Bank rejection rates are so high. How do I ensure that I don’t become another statistic?
The most common reason nowadays for loan rejection is the non-service of PTPTN loan repayments. There are of course also other reasons, such as a lack of credit records and late credit card repayments. Click here to find out more about the consequences of not paying back your PTPTN Loan.
The best way to stop yourself from becoming another statistic is to check your CCRIS records before applying for a mortgage loan. All you need to do is to go to Bank Negara where the guards will kindly direct you to the CCRIS kiosks, and then insert your IC, allow the machine to read your thumbprint when prompted, and then voila! Your report will be printed out - for free!
When you look at your record, you will see a list of all your debts from all your credit cards, study loans and etc. If you are a good paymaster, you will notice that all the numbers of the right side of the paper under the months will be ‘0’. If there is a number ‘1’, it means that you did not make payment or made a late payment for that month. And as long as there is a ‘1’ in the columns on the right, your loan application may be rejected as it shows that you are not a good paymaster.
The only way to clear your record immediately if there is a number ‘1’ in any of the months, is to clear off the entire debt immediately. Otherwise you need to continue making your monthly payments regularly for a cycle of 12 months to push the ‘1’ out of the chart.
Is now the right time to buy a property? I heard that property prices are going to go down. Should I wait until then?
Property prices are never going to go down. Since the inception of Malaysia, property prices have never failed, and in fact between the ‘slow’ years of 2009 and 2014, overall Malaysia property prices experienced a compound annual growth of 7.8%. So if this is your question, the answer is: The best time to have bought a property was 10 years ago. The next best time is today. Click here to find out more on how Budget 2017 will affect the market and first time home buyers.
Okay, so where should I buy my property?
Ideally, your property should always be centrally located to the city for a convenient lifestyle. After all, living 7.0 kilometres away from the Kuala Lumpur city sounds a lot less stressful if you are working there, rather than, “I stay 42 kilometres away from the city” - no matter what the developers say.
Of course the price to pay is the most painful part, but if you do your due research you will find that there are actually still some great new properties that are still selling below the market price when it comes to developments in the city.
For example, Razak City Residences in Sungai Besi is situated 7.0 kilometres away from KLCC, and is located just opposite the upcoming Bandar Malaysia that will house the upcoming High Speed Rail (HSR). These homes are not part of any affordable home scheme, yet they cost almost the same. They’re so affordable, you can even afford to buy them in on a humble monthly salary of RM3,000! Each unit comes with either 2 bedrooms and 2 bathrooms, or 3 bedrooms and 3 bathrooms. All the units comes with 1 parking lot. Click here to find out more.
I hear that location is the most important aspect to consider when buying a new home. But is price or location more important?
Location is definitely more important - after all, you can still obtain a 6,000 sf bungalow in Bukit Beruntung for only RM580,000. But there is a lack of amenities there, and the township is almost 50 kilometres away from Kuala Lumpur.
As mentioned above, if you do your due diligence, you will find that there are still many great developments to be found in the Kuala Lumpur city at affordable prices.
Which type of property will give me a better ROI?
The general consensus is that landed properties will give you a better return on investment (ROI), but that will depend on what you are looking for and what is your holding power like. At a time when the typical salary was only RM700 per month 30 years ago, a semi-detached house in Section 11 Petaling Jaya cost RM180,000 which in current times translates to a monthly repayment of RM595 per month at a loan period of 35 years and an interest rate of 4.25%. Thirty years later in 2016, the same house costs RM1.8 million at bank valuation.
Landed properties are therefore deemed to be more suitable as long term investments as its capital returns are higher, but of course the time period to wait is also much longer.
So if you are looking for ‘immediate’ returns, finding a property that is ideally located to be rented out is more suitable. For example, properties located around many universities such as in SS15, Subang Jaya is a great place for rental returns. Then again, public transportation is the future of Malaysia with all the upcoming train lines, hence finding a good property close to the rail tracks will provide better ROI in the coming years.
A good example of one such place is again Razak City Residences in Sungai Besi. Being located just opposite the HSR which will connect Malaysia to Singapore in under 99 minutes, it is anticipated that with the HSR, there will be a massive inflow of foreigners visiting Malaysia - either for work or play - who will be looking for nice yet affordable homes for temporary or permanent tenancy.
A place such as Razak City Residences will be ideal for them when it comes to commuting, hence owners of Razak City can choose to either rent their units out to temporary residents, or to avoid the hassle of renting they can just wait until they get a good offer and sell their unit off.
What if I cannot service my loan later? I don’t want to become bankrupt.
Always find a property that you can afford to pay for with only 30% of your household income for the safest approach. However, we understand that sometimes disasters happen that may cut off your source of income. So the next safest approach is to buy a really potentially great development such as Razak City Residences; and if push comes to shove, you will find it easy to find yourself a buyer and rid yourself of your debt.