Buying a property is the biggest purchase that the average rakyat will make in their lifetime and hence , it is important that aspiring house buyers must save enough money to pay the 10 % down payment and be able to afford the monthly instalments while maintaining an acceptable standard of living . Aspiring house buyers must also factor in potential changes in lifestyle , such as having additional children or ageing parents , before committing to the house purchase .
HBA sincerely hopes that commercial banks will really take the necessary measures to ensure that the end-financing amount is reflective of the true value of the property and adopt responsible lending process . HBA also calls for BNM to ensure that all banks in Malaysia adhere to the BNM guidelines that end-financing is based on net of discounts and rebates as some banks continue to close both eyes when it comes to this rebate issue .
MCO sales bargain ?
The Covid-19 pandemic is expected to take a heavy toll on the property sector , and property developers are expected to give massive rebates to entice house buyers , even to the extent that a certain developer was reported to have guaranteed “ one Proton for every unit one property bought ”. Hence , more stringent action is required for this critical stage , else the banking industry will be saddled with property loans that are not reflective of their true value .
UOB vs Lippo on the issue of purported inflated mortgages
Down south in Singapore , there is an existing case where the Singapore ’ s High Court is expected to deliver its verdict on this long running legal tussle between United Overseas Bank ( UOB ) and the developer . Lippo Marina Collection ( LMC ) this month .
The lawsuit was first filed in November , 2014 where UOB alleges that LMC had conspired with 2 property agents to offer ‘ excessive ’ furniture rebates offered to the buyers and hence inflated the stated sale prices of units at Marina Collection , a luxury condo at the wealthy enclave of Sentosa Cove . The Bank alleges it was thus misled into granting housing loans based on the inflated price , instead of the actual purchase price of the units .
Questions then arise whether the purchase prices were misrepresented ? Was there fraud ? Were payments misrepresented ? Was there a case of poor internal controls ? Was it just a case of property developer handing out generous perks or a conspiracy to secure inflated housing loan ?
The lawsuit was first reported by The Straits Times and now circulated within the banking and finance circle . I would like to update the readers after the High Court pronounce its decision .
Conclusion
For the average person , buying a property is the single biggest financial commitment in his or her lifetime , hence careful thought and planning is a must . When homebuyers take on a loan that they cannot afford , they will have to cut back on other areas and have very little or no savings for any emergencies such as illness or accidents . It would not be sustainable if you have to skip meals to maintain the loan instalments . In the event of default in the monthly housing loan instalments , one will face the nightmare of foreclosure proceedings , eviction and ultimately suffer the fate of being house poorer .
There is no shame in renting until you are financially ready to buy a home . Amidst the slow economy in this current COVID 19 pandemic , you can scout for a low-enough rental that allows you to save for a future house .
Datuk Chang Kim Loong is the Hon . Secretary-General of the National House Buyers Association ( HBA ). HBA can be contacted at : Email : info @ hba . org . my Website : www . hba . org . my Tel : + 6012 334 5676
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