PETALING JAYA: The step-up end-financing scheme announced in last Friday’s Budget 2017 speech will see the government guarantee up to RM100,000 of the loan taken for the purchase of homes under the 1Malaysia People’s Housing Programme (PR1MA).
This was clarified by Treasury Secretary-General Mohd Irwan Serigar Abdullah during a dialogue on Budget 2017 organised by the Malaysian Economic Association yesterday, TheSun reported.
In tabling Budget 2017, Prime Minister Najib Razak said the scheme was aimed at making financing easier and more accessible to the buyers with a total loan of up to 90 per cent to 100 per cent and to bring down the loan rejection rate.
“The scheme is a collaboration between the Government, Bank Negara Malaysia (BNM), Employees Provident Fund (EPF), as well as four local banks, namely, Maybank, CIMB, RHB and AmBank,” Najib said.
Irwan said the measure was needed to aid buyers who were chosen from the PR1MA balloting process but were still unable to obtain loans.
“The banks said the credit worthiness is not there. So we talked to the banks, and agreed that the government will guarantee up to RM100,000.
“Let’s say they are only eligible for RM160,000 but they want to buy a RM250,000 house, the government will cater for the difference of RM90,000. In that sense the government will finance the borrowing,” he was quoted as saying by the daily.
He added that if the buyer ends up defaulting on the loan, then the property will be sold via auction.
According to the terms of the PR1MA scheme, buyers will need to pay a lower amount in the initial years and only start to make higher instalment payments as their salaries increase over time.
“This will allow youngsters, working executives who just joined the work force to be able to borrow,” Irwan was quoted as saying by TheSun.
Meanwhile, following the Budget 2017 announcement on the step-up end-financing scheme, the EPF released a statement cautioning buyers that choosing such a facility will make them ineligible for other pre-retirement withdrawals under Account 2, namely education, Age 50 and Hajj withdrawals, until the PR1MA loan is fully settled.