I’ve been reading many publicity and news about My 1st Home Scheme. Although, when the news first broke down by our Prime Minister, everyone welcome such a scheme with an open heart. Even though, government have a good intention to help people, but the Scheme has many weaknesses and flaws.
After one year of implementation and execution, you can see the number of applications and approvals are very frustrating.
As announced by Bank Negara (BNM), the latest figures on the progress of the scheme, as at of end-January, revealed as follows:
Total People had Applied for the Scheme : 1624
Less : Withdrawn due to multiple application to various financial institution : 562
Therefore, Actual application: 1062
Approved Application: 382 (36.60%)
Rejected Application: 505 (47.50%)
Remaining Application, still being processed: 168 (15.80%)
You have to remember, the above number are for whole Malaysia. Approved application stand only 382 among the multiple banks. I believe the numbers quite low.
Don’t forget more people are being rejected upfront by the banks before submitting for the application because of the strict terms and conditions imposed. These numbers are not recorded. If it’s does, you can see a huge number.
So, let me highlight again the main terms and conditions that are very strict among the banks.
1) GROSS INCOME.
To apply for this housing loan, your GROSS INCOME must be lower than RM3000. If your income is slightly higher, then just forget about it. Bank’s must follow the guidelines given by Cagamas and Bank Negara.
2) DEBT SERVICE RATIO
Debt Service Ratio under this Scheme must be 1/3 of your income or 50% must support with saving.
Basically, if you are earning Gross income RM3000 per month and yet to deduct others deduction, It is difficult to comply with these terms.
Let me show you:
Gross Income RM3000
– EPF RM330
– Socso RM5.00
– Income Tax RM51
Net Income RM2614.00
For RM220,000 for 30 years, instalment per month estimate RM1154.00
With the above Net income, the Debt Service Ratio is 44%. Which exceeded 1/3 but still within 50%. But, for Debt Service Ratio exceeded 1/3 must support with saving. This will be subject to bank’s approval.
For above assumption, we yet to add any car loan, personal loan or credit cards, even without any commitment the Debt Service Ratio is still unrealistic.
Nowadays, if you do not have any commitments or facilities with the banks, the chances are high for the banks to turn down your application. The reason behind this is the bank would like to track customer payment characteristics.
So, for the above case, you only allow to apply for credit cards and make sure your credit cards fully paid up monthly.
For many of us, we are not fall under this “PERFECT” category.
3) NEED TO PAY MORE UPFRONT
Yes, it’s true. We have to accumulate our saving to pay from our own pocket first. This scheme definitely not for people who do not have saving. If you do not have cash to pay the 10% deposit, then this is not the scheme for you.
I understand what you think when this scheme launch. Everyone thought,” This is Good News! I do not need to come up with any cash.” But, you are “ BIG WRONG”
Let me explain…
Firstly, if you are among the lucky one who get approval under this scheme. You still have to prepare with this. My example only on RM220,000 property. I do not want to go further to RM400,000 property, the amount will be more.
Property Price : RM220,000
Loan Amount Approved : RM220,000
Sales and Purchase Agreement (estimate) : Lawyer fees & other fees is about 3-4% of Purchase Price , RM6600.00
• Regardless, any scheme, you have to pay for your SPA lawyer fees.
Loan Agreement (Estimate) : Lawyer fees & other fees is about 2-3% of Loan Amt : RM4400.00
• Under 1st Home Scheme, you are not able to finance this amount to your loan. Normal loan are allow.
10% deposit : RM22,000.00
• Most of the owner/developer, not agree to wait for such a long time for the 10% to be pay. Therefore, if owner disagree, you have to pay owner first. Few months later the bank will reimburse the amount to you. If the Owner/developer agree, then is beneficial for you.
Add up all the cash, the total amount you have to prepare will be RM33,000.00
So, if young people who do not have saving or help from other families member, then it is a tough situation.
We receive many emails a day and I would said 90% are not qualify for the scheme.
I really hope government will heard us and make amendment on the terms and conditions to fits the current criteria and work hand in hand with the banks.
We do need to help our younger generation to own a house.
The most important, we are not here to judge but hoping the related parties will hear us.
For purchaser under 1st time home scheme who required 100% loan financing, BEFORE YOU PURCHASE ANY HOUSE, YOU ARE ADVISABLE TO MAKE SURE your eligibility by referring to the below criteria as per below links :
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