Raising money for that downpayment
It's a Malaysian dream to own a property - our culture is not geared towards renting long-term.
Renting is considered something you do either as a student / newly working / a temporary solution if you're prone to being transferred - but in the long run, conventional wisdom is to bite the bullet and buy at least ONE property for your permanent residence.
So the conundrum lies in the wherewithal for the deposit and attendant costs.
To some, the need is urgent and saving up takes too long - so what are your options?
The fastest but most expensive:
Credit Card cash advance - that baby will hit you with an 18% p.a. interest rate the moment the cash comes out of the ATM.
Do Not Use This Method. Please. Even though it pays my salary.
The slightly less fast, also kinda expensive but sort-of bearable:
Personal Loan - you can take a bigger amount, take a longer time to pay it off and you have that lump sum to help secure the property you want to buy.
Only use this method when you are about to buy, you are quite sure of the price you want to pay and you are assured you are eligible for the housing loan.
You can couple this method with the following one:
The "It's already your own money but you have to apply for it":
Your EPF account 2 of course - you can use your EPF funds to purchase a home, you will need proof of purchase which is the Sale & Purchase Agreement (SPA or S&P). Therefore, you must have enough money for the legal fees and the earnest deposit (all in about 5-6% of the property purchase price) - these must be paid before you can access your own retirement funds.
If you had taken out a personal loan for the initial deposits and fees, now is a good time to pay it off with your EPF money so that you reduce your debt. You may incur some penalty charges which the bank is unlikely to waive if you cancel the loan before the halfway mark of the tenure, so you have a choice - pay the penalty or wait out to half way then pay it off. Your choice.
Another option available to Bumiputras eligible for ASB loans is the Dividend method:
This option takes a few years - yes, years to bear fruit. However, it's big, 'free' fruit, mind you.
How it works is thus:
Renting is considered something you do either as a student / newly working / a temporary solution if you're prone to being transferred - but in the long run, conventional wisdom is to bite the bullet and buy at least ONE property for your permanent residence.
So the conundrum lies in the wherewithal for the deposit and attendant costs.
To some, the need is urgent and saving up takes too long - so what are your options?
The fastest but most expensive:
Credit Card cash advance - that baby will hit you with an 18% p.a. interest rate the moment the cash comes out of the ATM.
Do Not Use This Method. Please. Even though it pays my salary.
The slightly less fast, also kinda expensive but sort-of bearable:
Personal Loan - you can take a bigger amount, take a longer time to pay it off and you have that lump sum to help secure the property you want to buy.
Only use this method when you are about to buy, you are quite sure of the price you want to pay and you are assured you are eligible for the housing loan.
You can couple this method with the following one:
The "It's already your own money but you have to apply for it":
Your EPF account 2 of course - you can use your EPF funds to purchase a home, you will need proof of purchase which is the Sale & Purchase Agreement (SPA or S&P). Therefore, you must have enough money for the legal fees and the earnest deposit (all in about 5-6% of the property purchase price) - these must be paid before you can access your own retirement funds.
If you had taken out a personal loan for the initial deposits and fees, now is a good time to pay it off with your EPF money so that you reduce your debt. You may incur some penalty charges which the bank is unlikely to waive if you cancel the loan before the halfway mark of the tenure, so you have a choice - pay the penalty or wait out to half way then pay it off. Your choice.
Another option available to Bumiputras eligible for ASB loans is the Dividend method:
This option takes a few years - yes, years to bear fruit. However, it's big, 'free' fruit, mind you.
How it works is thus:
- Max out your ASB loan - the cap used to be 250k but now it seems that it has been raised depending on the individual. Let's use 250k as the example for now
- Wait for your annual dividend - historically it's been about 8% return. That gives you RM20k in the 1st year - keep the money in FD or plough it back into ASB by cutting down your loan outstanding by 20K - you also save on interest charges
- 2nd year - another 20k or more; so your equity is now at 40k. Enough to buy your dream house yet? If so, then cancel your loan and keep the remainder and that's your down payment money.
- Not enough yet? Wait another year for it to go up to 60k.
So in 36 months, you can have about 60k cash in hand, not including what you have in EPF to buy your house. Provided your income makes you eligible for the 250k ASB loan, that is. So if you are eligible for 125k, then you will have 30k after 3 years..
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