What you need to know about My First Home Scheme?

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What you need to know about My First Home Scheme?

 

The scheme is one of the measures announced by the Government in the 2011 Budget aimed at assisting young adults to own a home. The scheme allows homebuyers to obtain 100% financing from financial institutions, enabling them to own a home without having the need to pay a 10% down payment.

Cagamas SRP Berhad will guarantee the banks on financing above the 90% level i.e. if a borrower obtains 100% financing, Cagamas SRP will guarantee 10% (from 90% to 100%) of the financing.

LOAN FINANCING AMOUNT Some banks (not all) in town are offering 100% financing based on Purchase Price or Market Value, whichever is lower.

Example 1:

If purchase price is RM400,000 & Bank valuation is RM400,000.

Bank are willing to give financing up to loan amount RM400,000.

Provided customer able to fulfil the banks and cagamas criteria under this scheme.

Example 2:

If your purchase price is RM400,000.

Bank valuation is RM380,000.

Bank are willing to give financing up to loan amount RM380,000.

Provided customer able to fulfil the banks and cagamas criteria under this scheme.

Why RM380,000 and not RM400,000?

Because, bank will not finance anything above the market price. Banks will not take risk to finance such property.

It’s just mean you are buying the property on higher price.

PROPERTY Financing property for Market Value or Purchase price  ( whichever is lower) to be from RM100,000 to RM400,000.

Completed Residential Properties

This simply means any residential property in whole Malaysia and it is completed.

This included if you are buying from owner, developer or real estate agent. Property Type including terrace houses, townhouse, bungalow house, apartment and condominium.

Under Construction residential properties.

This means any residential property in whole Malaysia which under construction.

For under construction property, not all the banks are able to give financing. You have to check with the respective banks whether they are the project financing bank.

If they say yes, then you have to check with the banks whether they are offering My 1st Home Scheme Package. If yes, for both, then you can apply with the banks.

Please take note, if you are buying leasehold property:

Normal leasehold property is up to 99 years. However, the leasehold balance will be reducing from year to year.

If the property you are buying, the leasehold years balance less than 60 years, then the bank may need to get Cagamas SRP approval before offering this scheme.

How long will Cagamas takes to approve?

While, unsure…and Cagamas might have right to decline too.

Therefore, please try to avoid any leasehold property less than 60 years balance.

PURPOSE OF LOAN/FINANCING My First Home Scheme only for the purpose of purchasing a residential property.

DO NOT applicable for REFINANCING.

LOAN/FINANCING FACILITY/PRODUCT & RATES For banks packages, normally only conventional product.Interest rates will be in the range of BLR-1.00% to BLR-2.10%.

Note:

You are not encourage to shop around for interest rates if you would like to opt for My First Home Scheme, because to get approval is difficulty, however, you might want to try a few banks at the same times. To avoid any disappointment.

LOAN/FINANCING TENURE Max 30 years tenure, subject to not exceeding borrower’s age of 65

(based on younger borrower’s age, for joint application) at loan maturity

BORROWER /CUSTOMER *Malaysian Citizenship only.

*Young Adults not exceeding 35 years of age.

*First Time Homebuyers only (defined through CCRIS checks) and declaration in Application form and letter of offer. To confirm this is your first house.

*Preferable Joint borrower is spouse and follow by sibling.

Note:

If you do not have a house but you have a joint housing loan with someone, just to assist someone to get loan, you may not able to apply for this scheme.

EMPLOYMENT *Only Private Sector.
*Not for self-employed and government staff.
INCOME /LIQUIDITY RESERVE *Max salary of up to RM5,000 per month per individual borrower/customer

*Spouses Joint application with combined gross income of up to RM 10,000 with single borrower’s gross income not exceeding RM5,000/month( Bonus to be excluded from calculations.)

*Other joint applicant (other than spouses’ relationship) still bound to maximum RM6000.

DOCUMENT REQUIRED 1. NRIC copy
2. Property Booking Receipt
3. Vendor Sales and Purchase Agreement / Title copy / New Sales and Purchase Agreement
4. Latest 3 months pay slips
5. Latest 3 months personal bank statement (To show salary credited as per pay slip)
6. Employment Letter ( on letter head or bearing company chop) confirming job title and income details.
7. Latest From B/BE with payment receipt acknowledgement
8. Latest KWSP statement/Latest EA form
9. Deposit Statement e.g. Fixed Deposit, ASB or Bonds .
CREDIT CRITERIA *If you have other loans, please make sure the payments are prompt.If it doesn’t, the chances your application to be declined is definitely high.Go and print your CCRIS Report with Bank Negara before buying any property. After print, you can email to us or you can consult the bank negara officer on the spot.

*Debt Service Ratio (DSR) under this Scheme must be 1/3 of your income.

Exceptional cases up to 50%-60% with evidence of good saving habit.

How to calculate Debt Service Ratio (DSR)?

Please refer to following example:

Nett Income : RM3500

Existing commitment( Monthly instalment) :

Personal Loan : RM300

Credit Card outstanding : RM1000 x 5% ( 5% is the min payment) =RM50

Total Existing Commitment: RM350

New housing Loan instalment : RM1000

Total Commitment: RM1000+RM350= RM1350.00

Debt Service Ratio ( DSR) :

RM1350 (Total Commitment) / RM3500 (Nett Income) x 100 = 38.57%

OWNER OCCUPANCY One of the borrower have to occupy  the property as primary address.

While, not sure how banks going to check it… but just to be safe make sure one of the borrower staying in the house.

LAWYER FEES  When buying a house with loan financing.You will enter 2 agreements.

1) 1st agreement will be between Purchaser (You) and Seller/Developer. This agreement called Sale and Purchase Agreement ( SPA )

* If buying from seller, you have to pay the lawyer fees by yourself. Estimate about 3-4% of Purchase Price.

* If buying from developer, you have to pay some small fees only. But, definitely cheaper than buying from seller. Some developer, even absorb this fee.

2) 2nd agreement will be between Borrower (You) and Bank. This agreement called Loan Agreement ( LA )

The lawyer fees will be around 2-3% of loan amount.

If you are applying for 100% financing, bank normally will not finance this fee. You will have to pay on your own.

 

STAMP DUTY For completed property SPA, you will have to pay stamp duty for this.

Please refer to our Lawyer Fees and Stamp duty Article  on the calculation.

For under construction property, normally, you do not need to pay. Please check with your developer.

50% stamp duty exemption on purchase of first residential property of up to RM400,000 extended to Dec 31, 2016.

For example :

Property price : RM300,000

Stamp duty calculation :

1st RM100,000 x 1% = RM1000

Balance RM200,000 x 2% = RM4000

Total Stamp duty : RM5000

After 50% rebate stamp duty payable : RM2500

 

For 50% stamp duty exemption on loan agreement , the example as below: 

Loan Amount : RM300,000

Stamp duty : RM300,000 x 0.5% = RM1500.00

After 50% rebate stamp duty payable : RM750

 

 

VALUATION FEES Only for completed property.Valuer will have the scale fees.All scale fees is based on property price. We’re only able to provide estimation:

RM100k-RM200k = RM600-RM700

RM200k-RM300k = RM700-RM800

RM300k-RM400k = RM800-RM900

For under construction property, valuation report is not required.

 

DEPOSIT TO SELLER OR DEVELOPER For normal cases, when you purchase a property. You will be paying upfront 10% upon signing of SPA.

Balance 90% will be pay by your approve bank.

For 100% financing, unless seller or developer agreed to wait for your bank to release the 10% deposit which normally will take 2 months  (depending on your property, some up to 6 months), then you do not need to pay.

However, if they insist upfront for 10% deposit, you’ll still need to come out first and the bank will reimburse to you.

Therefore, bear in mind you still need to prepare the 10% deposit.

SPECIAL REMARKS To summary up, if you are buying a property and would like to apply my 1st Home Scheme, you will need to prepare for the following cash :

1) Lawyer Fees for Sales and Purchase Agreement

2) Lawyer Fees for Loan Agreement

3) Valuation Fees for completed property

4) 10% deposit of Purchase Price ( will be reimburse by bank)

For Example :

If property Price : RM300,000, you have to prepare the following fees ( Based on the maximum calculation):

1) Lawyer Fees for Sales and Purchase Agreement (4%) = RM12,000

2) Lawyer Fees for Loan Agreement (3%)= RM9000

3) Valuation Fees for completed property = RM900

4) 10% deposit of Purchase Price = RM30,000

Total Cash needed upfront : RM51,000

(Yet to less 50% stamp duty. So about RM47,750.00 after deducted)

 

 

* Note: The above criteria and information are for illustration only. We will not be liable for any losses or damages cause by it. The final approval still subject to bank’s decision and terms and conditions apply. While every care has been taken in compiling and preparing the contents herein, neither the company & nor its consultant(s) guarantees the accuracy, completeness and/or applicability of the information provided nor is the information meant to be final and binding.

 

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About the Author:

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