Tong: FundMyHome is an option for homebuyers, not a solution for all

PETALING JAYA (Nov 15): FundMyHome is not designed to be a solution for all potential homeowners, said EdgeProp Sdn Bhd chairman Datuk Tong Kooi Ong.

Speaking at the FundMyHome Media Q&A session on Nov 15, Tong stated that the benefits to FundMyHome homebuyers are that they pay only 20% of the purchase price with no mortgages and monthly payments for five years. Besides, it enables one to move in to the unit immediately.

On the other hand, the trade-offs are that they have to take the risk of property prices falling after five years. However, the risk is capped at 20% of the original value of the home — the capital they invested in the beginning.

“They [homebuyers] pay just 20% of property price with potential of either savings on or earning rental income; they have no monthly repayments during the five years, no foreclosure risk, no personal liability and have their risk of capital losses capped to the 20% invested,” he replied to a reporter’s query.

Hence, he added, the FundMyHome platform rests on homebuyers who are willing to share their future capital gains in exchange for the benefits of owning and occupying a home now.

Although some have suggested that people should rent if they cannot afford to own a property, Tong said: “Undeniably, rent is a viable choice. But by telling homebuyers ‘don’t buy when you can’t afford one’ is dismissive for young Malaysians who want to own a home. 

“We are providing another possibility for them, FundMyHome is not designed to be a solution for all potential homeowners. But we are confident that we are a solution for some,” he stressed.

Introduced by EdgeProp, FundMyHome allows one to buy a property featured on FundMyHome.com by paying just 20% of the property price. The balance 80% of the cost of the property is contributed by participating institutions, who share the returns from changes in the future value of the homes.

The holding period is five years which means by the end of the fifth year, a homebuyer will have to choose whether to sell, to own the property (by taking up the remaining 80% share of the house based on market value) through a mortgage or refinance the unit on FundMyHome.

Currently, CIMB and Maybank Group are the participating institutions while nine developers are offering about 1,000 homes priced below RM500,000 to eligible individuals through https://www.fundmyhome.com/.

The FundMyHome platform was launched on Nov 4, 2018 in an event officiated by Prime Minister Tun Dr Mahathir Mohamad.

“In summary, if you have access to a bank mortgage, prefer not to share your capital gains and do not mind bearing the loss, FundMyHome is not for you. On the other hand, if you do not have access to a bank mortgage, are willing to share your capital gains and mitigate your potential loss, then FundMyHome may be for you,” emphasised Tong.

Hence, he sees FundMyHome as an option or opportunity for homebuyers who have some savings but couldn’t secure end-financing, to own their own property.

Owning a home by taking a mortgage is the most conventional way however, if the property market fluctuates, homebuyers will be stuck as they still have a long-term loan to service.

With FundMyHome, homebuyers will have a five-year cut-off time to decide whether they want to fully own the house. If the house price drops a lot, they still have the option to walk away after five years.

“However, should home prices rise by more than 17%, you would be better off with a normal mortgage. It is worth noting that the risk of losses due to a fall in home prices is higher under a mortgage. With FundMyHome, your loss is limited to the capital you invested, which is 20% of the original house price,” he said.

On comments that FundMyHome is more beneficial to developers by helping them to clear their inventories, Tong said many people have misunderstood the concept.

“The developers will only collect 80% of the house price in the beginning stage, the remaining 20% [which will be placed under a trust recommended by Securities Commission] will be used to pay as investment return [5% annually] to the institution,” he explained.

The developers could only get back the remaining 20% if the house price has increased over 20% by the fifth year. This means developers will be taking on a risk in the process.