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Own a RM500K home in Malaysia with these 3 simple tips!

Own a RM500K home in Malaysia with these 3 simple tips!

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So, how can you be one of the increasingly rare young Malaysian that owns a home? Here are 3 tips that will help you get the property of your dreams and find a leg up in the hyper-inflated property market today.

Thinking of buying a property? Well, you’re not alone. Despite reports claiming that the growth of property prices has been slowing due to bad economy and an oversupply of residential homes (The STAR, 2018), many millennials dread their prospects of owning a house today (FreeMalaysiaToday, 2018) and would cite these reasons that stops them short:

1. Renting is much more cheaper

It is true that renting is a cheaper alternative to owning a house. However, this is a subjective answer. We advise that you take stock of your priorities and short and long-term goals before deciding to rent or buy (RinggitPlus.com, 2019). The obvious downside to renting is that you could be paying instalments to a property that could be yours, and could potentially double or even, triple in value in the future.

2. Houses are much too expensive

Yes, they are, especially in city centres and places nearby public transportation stations (LRT, MRT, etc.). But there are alternatives available. You can live outside the city and commute or find a job that’s not in the city. Facts are that houses in the suburbs outside the city are much more affordable and are much more worth your Ringgits (iMoney.my, 2018).

3. I will be tied down to a loan (physically, financially, emotionally, etc.)

Many Malaysians fear being tied down to a mortgage which would drain their finances and keep them tied down to a location because of it, and that’s a sound fear. Housing loan defaults, is the second most cited reason for bankruptcy among young millennials, right after car loans, and followed on by personal financing loans. (Edgeprop, 2017). It’s no wonder that millennials feel that renting would be a safer, cheaper and more viable option, given the potential risks that exists.

Despite our dreams of owning a property, lifestyle inflation of prices and salary increments that are not catching up is not helping us to realise our dreams. One in two employed graduates in Malaysia are earning less than RM2,000 a month, and youth unemployment rates remains at around 13.2% in 2018, staying the same since 2017, being higher than the global average of 5.5%, writes The STAR (2018).

So, how can you be one of the increasingly rare young Malaysian that owns a home? Here are 3 tips that will help you get the property of your dreams and find a leg up in the hyper-inflated property market today.

1. Do the Math

Our rule of ever taking up a mortgage for a property is that if you can afford 3 of it, you can afford 1 of it. Another way of looking at it – never let your monthly instalment exceed more than 30% of your total income as you would have other commitments to tend towards as well (parents, groceries, living, etc.). Using this rule, you can then estimate the property price and type that you can go for within your budget.

It’s always good to consult a property agent to know how to manage your mortgage loans and investments. Consult us and we’ll help you make a sound financial decision.

2. Fund your down payments smartly

If you have found the right property for yourself, fret not that you may not have enough savings to pay for a down payment as there are plenty of alternatives available that can support you.

i. Low-Interest Rate Personal Loan

Keep a clean credit record and leverage this to negotiate with banks for a personal loan with lower rates. This does mean that you would have to agree to a tenure period, interest rates and monthly instalments to make payments to this personal loan, but you will likely clear this debt off in two to three years before starting to pay on your mortgage loan. Learn how you can manage your personal and mortgage loans with zero instalments paid to the banks with Prolution.

ii. EPF Account Withdrawal

You can support your property purchases by withdrawing from your Employee Provident Funds (EPF) Account given that you meet the following conditions.

· The property is a residential unit

· Bank has approved your financing options

· SPA has been signed but was not more than 3 years

· Withdrawal for a house purchase has never been done

Contact us to know more details about withdrawing from your EPF to buy a house and managing your mortgage with the banks.

3. Look out for initiatives from the Government

The government has created the My First Home Scheme (SRP) and PR1MA initiatives to support young Malaysians that are aspiring to buy a house in the country.

My First Home Scheme (SRP) offers the following benefits:

· 100% financing with ZERO downpayment

· Property must be occupied after purchase.

· Financing tenure not exceeding 40 years, or not after 65 years old.

· Instalments payable via monthly salary deduction

· Single borrower gross income not exceeding RM5,000 per month while joint borrowers income not exceeding RM10,000 per month

Meanwhile PR1MA offers:

· Affordable homes for individuals and families with an average household income between RM2,500 and RM7,500.

· 10-year moratorium whereby the property cannot be sold or transferred to another party without approval.

· Property must be occupied after purchase

Too much information here for you to consume? Still having doubts on whether buying a house is a right more. Consult us today and we’ll answer all the questions you have. Book your Session Here!

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