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Home ownership: two simple words, yet something almost impossible to achieve for many. Property prices are almost constantly rising along with the cost of living while wages have been stagnating. House ownership is becoming more and more of a distant dream, especially for the blue and white collar workers.
That is not completely true though, in recognition of this problem, some government sectors and financial institutions have come up with initiatives to make home ownership more affordable and accessible.
From affordable housing to flexible payment schemes, there are a number of ways you can become a homeowner without breaking the bank or saving up for 20 years. This can be done through affordable housing schemes that allow higher percentage of financing, lower down payment, or rent-to-own options.
Affordable Housing Schemes
Looking for affordable housing? Here is a list of affordable housing schemes to help Malaysians attain a property at attractive rates: –
1. Skim Rumah Pertamaku/My First Home Scheme
- Obtain 100% financing from financial institutions, no need to lay down a 10% down payment!
- Eligibility: For properties between RM 100,000 and RM 400,000; buyer must be 35 or below with monthly income below RM 5,000.
2. MyHome
- This scheme subsidises up to RM 30,000 per home.
- Eligibility: For properties between RM 80,000 and RM 300,000; buyer must be first-time buyer with a monthly household income between RM 3,000 and RM 6,000.
3. BSN MyHome (Youth Housing Scheme)
- 100% stamp duty exemption for transfer of ownership and facility documents for property priced up to RM 300,000.
- The government covers RM200 a month towards monthly instalments for the first two years.
- Eligibility: For properties between RM 100,000 and RM 500,000; buyer must be first-time buyer with a monthly household income below RM10,000.
4. Rumah Selangorku
- Affordable housing priced between RM 42,000 to RM 250,000 for middle-income earners in Selangor.
- Eligibility: Buyer does not have a property in Selangor, and has a monthly household income below RM 10,000.
5. Residensi Wilayah
- Affordable housing priced between RM 52,000 to RM 300,000 for middle-income earners in Federal Territories.
- Eligibility: Buyer must be staying and working in a Federal Territory and has a monthly income below RM10,000.
Rent First, Own Later
To offset some of the burdens of buying a house, the government has also rolled out Rent-To-Own schemes (RTO) which allows you to purchase a rental property in the future.
In essence, the RTO agreement you sign with the developer would include the option to buy the property after a specific amount of time, while you rent it first to “test” it out.
How Do RTOs Work?
The tenant signs a “lease-purchase” agreement with the developer, giving the tenant the option to buy the property at a specific date in the future. The duration of rent before purchase differs, some have to rent for 5 years, some may have to rent for 10 years.
After this duration, the tenant has the option to purchase the property at the price specified at the time of signing the agreement.
Why RTOs?
Boiled down to 3 major benefits, here is why you should consider a rent-to-own scheme: –
- You don’t need to pay a huge down payment to purchase.
- You only need around 3 months’ rent to be eligible, lower than the regular 10% deposit required to buy a home.
- With housing prices expected to go up, you can lock in the price at its current value, instead of its future value.
Should You Buy a House Now?
We won’t tell you what you should do, but the interest rates now are pretty low. Even outside of the schemes we have listed here, the government has extended the Home Ownership Campaign (HOC) with developers offering discounts among other incentives.
Of course, the responsible thing to do would be to weigh up all your options, conduct careful calculations of your budget. In uncertain times like this, the last thing you want is to give yourself more unwanted burden!