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What do millennials wish to do with their money? Instead of spending them all on boba tea and online deals, most of them actually wish to pay off their debts and buy a house. This is based on a survey conducted by Vase.ai involving 1,525 young Malaysians aged between 24 to 35 years old where they were asked about their savings aspiration. Read on to know more about home financing for millennials.
59% of the respondents earn below RM3,000 a month, 26% earn between RM3,001 to RM6,000 and 9% do not have a fixed monthly income. A huge chunk of them (60%) are employed full-time while 26% are self-employed.
When asked about their top financial goals for the next 5-10 years, 57% say it is to clear all their debts and to buy a house. 53% of them who have been saving part of their income also say they are saving for a property.
Though 78% of respondents say they have been saving part of their income, another study conducted by RinggitPlus revealed that most Malaysians save less than RM1,000 monthly. It’s undeniable that many Malaysians are living from paycheck to paycheck due to rising cost of living and also peer pressure that leads many to spend more than they should.
So, in order for these millenials to achieve their goals, they really have to take a good hard look at their expenditures and spending habits.
A Millenials Guide to Buying a House
As a start, to achieve healthy balance between house loan repayment and income, the latter should not be more than 1/3 of the monthly income. In this case, if someone is earning RM3,000 a month, they should be looking at properties priced around RM200,000. When many primary market properties are built in less favourable locations, one can find good deals through auctioned properties or simply settling with low-cost apartments.
However, without enough savings, how can one afford to pay for the house down payment? Luckily, there is a home financing scheme that allows buyers to get full home loan with zero deposit – which is My First Home Scheme (SRP). Find our full guide to My First Home Scheme (Skim Rumah Pertamaku – SRP) here.
Yesterday, Bank Negara Malaysia (BNM) announced the enhancements to Bank Negara Malaysia’s RM1 billion Fund for Affordable Homes where the maximum monthly household income is increased to RM4,360 while the maximum property price is increased to RM300,000. The expansion of its eligibility criteria is to help more Malaysians to purchase their first homes.
The maximum financing rate is 3.5% per year, with maximum tenure of 40 years or up to 70 years of the applicant’s age, whichever is shorter. Stamp duty is also waived under this programme. The enhancements will take effect on 1st September 2019.
Under the Fund, the overall borrowing costs are further reduced through some measures such as down payment support and mortgage term assurance/takaful contribution. Participating banks include AmBank, BSN, CIMB, Maybank and RHB Bank – so, do inquire from these banks regarding this programme.
For those who do not have a fixed income or official payslip, a scheme offered by Syarikat Jaminan Kredit Perumahan Berhad (SJKP) may be the answer. BSN My Home (Skim Perumahan Belia) is also available to help single or married youths own their very first home with ease.
In a nutshell, millennials do have a strong desire to own a property as most of them, regardless of having savings or not, wish to save money to purchase a property. The government has been very committed to ease homeownership among youths through these wonderful schemes, so it’ll be a waste not to take action now. The Home Ownership Campaign (HOC) 2019 is also extended to end of this year, so go ahead and start browsing for options today.
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