Friday 29 Mar 2024
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This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on Feb 15 - 21, 2016.

 

Question:

My husband, who is a foreigner, has relocated to Malaysia after getting a lateral transfer from his employer. We are looking to buy a house in Kuala Lumpur and have found something that suits our preferences. However, the bank officers have declined our joint application to buy the house, which is about RM780,000, saying that the property has to be RM1 million and above (for tier-1 homes applied under the Malaysia My Second Home programme). I don’t have a high amount of savings or any fixed deposits as I have paid off my personal loans and car loan. I am worried that if I apply for a housing loan under my own name, it will be rejected as I still have to support my parents. What can I do to convince the bank to sanction the loan?> PS, via email

 

Answer:

gavin-teoh_consult-the-expert_pw_tem-1097_pg8If the spouse is Malaysian, perhaps they can buy the property under the wife’s name. In order for the wife to qualify for the loan, if she doesn’t have a high income, a sizeable down payment must be made upfront. The standard practice for banks when it comes to debt payment against income is around 65%. In certain situations, they could offer higher financing of closer to 90%, depending on the bank’s policy and the economic situation.

Debt payments include your car loan instalment, minimum payment for credit card and fixed monthly payment for your personal loan. You may use investment assets such as unit trust funds and shares to support the application. If there is any joint investment/ savings account with the husband, it can be used. The wife may approach the Employees Provident Fund if she wishes to use withdrawals from her Account 2 as a down payment or regular loan payment.

Another channel to consider when applying for financing is non-bank lenders. These institutions have more relaxed requirements when it comes to offering housing loans, but they come with a slightly higher interest rate. Their underwriting is lower, for example, but the debt-to-income ratio is higher. Applicants with a bad financial record still have a chance to obtain a loan from a non-bank lender as their application could be considered.

There are insurance companies that provide home loans, but their regulations are more conservative; the debt-to-income ratio is also much higher. 


Have a personal finance query? Send it to: Consult the Experts, Personal Wealth,
Level 3, Menara KLK, No.1, Jalan PJU7/6, Mutiara Damansara, 47810 Petaling Jaya, Selangor; 
Fax: (03) 7721 8018; email: [email protected]
Attn: Consult The Experts. Please include your full name, address, 
contact number  and pseudonym, if any.

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