If a property developer has enough surplus cash, could it offer home loans to its buyers? Some would argue that the question should be should it do so and not whether could it do so. I think it’s best to look back at the fundamental question, does it help them to sell more properties? Any developer would want to secure buyers, preferably of a certain quality so that these buyers can then qualify for the home loans that they apply for.
A few months ago, one developer friend told me that he had to sell his 180 units of low cost apartments nearly 500 times because the banks kept rejecting the loan applications! Just weeks ago, a good friend who’s a senior manager for an affordable apartment project told me that she has already sold nearly 500 times for her 300 plus units and the selling is still continuing. Haha. Perhaps this is more applicable for the lower end segment? Well, whether lower-end or higher-end, the fundamental question is always, ‘do we have enough interested buyers who can qualify when they apply for a home loan.’
Sunway’s property development division recently announced something which was quickly shared by many people when it was published in the media. It’s a very interesting proposition indeed. Sunway is offering its buyers financing options of up to 88 percent under its Sunway Property Certainty Campaign, which included a guaranteed loan upon project completion, deferred payment and a voluntary exit plan. It’s managing director for property development division for Malaysia and Singapore, Sarena Cheah said, “We are definitely not trying to be a bank because we are not in the business. We are lending you a helping hand rather than giving you a scheme. ”
This scheme would end on 30th September 2016 and their buyers could apply to commercial banks or Sunway for the loans. It is offered on a limited, first-come-first-serve basis for Sunway’s new residential launches. The interest rate is fixed and the tenure is only 15 years. A friend called Sunway’s office and told me that the sales person told her that the interest rate would be higher than what’s offered by the commercial banks. Sarena explained further, “We are not giving it to everybody. It serves as a safety net if you can’t get a loan for whatever reason. At that point in time, when you can’t get a loan, that’s where we will come in.”
Based on the current market situation, I think many more creative methods would be introduced into the market. Developers do not just sit and wait. They need to keep their people and to keep their people, they need to sell properties. Well, at least now if you must own a place and you are not allergic to Sunway’s properties, it’s time to view and decide. Banks are no longer your last resort in this case. Still, a word of caution. Buy within affordability. No one knows exactly how long the current slowdown would continue and how bad the job market may actually become. Happy applying.
written on 31 Mar 2016
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