Let’s be honest. It’s pretty difficult to save money these days, let alone to get enough home financing. Yes, most of us try to set aside a small portion of our salary every month for savings but it gets harder and harder with the rising cost of living. Similarly, salaries have largely not kept pace with rapidly rising house prices or rental rates particularly in the city.
How will young working adults ever afford to even save up for a home deposit at this rate?
Thankfully, this is where My First Home Scheme can help. The scheme offers up to 110% home financing to eligible applicants, setting buyers free from having to fork out deposits, down payments and other associated upfront cost in purchasing a property.
How does it work?
The scheme mainly focuses on allowing applicants to obtain maximum home financing, covering down-payment as well as other fees related to home purchase. Cagamas SRP Berhad (“CSRP”) will guarantee the banks on a ‘first-loss’ basis for financing above the 90% level.
The applicants are liable to the bank for the full home financing amount and the guarantee only indemnifies the bank for any loss incurred as a result of financing above the 90% level. The interest rate would depend on the normal interest/profit rates of the respective banks.
Who is eligible for the scheme?
- Must be a Malaysian citizen
- First-time house buyer
- Salaried worker or self-employed individuals
- Single or joint applicants
- Gross monthly household income:
- For property priced up to RM500,000 – not more than RM5,000 for single applicant or not more than RM10,000 for joint applicants (subject to maximum gross monthly household income of RM5,000 per applicant)
- For property priced up to RM300,000 – not more than RM5,000 for single or joint applicants
- No record of impaired financing for the past 12 months
Financing tenure must not exceed 35 years, subject to applicant’s age not exceeding 70 years at the end of financing tenure. Fire insurance or takaful is compulsory.
An online financial education module provided by AKPK must be completed for applicants purchasing property up to RM300,000 with gross monthly income of RM5,000.
Type of eligible properties for purchase under SRP
Primary and secondary properties in Malaysia with maximum value of RM500,000. The property must be for own stay.
It’s good to take note that your monthly loan repayment should not exceed about 1/3 of your monthly income. In this case, if your salary is RM3,000 per month and in order to achieve healthy repayment vs. income balance, the property’s value should be around RM200,000. (RM940 monthly loan repayment under SRP 100% financing is about 35% of the total income stated above).
As you earn more, you may widen your price range accordingly.
If eligible for 110% financing, you’ll be able to use the extra 10% to cover your entry cost (legal and other fees). Some developers cover legal fees, stamp duty and more, so buyers can put these aside if the offer is available.
Costs related to Sales & Purchase Agreement
Legal Fee (1%) = RM2,000
Stamp Duty (2%) = RM4,000
Costs related to Loan Agreement (100% financing of RM200,000 house value)
Stamp Duty (0.5%) = RM1,000
Valuation Fee (0.20%) = RM400
(Valuation fee subject to secondary market only)
**Stamp Duty exempted under HOC 2019, extended to first-time homebuyers in the secondary market. If buyer buys directly from the developer, valuation fee and agent’s fee (if applicable) can be disregarded.
Extra 10% financing = RM20,000
Estimated fees (+ Loan agreement stamp duty) = +- RM7,000
List of Participating Banks
Found a house you really like and it’s within your means? Be sure to ask for My First Home Scheme financing option from these participating banks:
- Affin Bank
- Alliance Bank
- Alliance Islamic Bank
- AmBank Islamic
- Bank Islam
- Bank Muamalat
- CIMB Bank
- CIMB Islamic
- Hong Leong Bank
- Hong Leong Islamic Bank
- Maybank Islamic
- MBSB Bank
- OCBC Bank
- OCBC Al-Amin
- Public Bank
- Public Islamic Bank
- Standard Chartered
- Standard Chartered Saadiq
Good luck! 😉
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