Tax Budget 2012: My First Home Scheme (MFH)

Budget 2012 has proposed to increase the maximum price ceiling for houses under My First Home (MFH) scheme to increase from RM220,000 to RM400,000.

This improved scheme will be made available to house buyers through the joint loans of both husband and wife commencing from 1 January 2012.

Under the current MFH scheme, houses are set to be at the region within RM100,000 to RM220,000 range.

This scheme is opened to private sector employees aged between 18 to 35 years old with monthly salary income of not more than RM3,000.

MFH scheme would made it easier for those who qualify to obtain loans form properties with selling price at RM400,000 and below.

However, those who are earning below RM3,000 and take up loans under this scheme for houses valued at RM400,000 will find themselves in the situation where their disposable income are largely contributed to the housing loan instalments.

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Case Study:

If your household income are RM2,800 per month (means you are only income earner in your house & are earning RM2,800 per month or you & your wife are earning income of RM2,800 per month)

After hearing the budget & you feel excited over the news, you decided to buy the condo that next to the unit that you are renting for RM750 now.

The condo is selling at RM350,000.

You have contacted a friend who working in a bank, he has worked out the following calculation if 100% loan is to be given to you in accordance with the My First Home Scheme (MFH):

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Loan = RM350,000

Loan tenure: 40 years (You are 30 now, bank thinks you will work until 70)

Loan interest: 4.4% (BLR 6.6%-2.2%)

Monthly repayment: RM1,551 (using home loan calculator in iproperty.com.my  )

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You must get ready to pay RM1,551 out of your monthly income RM2,800!

(Oops! Forget about EPF & SOCSO deduction from your monthly income, your net monthly income should be RM2,533, leaving your household net disposable income after paying home loan shall be RM982 ONLY !)

(Oops again! Forget water & electricity, Forget quit rent & assessment, Forget maintanance/management fee, Forget….. list goes on….)

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Small note from NBC Group:

It is commonly understood that the basic formula of granting loans was not allow commitment of more than one third of the salary. If loans are going to be approved more easily, households may face a greater financial risk in cases of emergencies due to insufficient savings.

To buy a house is easier now & to get a loan from bank is easier now, however, please do reconsider the monthly repayment & emergencies before making any housing decision.

Buying a dream house within your means is vital for easier life in future.