A couple of days ago, we received a call from a client. And let’s called her Ms. Amy (not actual name).
Amy bought a house in the year 2000 with her brother and joint name for the loan as well.
The house is occupied, and the house installment is paying by her brother.
In the last couple of years, her brother promised to remove her name from the property and loan. But, until today. It didn’t happen yet.
She is frustrated and has been chasing him for years now.
She is planning to buy a new house. But, facing an obstacle of getting a 90% margin loan.
She already has one existing home loan (under her name). Therefore this will be her 3rd home loan.
As the BNM guidelines, the bank only can give a 70% margin for a 3rd home loan.
That means she needs to prepare a deposit of 30%.
And for most of us, a 30% deposit can be a lot.
The truth is, many of us can relate to this story.
You help your family, but in the end, it hurts your financial profile.
So, should you do it in the first place?
I guess it depends.
It depends on the arrangement between the two of you and how desperate you want to help your family.
From Amy’s stories, the brother promises to transfer the property and loan to his name, but he didn’t.
Well, it not that easy to do the transfer, I mean financially.
It can cost some or a lot of money, depending on the property price. Let’s explore the cost involved.
For a property value of RM500,000, 50% shares is RM250,000.
So, Amy needs to appoint a lawyer to do an MOT transfer to transfer Amy’s shares to her brother. And the cost is about RM9600.
Then, Amy’s brother needs to apply for a new loan under RM450,000 ( 90% x RM500,000), and there is the cost of legal fees, stamp duty, and valuation, which estimate about RM9700.
The estimate total cost will be RM9600+RM9700 = RM19,300.
And hopefully, his brother can apply for the loan; if he can’t, then the transfer isn’t going to happen.
Our advice, make sure your family member is capable of paying such money and able to get a home loan. If not, you’re stuck with the home loan.
And you need to pray hard that they pay the home loan promptly. If not, it’s going to be bad for your financial profile, and you might face the difficulty of getting a home loan or any other loans from banks.
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