Know These Two Government Schemes That Will Help You Own A Home

Know these two government schemes that will help you own a home.

Are you dreaming of your first home? Are you planning to buy house in Malaysia? A place where you can grow as a family, safely and quietly. A little slice of sanctuary you can call your own? Buying your first home can be a daunting idea, some may even immediately dismiss the idea thinking that they do not earn enough, or have not saved any money for the mandatory 10% down payment.

But wait! There are two government schemes in place that can help you buy your first house. I am going to go through them, step by step, to ensure we can all understand what they entail, since we aren’t all bankers are we?

The first government scheme you should know about is the Skim Rumah Pertamaku (SRP), also known as the �My First Home Scheme’. 

This scheme allows first time property purchasers to buy a house with 100% financing from financial institutions. This allows first time buyers to buy a house without the stress of saving for a 10% down payment! No extra time needed to try and save until you’ve acquired the full amount. 

To qualify for this scheme, you need to earn a total amount of RM5000 per month if you are planning on buying the property by yourself, or a total amount of RM10 000 per month if you are planning on buying a property with a family member. For example, if you and your wife are looking at buying a house, your wife earns RM4000 per month and you earn RM4500 per month then you would qualify for this scheme. 

The next part of the scheme deals with the total value of your desired property, in total the price of the property should ideally range between RM100 000 to RM400 000. This amount limit is to ensure that the monthly repayments on the house do not exceed 60% of your total earnings within the household. This is put into place so that you will be able to comfortably afford the monthly repayment and still afford your other everyday payments.

The next main qualifying aspect is your age and the time frame taken to pay off the property. You should not be older than 35 years when applying or 65 years old when the repayment plan is complete, and the repayment plan will not be taken over longer than 40 months. This ensures that you have completely paid the financial institution before you are eligible for retirement.

There is always fine print when it comes to schemes like this. Here are the important parts, excluding the main points above, that have to be considered when considering applying for this scheme:

● You must be a Malaysian citizen.

● You have to be working for an independent company, you cannot work for a statutory body (government company), unless the statutory body does not offer a staff financing facility - then you are eligible. You do however qualify if you work for a private company and your spouse works for a statutory body.

● You may not buy a property with a friend, you have to be family members. 

● Once the property is bought, the owners have to reside in the property. 

● You are not eligible if you are self employed. If your spouse is employed by the private sector, he/she may apply but in an individual capacity.

● The Cagamas SRP Berhad’s guarantee only applies to the financial institution, not to the individual therefore you responsible for paying the full amount of the property value plus the standard bank charges, not just 90% of the total amount.

● To see a list of participating financial institutions use the following link: http://www.srp.com.my/en/bank.html

The second scheme you need to be aware of is the PR1MA ,Perumahan Rakyat 1Malaysia, scheme. 

This scheme allows you to buy a property in key urban areas. The government plans to build these properties in these urban areas. Signing up with PR1MA allows you the first option at acquiring one of these properties. 

The difference to the PR1MA scheme is that it utilises �stepped up’ financing. This means that for the first 5 years, your repayment will be lower. This allows you to get financing for a higher amount, that is affordable now. Another difference is that PR1MA allows for drawing from an EPF 2 ( Employees provident fund 2) as part of the payment up until retirement or end of tenure (end of the repayment contract). This means that you are able to draw from you EPF 2 account to help pay a portion of your total repayment amount should you need to. This is beneficial as it will help you with a decreased initial monthly installment amount and help with the final installment amounts up until the end of your contract. You are able to apply for either �stepped up’ finance, EPF 2 or both when registering.

The way PR1MA works is through a balloting process. Once you have registered by creating your PR1MA account and chosen your desired areas, you will be notified of the launches in those areas are occurring. This will allow you then to make application for those properties as the balloting process is not automatic. Then the balloting process will take place- this will be an open ballot for everyone who has met the requirements. If your ballot is successful you will then be able to view and choose your property. Then you will go through the financing process.

In order to qualify for this scheme you have to:

● Have an individual or combined household (husband and wife) income of RM2500 to RM7500.

● Be above the age of 21 years ( you can be single or married).

● Be a Malaysian citizen.

● Not be in ownership of more than one other property.

● You will still qualify if your spouse works and lives in another country as long as your combined income within the eligible amount.

Other details that you should be aware of:

● A 10 year Moratorium will be implemented from the start of the financial agreement., that means that the house cannot be sold within the first 10 years of owning the property, unless approved by PR1MA.

● The house has to be lived in by the owners, there is no subletting allowed.

● Houses offered by PR1MA are usually priced between RM100 000 and RM400 000 

● The size of the property depends on the type of property, an apartment is sized between 600 - 1200 square feet and a terrace PR1MA house is sized between 850 - 1850 square feet 

If your application was not approved by any of the participating banks: Maybank, CIMB, RHB or Ambank, do not worry! In future, PR1MA will have a rent to own scheme specifically for those not approved by the participating banks, to which you can apply for. 

Now that you have a breakdown of each scheme you can utilise them to help you get the home of your dreams. It’s not as difficult or a daunting as you once thought.