Up-stake: The PR1MA step-up financial scheme allows buyers eligible for a conventional loan to get access to a higher loan amount.

IN last week’s Budget 2018, the Government extended PR1MA’s step-up financing scheme (SPEF) to private developers, subject to certain conditions, as part of its effort to house the middle income (M40) with their first house.

The move underscores the Government’s encouragement to build more affordable units.

Since the scheme was launched in January, a total of 50 out of 197 SPEF applications have been approved by the 1Malaysia People’s Housing Programme (PR1MA) amounting to RM14.3mil.

SPEF is a financing option for buyers who are eligible for a conventional loan, to get access to a higher loan amount.

SPEF comes with two options: the step-up only or the step-up with EPF Account 2 withdrawal. Both options allow buyers to service the loan interest in instalments for the first five years and start paying the principal beginning from the 6th year, the PR1MA statement says.

“SPEF is suitable for the M40 group who may need to restructure their finances or leverage on the additional loan to own their preferred PR1MA homes,” the statement says. The organisation says the ease of getting loans depends on the creditworthiness, or credit profile of the loan applicant. Those with high financial commitment will find it more difficult to get loans. Applicants must first qualify for a loan from any of the four panel banks, namely Maybank, CIMB, RHB and AmBank.

If applicants have other financing issues that hinder them from getting a loan in the first place, SPEF is not the solution.

PR1MA explains that difficulties in obtaining home loans are not PR1MA-specific, but an issue faced by other developers as well, especially those involved in public housing programmes.

“This is mainly because these types of homes are targeted towards those who may or may not have adequate financial ‘muscle’ to purchase a house,” according to the statement.

“Although SPEF enables buyers access to a higher loan amount than conventional loans, it is not, however, a financing scheme that allow buyers to purchase property beyond their means,” the statement says.

PR1MA says SPEF is suitable for the M40 group who may need to re-structure their finances. In the first five years of the scheme, borrowers pay the loan interest only, which can be as low as RM880 a month.

“Eligible PR1MA home buyers should leverage on SPEF to enable them to own better homes,” PR1MA says.

The organisation underlines why potential buyers are unable to secure loans. Among them are:

> Low disposable income coupled with high financial commitments,

> Failure to provide complete documentations required by banks, and

> Overdue PTPTN (Perbadanan Tabung Pendidikan Tinggi Nasional) payments.