Owning a home is on top of many Malaysians’ wish list, but making that wish into reality can be an overwhelming struggle given that many first-time buyers cannot afford to buy properties, especially in the Klang Valley where there is an overabundance of high-end properties. Despite efforts by the government and property developers to build more affordable properties in cities and suburbs, it is a sad fact that first-time homebuyers still face challenges when it comes to buying property, be it due to lack of understanding about the buying process, or simply because of financial problems.

Stagnant Wages
It is a well-known fact that while property prices are increasing, salaries have remained stagnant. Earlier this year, the Real Estate and Housing Developers’ Association Malaysia (Rehda) said stagnant wages was the reason why people aren’t able to afford homes. In fact, housing in Malaysia was considered “severely unaffordable” in certain parts of Malaysia, with a median house price that was 4.4 times the median annual household. Homeowners who are looking to upgrade to a bigger or better quality home may find it difficult to do so while keeping within their means.

Housing Loan Application Rejected
On top of hefty property prices, getting a loan from a bank might be a challenge for prospective home buyers. One way is to sort out your finances before applying for a loan to avoid the much dreaded rejection from the bank. It is also important to note that having a good credit score (no debts, no existing loans, and consistently timely payments) as well as sufficient and stable income will greatly aid your efforts to obtain a housing loan. These are the 9 most common reasons home loan applications are rejected in Malaysia.

Lack of Funds for Down Payment
Forking out enough money for a down payment is no easy task. Most banks require a 10% downpayment of the property’s final price, so if your new home costs RM450,000, you’d have to come up with a down payment of RM45,000 – which is a pretty massive sum to accumulate, especially when you’ve barely started working. Besides the down payment, many first-timers also tend to overlook other costs of buying a property, such as stamp duty, legal fees, processing fees… These costs are in addition to the down payment and will cost you around 5% of the property’s purchase price. In this case, you’ll need to save an additional RM22,500 for closing costs on top of the RM45,000 down payment.

Lifestyle Choices
Taking that next big financial step to buying your first property is a commitment that would mean scaling back on lifestyle choices such as travelling, eating out regularly, buying the latest gadgets, or splurging on fashion. It’s a commitment that many hesitate to make, which is why many young people opt to rent instead of buying their own property – partly due to high property prices, but also attributed to lifestyle choices that eat up their paycheck with little savings at the end of the day.

(Source: Malay Mail Online)