Young buyers often spot a promising deal and find themselves short of the 10% down payment, or unable to qualify for a loan because of card debts and instalment plans. Many complain that salaries no longer keep up with prices.
Where can a first-time buyer find the money for a property, and what should come first?
“you should ask yourself how can you afford this”
First save six months of expenses. Then the money comes from the four Fs: family, friends, financial institutions and fools. Borrow from family or friends only if you repay on time, keep your credit clean for the bank, and steer clear of being anyone's 'fool'. Above all, work out the income you need and how to reach it.
Why
Six months of savings comes first
If you spend RM3,000 a month, have RM18,000 in the bank before you look at property. Paying the minimum on cards all year and clearing them with the bonus leaves nothing to invest.
Partners split the bad times too
Buying with a friend halves the down payment, but both names are liable. When the unit is empty, each of you pays half the instalment every month.
Beware anyone who wants your name
'Fools' are people who lend their name and credit to someone else's scheme for a promised share. If a deal were certain to make money, nobody would need to share it.
Work back from the price
Banks lend roughly where the instalment is a third of income. A RM500,000 property costs about RM2,500 a month, needing about RM7,500 of income; ask what would raise yours from where it is.
What to do
- Save six months of expenses before you start viewing.
- Clear card debts and instalment plans so they don't block your loan.
- If family or friends help, agree repayment terms in writing and keep to them.
- Never lend your name or credit for someone else's purchase.
- Calculate the income your target property needs, and plan side work or skills to reach it.
Editorial Note: Summarised from Sean Tan's full episode. The quoted answer is in his own words; the rest is our paraphrase. Figures reflect the recording date, so check current rates and rules before acting on them.
Sourcing Money for Property Investment
Sources & Verification Data
Summarised from Sean's full English captions for this June 2019 video. The quoted line is verbatim; everything else is paraphrased.
