What is SJKP?

SJKP stands for Skim Jaminan Kredit Perumahan which means the Housing Credit Guarantee Scheme. Through guaranteeing housing loans with the Malaysian government’s support, this program helps people obtain housing loans. The Malaysian government introduced SJKP on 1st April 2022 to increase homeownership among those who might not secure home loans through traditional methods.

SJKP’s main aim is to reduce the risks for lenders as it guarantees housing loans. This assurance encourages financial institutions to lend money to borrowers who are usually considered high-risk. SJKP significantly reduces the financial risks involved with housing loans. This helps in encouraging homeownership and real estate in Malaysia. Other than SJKP, there are still a few Malaysia Home Financing Assistance Programmes introduced by Government. Don’t forget to check out them as well to make sure you find the best schemes.

Who is Eligible to Apply?

The government thoughtfully designed the eligibility criteria for the SJKP scheme. In case of a huge prospective homebuyer with cash constraints, the scheme will help. If there is a lack of down payment, the scheme will assist. The SJKP scheme is designed to aid homebuyers with various financial problems.

Below are the core categories and the components for the eligibility.

Are you fall into below group of buyers?

1. First-Time Homebuyers:

Definition: It should also be noted that the recipients of the SJKP scheme are first-time home buyers and those who want to become homeowners. First time buyers of both new project or Second hand houses are in this basket.

Importance: As for the goals of SJKP, they are to help pioneers. In other words, those individuals who might have have difficulties with a mortgage contract due to the lack of credit history or savings.

2. Low to Moderate-Income Individuals:

Income Thresholds: SJKP focuses on the low-middle income earners or those with little chance of being granted loans from the conventional banking system in order to buy homes.

Support Focus: This focus assists in making it possible for those that need further assistance to pay for a home. The scheme can help buyer to get 120% loan instead of 90% and you may also benefited from 0% downpayment!

3. Applicants with Insufficient Collateral:

Collateral Requirements: Those people who may not be able to engage a sufficiently viable form of collateral to support a housing loan are also included. SJKP guarantee reduces risk for the lenders and these applicants are able to secure a loan easily.

4. Civil Servants and Public Sector Employees: Civil Servants and Public Sector Employees:

Specific Groups: Some of the targeted workers are public servants and other civil servants may fall in certain specific provisions of the scheme, which is meant to provide support to these specific groups.

Requirements for SJKP Application

To apply for the SJKP scheme, applicants must meet several requirements designed to ensure that the support reaches those who are most in need and can effectively utilize the financing. The key requirements include:

1. Proof of Identity and Residency:
   • Identification: Applicants must provide valid identification documents, such as a MyKad (Malaysian Identity Card), to verify their identity.
   • Residency: Proof of residency in Malaysia is also required to confirm that the applicant is a resident eligible for the scheme.
2. Income Verification:
   • Documentation: Applicants must submit documents verifying their income, such as recent payslips, tax returns, or other income statements. This helps determine eligibility based on income thresholds set by the scheme.
   • Income Limits: The scheme typically has income limits to ensure that the support is directed towards low to moderate-income individuals.
3. Proof of Employment:
   • Employment Status: Documentation confirming the applicant’s employment status, such as an employment letter or contract, may be required to demonstrate stable income.
4. Property Details:
   • Property Information: Details about the property being purchased, including its location, price, and type (new or existing), must be provided. This information helps assess the suitability of the property for the scheme.
5. Creditworthiness:
   • Credit History: While SJKP provides guarantees, lenders may still assess the applicant’s credit history to gauge the risk involved. A reasonable credit history can positively impact the application process.
   • Repayment Capacity: Applicants must demonstrate their ability to repay the loan. This includes providing a clear repayment plan and evidence of financial stability.
6. Compliance with SJKP Guidelines:
   • Adherence to Scheme Rules: Applicants must follow specific guidelines and conditions set by SJKP. This includes meeting any procedural requirements and ensuring compliance with the terms of the guarantee.

Application Process for SJKP

The process for applying for SJKP has several steps to ensure a thorough evaluation and approval:

1. Preparation: Prepare necessary documents, including proof of identity, income verification, employment status, and property details. Ensure that all information is accurate and up-to-date.
2. Submission: Submit the application to an approved financial institution or directly to SJKP, following the specific procedures outlined by the scheme.
3. Evaluation: The financial institution or SJKP will review the application, assessing the applicant’s financial status, income, creditworthiness, and the details of the property. This evaluation ensures that the scheme’s support is provided to qualified applicants.
4. Approval and Disbursement: Upon approval, the financing will be disbursed according to the terms agreed upon. The applicant will receive a guarantee on the housing loan, which helps facilitate the purchase of the property.
5. Monitoring and Reporting: After receiving the financing, the borrower must periodically report their financial status and loan repayment. This requirement ensures that they use the loan effectively and make timely repayments.

Benefits of SJKP

The SJKP scheme offers several benefit for both individuals and the broader housing market:

1. Increased Access to Home Loans: By providing guarantees, SJKP helps individuals who might otherwise struggle to secure a housing loan, on the other hand, greatly encouraging house buying.
2. Risk Mitigation for Lenders: The guarantee reduces the risk for lenders, encouraging banks to extend credit to a broader range of borrowers and stimulating the housing market.
3. Support for Low to Moderate-Income Families: SJKP focuses on helping individuals and families with lower incomes, making homeownership more attainable for those who need it most.
4. Promotion of Homeownership: By making it easier to get housing loans, SJKP tries to increase the number of homeowners. Consequently, it helps keep the housing market steady overall.

Conclusion

The SJKP is a vital initiative in Malaysia’s housing finance sector. It is designed to make homeownership more accessible and attainable. By offering guarantees on housing loans, SJKP mitigates financial risks for lenders. It supports individuals, particularly first-time homebuyers and those with lower incomes. SJKP helps them secure the financing needed to purchase a home.

Understanding the eligibility criteria and requirements for SJKP is crucial for prospective homebuyers looking to leverage this scheme. With proper preparation and adherence to the guidelines, individuals can benefit from the support provided by SJKP, moving closer to achieving your dream house goals and contributing to the growth and stability of Malaysia’s housing market.

Navigating the application process with a clear understanding of the requirements and ensuring compliance with the scheme’s guidelines is essential. As a results, it can significantly enhance your chances of successfully obtaining a housing loan through SJKP. As Malaysia continues to focus on enhancing access to housing, initiatives like SJKP play a critical role in supporting homebuyers and fostering a vibrant and inclusive housing market. Check here about consumer guide of getting a house loan in Malaysia.

The post What is SJKP? Who is Eligible to Apply and What Are the Requirements? appeared first on HousingWatch.

1. For individuals: 70% loan to value (LTV) ratio for third property or above.
2. For non-individuals: 60% LTV ratio for 3rd properties or above.
3. Ban of developers’ interest bearing scheme (DIBS)

Frequently Asked Questions (FAQs)

1. What is the normal expected LTV ratio in Malaysia?
   • Here in Malaysia, home buyers normally expect 90 percent LTV ratio for a housing loan. Previously, there are special programs from Malaysia Government such as Skim Rumah Pertamaku that offer a 100% LTV ratio for eligible first-time home buyers.
   • However, start from 1 April 2023, this program is no longer active and first time house buyers are required to prepare 10% for the down payment.
2. How to Calculate Your LTV?
   • The loan-to-value (LTV) ratio is influenced primarily by three factors: the down payment, the sales price after any discounts (net sales price), and the appraised value of the property. To achieve a lower LTV ratio, making a larger down payment and securing a lower sales price are effective strategies. However, be aware that some banks have fixed minimum down payment requirements, which you might need to discuss and potentially negotiate.
3. Why Banks May Limit LTV Ratios?
   • In addition to regulations set by Bank Negara Malaysia (BNM), banks may also set limits on the loan-to-value (LTV) ratio based on their own internal credit policies. It’s a good idea to check with several banks to understand their specific policies, and compare them to find the best fit for your needs.
   • If you already have one or more housing loans, banks may use a Combined LTV ratio, which takes into account both your primary mortgage and any additional home equity loans you might have.

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1. Maximum Tenure for home financing is 35 years
2. Affordability assessment takes into account all existing debt obligations, including financing from all FSPs and other non-bank entities.
3. No prescribed debt-service-ratio (DSR) level but FSPs shall ensure that the DSR level is prudent enough to prevent the customers from becoming over-leveraged.
4. Proof of income may include salary slip, EPF statement, savings account statement or income tax submission.
5. Borrowers with no permanent employment or are self-employed may be required to provide evidence of income for a period of at least 6 months.

Frequently Asked Questions (FAQs)

1. What are the objectives of the Guidelines on Responsible Financing (the Guidelines)?
   • The Guidelines are aimed at promoting responsible business conduct by financial institutions when they lend to borrowers. The Guidelines require financial institutions to reasonably ascertain that the applicants have the capacity to repay their loans throughout the financing tenure without substantial financial hardship.
   • The Guidelines complement other pre-emptive measures introduced by Bank Negara Malaysia (the Bank) to prevent the household sector from becoming a source of vulnerability to the financial system and the economy.
2. How do financial institutions decide whether to offer a housing loan to an applicant?
   • Before offering a housing loan to an applicant, the financial institution must be satisfied that the applicant can repay the housing loan while also paying for necessities and meeting other financial obligations such as repayments on existing debts as well as have sufficient financial buffers to deal with potential increase in interest rates and living expenses or decrease in the applicant’s income.
3. Will financial institutions offer housing loans to applicants who do not have salary slips?
   • In facilitating financial institutions to reasonably ascertain that the applicants have the capacity to repay their loans, it is important for applicants to provide documentation as proof of income. Alternative documents that can be provided include bank statement, unit trust account statement or other documents that indicate sources of income.
4. Is a guarantor required for obtaining a housing loan?
   • The Guidelines do not impose the requirement to have a guarantor. However, some financial institutions may require a guarantor to enhance the credit standing of the housing loan applicant.
5. Will lengthening the housing loan tenure from the current maximum of 35 years be beneficial to the borrower?
   • Not really. This is because it may not significantly improve one’s debt service ratio. In addition, increasing the housing loan tenure will further add to the total cost of home financing.
   • To illustrate this point, assuming the tenure for a housing loan of RM500,000 is increased from 35 to 40 years, the total cost of financing will increase by 17.4% or RM97,428 while the monthly instalment will only reduce by 4.4% or RM112 (Financing rate of 5% p.a)
6. What should applicants do before taking out a housing loan?
   • Before applying for a housing loan, applicants should work out roughly how much they can afford to set aside for the monthly instalments based on their income, living expenses and all existing debt repayment obligations.
   • It is important to factor in future potential increase in the financing rate or any changes that might affect their income or expenses in the future (e.g. starting a family).
   • Applicants should be mindful of other costs involved in purchasing and owning a house. The costs associated with the purchase of a property may include stamp duty, legal fees, loan processing fee and mortgage insurance. Apart from monthly loan repayment, house owners are responsible for property assessment tax, quit rent, fire insurance and maintenance fees, if applicable.
   • Applicants should also do some research and take the time to compare the key features of housing loan packages offered by financial institutions such as the financing rate, lock-in-period and penalty, fees and charges.

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