Saturday, March 26, 2011

My First Home Scheme - 100% Loan

Soaring property prices have made it difficult for working Malaysians to afford a home of their own.

Enter the new ‘My First Home Scheme’, introduced by the government. Under the scheme, those below 35 with a monthly income of less than RM3,000 may sign up for 100 per cent housing loans repayable over 30 years. But can working Malaysians cope with that repayment schedule? 

Blog reader KSL has churned out some figures and discovered what he says is the downside to the loans: 

Let’s do simple maths here:

Monthly salary 3,000
Less: EPF (330)
Less: SOCSO (5)
Less: Income tax (51) – single status
Net take home pay 2,614

With RM2,614 a month, one will need to carefully budget to take care of the following fixed commitments:

1. Housing loan repayment. Present BLR is 6.30% (Update: adjusted to 6.60% p.a. in May 2011) but lets assume one is able to get a fixed loan at rate of 5.25% for entire 30 years, repayment per month for RM198,000 loan is RM1,093.
2. Cagamas 1st 10% financing. Assume 0% interest over 30 years, repayment per month is RM61.
3. Car loan. Assume a Proton Saga 1.3s RM38,000, 90% financing at 2.58% for 7 years, monthly repayment is RM480.
4. PTPTN loan assume RM10,000 for 10 years, monthly repayment is RM108.
5. Housing loan MRTA (mortgage reducing term assurance) assume borrower is 27 years old, premium is RM4,992 per year, per month is RM416.  May be RM100 per month.

Just the above five items, monthly commitment works out to RM2,158 RM1,872! Balance of RM461 RM772 from the take home pay!

The balance would have to take care of the following expenses:

1. Daily meals
2. Petrol for the car
3. Astro
4. Mobile phone charges
5. Internet charges
6. Electricity bill
7. Water bill (first 20m3 free in Selangor – THANK YOU!)
8. Indah Water bill
9. Entertainment
10. Essential and non-essential shopping
11. General house maintenance and repairs
12. All the 6% government tax

Further, remember to set aside, if there’s anything left that is, for the following annual/half yearly expenses:

1. Assessment
2. Quit rent
3. Property insurance (fire)
4. Car road tax
5. Car insurance
6. Graduate’s professional association’s membership fee

Let’s not forget the following too upon purchasing a property:

1. Lawyer’s fees
2. Stamp duty on SPA
3. Bank loan fee and stamp duty
4. Valuer’s fee (if property is not new from developer) for bank loan

Is it scary enough? Think carefully before you commit.

What do you think of the above calculation? Is the ‘My First Home Scheme’ the answer to soaring property prices?

Amended from Source:

More info: