SJKP: How Malaysian First-Time Homebuyers Can Explore Housing Financing

Categories: Basics - Property Investment, Kuala Lumpur / Selangor Props

[Sponsored] SJKP: How Malaysian First-Time Homebuyers Can Explore Housing Financing

I bought my first property jointly with my wife in 2003. That was when I was 26 years old. I can safely tell you that property investment is something compulsory for all of us. Unless of course we intend to pay rental every month even after our income has stopped. Shelter is a must yeah, we cannot sleep in the garden… Now, if you are a first time home buyer, you have additional help. You can read this article to understand more.

Buying our first home is a major milestone. But before we start browsing property listings and imagining where the sofa should go, there is one important question to answer: can we obtain the financing needed to buy the house?

For some Malaysians, getting a housing loan can be more challenging because their income does not come in the form of a regular monthly salary. Think about self-employed individuals, small business owners, freelancers and people whose earnings vary from month to month. They may earn enough to pay their monthly instalments, but documenting their income can be more complicated.

This is where Syarikat Jaminan Kredit Perumahan Berhad (SJKP) comes in.

SJKP administers Government housing credit guarantee schemes intended to help eligible Malaysians obtain housing financing for their first home. Let’s understand what it does, which schemes are available and how potential homebuyers can apply.

1. What exactly is SJKP?

SJKP was established on 6 December 2007 as a wholly owned company of the Minister of Finance (Incorporated).

Its role is to provide guarantees for housing financing offered by participating financial institutions. The schemes are intended to address some of the difficulties faced by potential first-time homebuyers, including those who do not have fixed monthly incomes.

Here is the important distinction: SJKP is not the bank providing your housing loan.

The participating financial institution provides and assesses the financing. SJKP provides the relevant Government guarantee, subject to the applicable scheme and approval requirements.

In other words, applying under an SJKP scheme does not automatically mean your housing financing will be approved. The financial institution still assesses your application.

Official reference: About SJKP

2. What are the main schemes available?

SJKP’s website highlights two main housing credit guarantee schemes: the Housing Credit Guarantee Scheme (HCGS) and HCGS-MADANI.

Housing Credit Guarantee Scheme (HCGS)

Under the HCGS, the financing limit is up to RM500,000, including the principal financing amount and specified related costs such as mortgage protection, long-term houseowner takaful, solicitor’s fees and valuation fees.

The scheme covers term loans or Islamic term financing, with a financing tenure of up to 35 years or the applicable financing tenure, whichever is earlier. Two-generation financing is allowed, subject to the relevant conditions.

The website also describes guarantee coverage above 100% of the financing amount obtained from participating financial institutions, subject to the financing limit and scheme conditions.

The interest or profit rate is determined by the participating financial institution. Therefore, applicants should discuss the applicable rate and repayment terms directly with the bank.

Reference: HCGS scheme features

Housing Credit Guarantee Scheme – MADANI (HCGS-MADANI)

The second scheme is HCGS-MADANI, with a financing limit of up to RM360,000. This includes a maximum house price limit of RM300,000 and the additional amount of up to 20 percent will cover specified costs such as mortgage protection, long-term houseowner takaful, solicitor’s fees, valuation fees, renovation costs and the purchase of home furnishings and fittings. All these will be subject to the scheme’s terms.

Its financing tenure can be up to 35 years, subject to the applicable conditions. The interest or profit rate is determined by the participating financial institution.

The two schemes have different financing limits and features. Potential buyers should review the details of each scheme to understand which one may be relevant to their circumstances.

Reference: HCGS-MADANI

3. Who can apply?

SJKP’s eligibility page states that applicants must be Malaysian citizens aged 18 and above. Joint financing is allowed.

Both fixed-income earners and people without fixed monthly incomes, including self-employed applicants, can be considered.

The property must be the applicant’s first home and intended for owner-occupation. Eligible property types include newly completed homes, properties under construction, existing homes purchased through the secondary market, and auctioned residential properties.

However, there are financial and credit-related requirements.

According to the website:

Total repayments for all the applicant’s loans must not exceed 65% of gross monthly income.
The applicant’s CCRIS record must not show arrears exceeding two months within a 12-month period.
The applicant must not have other adverse credit records within the preceding 24 months.

Meeting these criteria does not guarantee approval. The participating financial institution will assess the application and apply its relevant requirements.

Reference: SJKP eligibility requirements

4. What documents should applicants prepare?

This is particularly important for people whose income does not come from a conventional salaried job.

SJKP’s website identifies several supporting documents that may be relevant.

For salaried employees, these include salary slips and EPF statements.

For applicants without fixed incomes, supporting evidence may include bank statements, business licences, fishermen’s registration cards or other documents that substantiate trading or service activities.

The website also states that applicants without fixed incomes may obtain an income confirmation letter from an authorised person, such as a Category A Government Officer, a village development and security committee chairman (JKKK), a Penghulu, an elected representative or a bank branch manager.

The actual documents required may depend on the applicant’s circumstances and the participating financial institution’s assessment. It is sensible to check the requirements with the chosen bank before submitting the application.

5. How does the application process work?

The process outlined by SJKP is straightforward to understand.

Step 1: Identify the house.

First, identify the residential property you intend to purchase.

Step 2: Prepare the supporting documents.

Gather the documents needed to demonstrate your income, financial position and other relevant details.

Step 3: Approach a participating financial institution.

Bring the documents to a participating bank and apply for housing financing under the relevant guarantee scheme.

One important point: SJKP’s FAQ states that applications are made through participating financial institutions, not directly at SJKP’s office.

Reference: SJKP application process

6. Which banks participate?

SJKP publishes a list of participating financial institutions on its website. The institutions listed through its official eligibility and financing tools include:

Affin Bank
Agro Bank
Alliance Bank
Alliance Islamic Bank
Al Rajhi Bank
AmBank Islamic
Bank Islam
Bank Muamalat
Bank Rakyat
Bank Simpanan Nasional (BSN)
Hong Leong Bank
Hong Leong Bank Islamic
Maybank
Maybank Islamic
MBSB Bank
RHB Islamic Bank

Applicants should refer to SJKP’s current partner list and confirm the availability of the relevant scheme with the bank, as participating arrangements may change.

Reference: SJKP official website and financial institution partners

7. What should potential buyers remember?

SJKP’s website also provides an eligibility checker, a financing calculator, scheme information, brochures and frequently asked questions.

These resources can help potential buyers understand the basic requirements and estimate possible monthly repayments. However, a calculator is only an estimate, not a financing approval.

It is also important to remember that a larger financing limit does not necessarily mean we should buy a more expensive house. We still need to consider our monthly income, existing commitments and ability to manage repayments over many years.

The website’s FAQ states that SJKP does not charge borrowers a fee directly for the guarantee scheme. However, applicants should clarify any applicable financing costs and charges with their chosen financial institution.

Conclusion

SJKP is a Government-backed housing credit guarantee initiative aimed at helping eligible Malaysians obtain financing for their first owner-occupied home. Its two main schemes, HCGS and HCGS-MADANI, have different financing limits and coverage arrangements.

For potential homebuyers, the first step is to understand the eligibility requirements, prepare the necessary documents and speak to a participating financial institution.

A home purchase is a long-term financial commitment. Knowing what support is available is useful, but the final decision should still be based on what we can comfortably afford.

Happy property hunting!

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Official references

All references below are from SJKP’s own website: