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How to Save And Buy Your Dream House

(This article was originally published on the 8th of March 2018 and updated on the 1st of November 2019).

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Every individual surely wishes to own a house. The price of houses have been escalating over the years leading many individuals feeling unhopeful of owning one. However, it is definitely not impossible to own a house with the help of proper saving and financing aid.

So now, you will need to take matters into your own hands. Banks typically finance up to 90% of your mortgage so your first priority is to put enough money aside for your 10% down payment and some extra budget for the lawyer fees, stamp duties and renovation costs. Then, choose the right home financing as well as utilise on government schemes would further ease your journey into owning your dream house. In this article, you will find that buying a house is not as difficult as it seems.

How to Save & Buy Your Dream House

1. Save Money for your Deposit

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Put aside a sum of money from your monthly salary to allow you to save enough for the down payment. Set realistic and reasonable time frame to help you achieve your goal. Make sure that you practise good discipline while you are on this ‘money saving mission’.

There are many ways on how to have save extra money within a short period of time. While these are totally practical methods, you may need to make some little sacrifices.

Start by using the substitution method. Control your expenses by switching your usual purchases to something cheaper. For example, switch your RM10 meal at a restaurant for a RM4 homemade lunchbox or a RM10-12 artisan coffee for a RM2 brewed dark coffee from home. And quit smoking! A pack of cigarette costs about RM18-23 and if you do not smoke, you pay NOTHING. Do you get the idea?

A few hundred or even a few thousand ringgit here and there can really make a HUGE difference. If required, you can tap into your Employee Provident Funds (EPF) Account 2 so that you have enough for your down payment.

2. Choose the Right Housing Loan

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For most people, buying a house is considered one of the largest purchases in their life. Therefore, you need to choose a housing loan that offers the best interest rate.

There are quite a number of bank loans available in Malaysia, with a current market interest rate between 4.3% and 4.6%* depending on the borrowed loan amount. Spend some time to research and survey on the different types of home loans.

You can check out the financial comparison sites like iMoney, RinggitPlus and Loanstreet to find the best home loans in Malaysia. A home loan calculator can help you to figure out your monthly repayment of the mortgage as well.

Alternatively, you can tap into home financing scheme such as Maybank’s HouzKEY. Under this scheme, you can choose to rent a property from the bank with a flexibility to purchase the property as and when you are ready during the rental tenure. The scheme is open to the public. Three months upfront rental deposit is all you need to have and you will be able to move into your dream house in no time.

3. Get Assistance from Government Housing Schemes

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Combine frugal habits with a smart long term mortgage strategy and you are almost there. Here are more good news. There are some schemes from the government that can help you out. These government housing schemes available for Malaysians are PR1MA, My First Home (SRP), Rumah Selangorku, Residensi Wilayah, People’s Housing Program (PHP), MyDeposit. For civil servants, there is a scheme called Skim Rumah Mampu Milik by Perumahan Penjawat Awam Malaysia (PPAM).

We have compiled an overview of the aforementioned government schemes to better assist you on selecting the one that would best fit you. For more information, you can refer to:

SCHEME  REQUIREMENTS
PR1MA – Provide affordable housing between RM100,000 – RM400,000
  • Income between RM2,500 – RM15,000 monthly (Individual / Joint)
  • PR1MA unit is either first or second home
  • 21 years old & above
SRP – Provide loan financing up to 110% for houses priced not more than RM300,000
  • Income not more than RM5,000 (Individual) / RM10,000 (Joint)
  • Loan tenure not more than 35 years
  • For first time homeowner only
Rumah Selangorku – Provide houses of not more than RM250,000
  • Income around RM3,000 (Joint) for Type A; RM3,001 – RM10,000 (Joint) for Type B,C,D
  • Does not own a property in Selangor
  • 18 years old & above
Residensi Wilayah – Provide houses of not more than RM300,000
  • Income not more than RM10,000 (Individual) / RM15,000 (Joint)
  • Born, reside / work in Federal Territory
  • 21 years old & above
PHP – Price of house in West Malaysia RM35,000 & Sabah/Sarawak RM42,000
  • Income not more than RM3,000 – RM15,000 monthly (Individual /Joint)
  • For first time homeowner only
  • 18 years old & above
MyDeposit – A contribution of 10% of the property price capped at RM30,000 for property priced not more than RM500,000
  • Income not more than RM3,000 -RM15,000 monthly (Individual / Joint)
  • For a first time homeowner only
  • 21 years old & above
Skim Rumah Mampu Milik – Provide affordable housing projects for civil servants
  • For civil servants in Malaysia (including retired & contract staff)

(**The information disclosed is accurate during the period it was written)

Conclusion

Starting early, planning and saving whatever you can for your dream house puts you in a better position down the road compared to someone who waits and does nothing. If you need financial assistance to help you to get on the property ladder, Direct Lending is here to help.

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