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Buying homes for the first-time? Go for government schemes

We have often heard of the ever harder to obtain mortgage approvals. Seriously, is this due to the applicant or the bank? Actually, not entirely true but assuming we could not get one from the private sector, we should goto the government. As per the advice from The Association of Banks in Malaysia (ABM), first-time home buyers should consider applying for government schemes such as My First Home Scheme (SRP) for assistance in property purchase. Reported in a few medias, it said “The buyers are advised to avoid obtaining more credit, which may not be sustainable in the long term, and over-stretching themselves financially.”
It announced that 11 commercial banks and 11 Islamic financial institutions in Malaysia were participating in the scheme and the list could be obtained on the SRP website. In brief, ABM said home buyers need to be reminded that there are options for them. It said that before offering loans to applicants, they screen the applicants and approval is often based on many different factors. It said, “The business of commercial banks is in the main lending or extending credit while adhering to their respective risk appetites and/or the guidelines set by the regulators”
Besides that, ABM said it would be good for borrowers to also consider getting a pre-approved housing loan before even starting to look at purchasing a property. Potential buyers should work with their financiers to assess the suitability and affordability so that their applications have a stronger approval rate. It shared, “In assessing one’s eligibility for a housing loan, monthly home loan installments and other long-term monetary commitments such as hire-purchase loans should not exceed more than 40% of gross monthly income.”
Actually, it’s clear that banks are also wary of being too lenient with granting of loan approvals. No banks would want their non-performing-loans (NPL) to increase substantially. Besides that, as everyone could see, the prices of properties today versus the years before 2009 has changed tremendously even though 2009 and today is only 7 years apart. Thus, it may be more prudent for the banks to slow the loans growth instead of causing a potentially big property bubble to build up. On a personal note, I think when the banking sector remains sound, then property investments would be too. Happy viewing and perhaps applying.
written on 13 Aug 2016
Next suggested article:  The waiting game best played after we own something
 

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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