Don’t have proof of fixed monthly income? Here’s how Housing Credit Guarantee Scheme can help you secure a home loan.  

A home is a place of refuge and safety from the troubles of the world. However, for many vulnerable Malaysians with irregular incomes, obtaining a loan to buy a home is still challenging, sometimes even impossible.

Here’s where the Housing Credit Guarantee Scheme (HCGC) could help you in getting that dream home.

#1: What is HCGC?

The HCGC is a government body that guarantees the loans and financing facilities for Malaysians who can afford a house but cannot get a loan. It was established in 2007 as part of the Supply Bill (2008) as a company under the Ministry of Finance.

HCGC targets vulnerable groups that have irregular income such as

  • Farmers
  • Petty traders
  • Taxi drivers
  • Fishermen
  • Small business owners
  • Gig worker
  • Freelancers

Typically, these groups have a hard time getting a loan approved from the bank. Banks require a lot of documents from a prospective home loan applicant that proves the applicant is highly likely to be able to repay the loan. If your paperwork shows an irregular income, chances of rejection are high.

HCGC helps by being a guarantor for these individuals when they go and get a housing loan.

#2: How Exactly Does HCGC Help?

HCGC will guarantee 100% of the loan or more, which provides an assurance to the financial institution lending. The loan is for first-time home purchase and is great for first-time homebuyers.

Here are some of the other details.

  • Financing limit: Up to RM500,000 (includes principle financing amount, mortgage insurance such as MRTA, MRTT, LTHO, lawyer’s fee, and valuation fee)
  • Financing tenure: 35 years (two generation financing allowed, which means your parents or children can also be part of the loan)
  • Interest rate: As determined by the financial institution

If the person (or people if its joint loan) cannot repay the loan, HCGC will step in and help.

#3: Eligibility for HCGC?

This will apply for any Malaysian citizens above 18 years of age. Remember when it was mentioned that two generation financing is allowed? This means your children needs to be above that age if they want to be part of the loan.

You will also need to be a non-fixed income earner, which means that you have income that changes from month to month. This also applies for self-employed workers.

This is for first purchase of a home and includes properties that are

  1. Newly completed
  2. Under construction
  3. Sub-sale
  4. Auctioned

Here is the important part. Your total repayment every month for the loan cannot exceed 65% of your income. You will also need to maintain good credit records such as

  • CCRIS records that show you have less than 2 months of non-payment the past 12 months.
  • No other bad credit records the past 24 months.

Lastly, the monthly income of the main applicant must not exceed RM11,000.

#4: Required Documents Before Applying?

There are some documents that you will need before applying:

  1. Sale & Purchase Agreement / booking sheet / down payment receipt
  2. Latest 6- months bank or deposit account statement
  3. Latest income tax return / EPF statement
  4. Employment confirmation letter (if there is any)
  5. Photocopy of Identification Card of the applicants
  6. Business license, fisherman’s registration card, taxi permit, etc
  7. Declaration of self-employment confirmed by any government servants in category A (Penghulu, Bank Branch Manager) or Jawatan Kemajuan dan Keselamatan Kampung.

#5: How to Apply?

This is quite similar to a bank loan application to a bank or financial institution.

1. Choose a Property to Buy

Identify a property that you want to purchase. Remember that it needs to be a eligible property as mentioned above.

You would need to also prepare a Sales & Purchase agreement and down payment receipt.

2. Apply to the Financial Institution

You will need to provide the needed documents specified above to the bank or financial institution. For the declaration of self-employment, it will need to contain the name, IC number, source of income, average monthly income, business address and years of business to be valid.

From here, they will evaluate whether you fulfill the conditions. Once it is satisfactory, they will submit your application to HCGC.

HCGC will review your application and provide the guarantee

3. Wait for News

If HCGC approves, the financial institution will issue you a Letter Offer for the loan with HCGC guarantee. Make sure you are within 20 kilometer from the bank branch that you applied to.

#6: Who are the Financial Institutions Participating in HCGC?

Here are the banks and financial institutions that are participating in HCGC:

  1. Maybank (Conventional and Islamic)
  2. Hong Leong (Conventional and Islamic)
  3. Alliance (Conventional and Islamic)
  4. MBSB Bank
  5. Bank Islam
  6. Agro Bank
  7. Affin Bank
  8. Ambank Islamic
  9. Bank Muamalat
  10. BSN

Conclusion

If you are struggling to get a first-time home loan, HCGC might be the right avenue to ask for help. As houses get more expensive and unaffordable in Malaysia. it is important to secure a home loan now to buy one.

This is especially true if you are trying to build a family.

 

Having trouble getting a home loan? Let us know in the comments below on how we can help!

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