The biggest hurdle for most homebuyers is the upfront cash, specifically the downpayment. Here is a detailed look at how it works and how you can fund it.
The Standard Rule: 10%
For a standard housing loan in Malaysia (90% Margin of Finance), you are required to pay the remaining 10% in cash.
- Example:
- House Price: RM500,000
- Loan Amount (90%): RM450,000
- Downpayment (10%): RM50,000
Can I Buy with 0% Downpayment?
Yes, it is possible in certain scenarios:
1. New Launch Rebates
Developers often offer "early bird rebates" or "bumi discounts" that offset the downpayment.
- Example: A 10% rebate means the developer absorbs the downpayment cost. You essentially borrow 90% but don't pay the initial 10% cash.
2. My First Home Scheme (Skim Rumah Pertamaku)
This scheme allows eligible first-time buyers to obtain 110% financing, covering the price plus valuation fees.
3. 100% Loans for Government Servants
Civil servants can apply for LPPSA loans which offer full financing.
Sources of Funds for Downpayment
If you need to pay that 10%, here is where you can find the money:
1. EPF Account 2 Withdrawal
You are allowed to withdraw funds from your EPF (KWSP) Account 2 to pay for the downpayment or reduce the housing loan.
- Limit: The difference between the house price and the loan amount + 10%.
- Process: Apply via i-Akaun online.
2. Review Your Low-Yield Assets
Consider liquidating fixed deposits or stocks that are underperforming compared to the potential appreciation of the property (or the savings on rent).
3. Family Assistance "Bank of Mum and Dad"
Many first-time buyers receive a "soft loan" or gift from parents to bridge the gap.
Hidden Costs to Remember (Not just Downpayment!)
Remember to save an additional 3-5% for:
- SPA Legal Fees & Stamp Duty
- Loan Agreement Fees & Stamp Duty
- Valuation Fees
Tool: Use our Stamp Duty Calculator to estimate these extra costs.
Summary
Saving for a downpayment takes discipline. Start early, automate your savings, and explore developer offers if cash is tight.
