‘PR1MA loan applicants can’t have their cake and eat it too’

KUALA LUMPUR (Feb 21): Buyers of the 1Malaysia People’s Housing Programme (PR1MA) homes who plan to take up its housing loan scheme by drawing down their Employees Provident Fund (EPF) Account 2 can’t expect to “have their cake and eat it too”, said the pension fund’s chief executive officer Datuk Shahril Ridza Ridzuan (pictured).

He was referring to the EPF’s move to “ring-fence” the EPF Account 2 of its members who opt to use their savings to secure a higher loan amount under the Special PR1MA End-financial Scheme (SPEF) in order to purchase a PR1MA home. The SPEF is a special end-financing scheme created exclusively for PR1MA homebuyers, which provides eligible buyers with significant reduction in monthly home loan instalments at affordable levels.

“It is their choice at the end of the day. If they want to have a bigger loan amount from the banks, they have to essentially sacrifice using their EPF Account 2 for other purposes.

“Basically they [EPF PR1MA applicants] need to decide what’s more important — the flexibility to use their withdrawals for other needs or for a PR1MA home to live in ... You can’t have your cake and eat it too,” he told a media briefing on the EPF’s investment performance and dividend for 2016 yesterday.

In November last year, the EPF announced that applicants of the SPEF will not be able to make other withdrawals from their EPF Account 2, at least not until their PR1MA loan is settled.

Last week, PR1MA announced that the cornerstone of SPEF is the step-up only or the step-up with EPF Account 2 withdrawal options, where in the first five years only interest is paid.

The principal amount kicks in from year six onwards until the loan is settled. The step-up option combined with withdrawals from EPF Account 2 means that homebuyers can have access to a larger loan amount.

“The EPF’s decision to ring fence the Account 2 was to provide more security for the banks so that they can offer the higher loans.

“PR1MA has also increased the eligibility for [the] SPEF [to a household monthly income of RM15,000 from RM10,000 previously] as they do not want people to be borrowing more than what they can afford,” said Shahril.

The SPEF scheme established by PR1MA is in collaboration with the EPF, Bank Negara Malaysia and four local banks namely Malayan Banking Bhd, CIMB Group Holdings Bhd, RHB Bank Bhd and AMMB Holdings Bhd.

This article first appeared in The Edge Financial Daily, on Feb 21, 2017.

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