Willing to take a lifetime loan to own a home?

The government defines those who earn a monthly income of RM2,537 as the majority 40% or the B40. These people amount to 2.7 million of Malaysia's population.

One of the major necessities of people, Malaysians, is a home. A roof over their heads. And that is something the government has to ensure as well – home ownership.

And as we all know, the issue of affordable homes is something that has been discussed, debated and criticised for many years now. Basically, houses in Malaysia are just difficult to afford.

An average apartment or even a house in the suburbs of the Klang Valley would probably be between RM300,000 and RM400,000 per unit. Let's take the middle amount of RM350,000.

If it is someone's first home, then he or she would qualify to take a maximum loan of 90% of the purchase price of the property. That means he or she would have to come up with a 10% downpayment.

Ten percent might not sound like a lot, but that is actually RM35,000. And don't forget legal fees and stamping duties for the sales and purchase agreement. That would probably set a person back around RM45,000.

Now if this person earns RM2,537 a month, how long do you think it would take him or her to save up that amount? Don't forget there's the normal monthly expenditure to think about too.

Let's say this person saves 10% of his monthly salary for the initial payment to purchase the house. That would be RM200 a month. To get RM45,000, that would mean saving for almost 19 years.

And after 19 years, there will be a loan of RM315,000 to service and that would take another few decades to settle. Basically, the homeowner will probably never really own his home at all in his entire lifetime.

In the recent Budget 2016, the government outlined a few plans to encourage and increase homeownership among Malaysians. One of them was the First House Deposit Financing scheme.

What worries me about this scheme is that it will only create more debt for Malaysians. And looking at how owning an average priced home already puts people in a lifetime of debt, this could be risky.

Instead of creating more debt for the people, a better way to make owning homes more possible is to curb real estate speculation prices so that the appreciation in the prices of homes will be not be so exorbitant.

Another is to ensure the growth of income among Malaysians, be it in the public or private sector, so that it correlates with the increase in cost of living.

As it is, the B40 (and yes even the new M40) is finding it near impossible to own homes today without becoming locked in debt for an entire lifetime. – October 30, 2015.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.