PR1MA's end-financing scheme is no panacea

PETALING JAYA: Perbadanan PR1MA Malaysia has seen only 50 of the 197 applications for RM44.1 million loans for homes approved in the nine months since the step-up financing (SPEF) programme was launched.

The corporation, when contacted by SunBiz, said the programme is not a solution for those with issues in securing financing for buying homes but instead is to help already eligible borrowers secure higher financing.

“It is important to take note that PR1MA’s (1Malaysia People’s Housing Programme) SPEF is a financing option for PR1MA home buyers who are eligible for a conventional loan. In order for them to be eligible for SPEF, applicants must first qualify for a loan from any of the four panel banks.

“SPEF serves as an added boost – providing access to a higher loan amount than they would otherwise be eligible for with conventional loans, thus enabling them to purchase better homes,” the corporation said in its response via email.

The four panel banks for SPEF – Maybank, CIMB, RHB and AmBank – have approved some RM14.3 million loans as at end of September 2017 and are currently processing other applications.The banks declined to comment for this article.

The PR1MA SPEF programme was first announced in Budget 2017 and launched in February 2017. In Budget 2018, Prime Minister Datuk Seri Najib Abdul Razak announced that it would now be extended to private developers.

The PR1MA SPEF scheme comes in two options – the step-up only or the step-up with Employees Provident Fund (EPF) Account 2 withdrawal.

For both options, borrowers are only required to service the loan interest in instalments for the first five years and start paying the principal beginning from the sixth year.
In the first five years of the scheme, borrowers will only pay interest of the loan, which can be as low as RM880 a month.

“Although SPEF provides home buyers access to a higher loan amount compared with conventional loans, it is not however, a financing scheme that allows buyers to purchase property beyond their means,” it said.

It advised home buyers to make the necessary preparations before deciding to buy a house to ensure that they are financially ready to do so, calling the purchase of a house a huge commitment requiring financial discipline.

“Homes are categorised under big ticket items. Before you decide to buy one, you must know the types of houses that you can afford and should make the necessary arrangements to be financially prepared for this,” it added.

PR1MA reiterated that the ease of getting loans would depend on the creditworthiness or credit profile of the loan applicant.

According to the corporation, reasons for unsuccessful applications include bad credit record such as overdue National Higher Education Fund Corporation payments, low disposable income due to high financial commitments and failure to provide complete documentations as required by the banks.

Those blacklisted through the Central Credit Reference Information System are not eligible for the scheme.

“Difficulties in obtaining home loans are not PR1MA specific, but an issue faced by other developers as well, especially those involved in public housing programmes. This is mainly because these types of homes are targeted towards those that may or may not have adequate financial ‘muscle’ to purchase a house,” it added.

The corporation had previously said that many applicants who went through the balloting process had received the “Offer to Purchase” letter but were unable to complete the buying process due to financing issues.

The SPEF scheme was established as an option for eligible PR1MA home buyers to ease their monthly instalments for the first five years and improve their financial planning.