fall under the category of low to middle-income earners.
How it works is similar to PR1MA, whereby approved applications will still need to go through a balloting process. The program helps reduce the purchase price of low to medium-cost homes by offering a subsidy of up to RM30,000 to aid buyers and at the same time provide an incentive for developers to build.
• First Come First Serve - Interested buyers should apply as soon as possible, but note that even though you are a qualified buyer, your application will still require review from the ministry before selection through balloting.
• Resale moratorium and owner-occupancy - As with PR1MA, the property may not be sold for 10 years and is meant to be owner-occupied.
The Downside to Government Programs
The truth is that although these schemes are much-needed and thoroughly appreciated to the cause of homeownership, not every deserving applicant will benefit from the opportunity.
In addition, most of these programs are accompanied by a special set of stipulations and could vary from state to state. It will no doubt be disheartening to those with rejected applications as these assistance programs truly do come with a lot of promise.
But still, don’t be put-off by the possibility of rejection; instead arm yourself with as much information as possible to ensure your application is solid. Also, keep in mind that some of these initiatives are still having the kinks ironed out and are in pilot phase – so you will need to stay updated from time to time for any change in details that could affect your situation.
For more information, please visit the official websites of all the programs mentioned.
(Written by: Desiree Nair)