The Malaysian government recently enhanced the Housing Credit Guarantee Scheme, increasing the financing guarantee to 120% to cover full home purchase costs. This uplifts affordability and accessibility of home ownership, especially for first-time buyers.
The Malaysian government recently announced an enhancement to the housing loan scheme under the Housing Credit Guarantee Corporation (HCGS) to make home ownership more accessible and affordable.
Under the new scheme, the financing guarantee has been increased from 100% to up to 120% of the property price for homes worth up to RM300,000. This means borrowers can now get a loan to cover not just the selling price of the home but also all associated purchase costs like legal fees, valuations, renovations etc.
This change is part of the government's "Madani Economy: Empowering the People" framework aimed at uplifting people's livelihoods. Prime Minister Anwar Ibrahim stated that the scheme would cover the full spectrum of home ownership costs through a single loan amount.
The government has allocated RM5 billion to boost the HCGS scheme. This enhanced financing is expected to benefit many first-time home buyers who struggle with high upfront costs of purchasing a home.
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Comparing the Old and New HCGS Scheme
Let's compare the key features of the old and new HCGS housing loan scheme: please refer https://www.sjkp.com.my/en/ for new updates
| Feature | Old Scheme | Enhanced Scheme |
|---|---|---|
| Financing Guarantee | 100% of property price | Up to 120% of property price |
| Max Property Price | RM500,000 | RM300,000 |
| Costs Covered | Purchase price only (including principal financing amount, MRTT*/MRTA*, LTHO*, solicitor’s fee and valuation fee) | Price (including principal financing amount, MRTT*/MRTA*, LTHO*, solicitor’s fee and valuation fee) + renovation etc |
As we can see, the major improvement is the increased financing coverage from 100% to 120% which will cover all associated home buying costs. This takes away a major pain point for borrowers who previously had to arrange additional finances for fees, taxes and renovations.
Making Home Ownership More Accessible
The enhanced HCGS scheme makes owning a home much more accessible for average-income Malaysians. It removes the financial hurdle of high upfront costs beyond just the selling price. With the loan covering all additional costs, more people can actually afford to buy a house now.
This is a step in the right direction by the new government to address housing affordability issues in the country. It remains to be seen how many people ultimately benefit from this initiative. But the increased financing flexibility and coverage is likely to boost home ownership rates, especially among younger first-time buyers.
The HCGS enhancement allows more Malaysians to turn their dream of owning a home into reality. The long-term impacts on home ownership rates and real estate market stability could be significant. Nonetheless, this is a policy move that empowers more people to become home owners.
