Home loan that fits your pocket

• The AFFIN Home Step Fast/i, which offers borrowers the opportunity to own properties and build up their household finances at the same time, allows for a lower repayment commitment in the first five years.

Every banker pushes its home loan packages, but few take the time to tell you which one fits you best and whether your financial health is even able to sustain one. 

Observing that many prospective property buyers often overlook the importance of managing cash flow, especially at the crucial first five years of owning a property, managing director, Mortgage Business, Group Community Banking, AFFIN Bank, Jessie Wong, points out that having money now does not mean having it forever. Life is not stagnant; it has its ups and downs. The same goes for interest rate movements. So, it is important for any homebuyer to manage his or her own cash flow, she tells EdgeProp.my in an exclusive interview. 

“Talk to the bank and understand what types of home loan or financing product best fit your current lifestyle as well as your future potential income and career growth,” Wong advises potential borrowers, highlighting that options are available for customers to build up safety nets that allow them to navigate unforeseen challenges without dampening their individual personal credit rating.  

Last time, Wong recounts that homebuyers were steadfast in saving up to 20% of the home value to sustain the loan margin, but it is not the norm today, driven by poor financial management awareness, coupled with the availability of creative loan packaging that supports high loan margins, sometimes exceeding 100%. 

She explains that banks assess borrowers’ income and lifestyle at the onboarding stage, not at the tail-end, disbursing loans based on affordability at that point in time. However, along the way, life events shift the affordability dynamics, which affect their repayment capability.

“In unfortunate situations, the borrower is unable to meet loan repayment due to additional financial burdens such as the birth of a child or when income is disrupted and foreclosure happens,” she adds.

AFFIN's key aim is to ensure that every customer is matched to a product that is ideally suited to his or her financial capability to avoid foreclosure. 

“For example, we will encourage a borrower to purchase the Mortgage Reducing Term Assurance (MRTA) as it provides peace of mind and protects the family during the difficult time when death or total permanent disability occurs. A borrower may choose from a range of protection plans that allow money-back-guarantee features and auto-coverage for those with medical conditions.

“We do not develop a product to suit the type of housing development, but we develop a product that suits different segments of customers,” she explains. 

Shared responsibility to alleviate non-performing loans

Nevertheless, Wong emphasises that avoiding homes hitting the auction market is a shared responsibility of all stakeholders in the property industry and requires concerted efforts – from suitably-priced homes and supportive government policies to well-structured bank loans that take into account sustainable repayments throughout the loan tenures, not only at the onboarding stage.

Wong highlights that the government offers various schemes and incentives, particularly to first-time buyers, to facilitate homeownership. Meanwhile, property developers, cognisant of building the right homes in the right places, study the local demographics before they commence any project to avoid a mismatch of property prices with the affordability of the surrounding community.

“So, they have to be reliable and bear certain codes of ethics and conduct to share with buyers the complexity of home purchasing, what to look out for, and where to get loans,” Wong says.

She adds that banks view developers as business partners and rely on them to provide buyers with the initial information they need to secure the right home loan, as there is no one home loan that fits all financial eligibility.

Loans vs financial fit

When seeking a home loan or financing, Wong recommends one that facilitates better cash flow and flexibility and manages rate volatility, especially in light of the periodic overnight policy rate (OPR) fluctuations.

“You should also look for a loan that lets you consolidate your existing credit to get your finances back on track, pay down the sum owing any time, or settle your loan without worrying about a penalty or lock-in period,” she counsels. 

Noticing that many homebuyers are rattled by the burden of managing home loan repayments while trying to maintain a quality life, AFFIN has been inspired to design a plan that facilitates especially first-time homebuyers – the AFFIN Home Step Fast/i, which is a more progressive and competitive home loan product to gear up for the Bank’s AFFIN2025 Transformation agenda. 

“We have various home financing products that cater to different needs. We have it in both conventional loans and Islamic financing with step-up repayment features, overdraft or standard term financing," Wong says.

As buying a property is the biggest commitment one can make, Wong stresses the importance of ensuring repayments are well within one’s capacity.

The AFFIN Home Step Fast/i, which offers borrowers the opportunity to own properties and build up their household finances at the same time, allows for a lower repayment commitment in the first five years. Homebuyers can opt to only service the interest and save the rest for emergencies, furnishing or wealth accumulation.

“The savings from this Step Fast loan/financing are substantial in comparison to the repayment for a traditional loan, and if you invest it wisely, you can make a bullet payment to reduce your principal in the sixth year. Saving a portion of your monthly repayment is a fantastic way to build wealth over time and the power of compounding can help achieve your financial goals, such as paying off your mortgages faster,” Wong says. 

She adds that the loan facility is available even for affordable homes priced from RM200,000, so young executives and professionals can take advantage of the facility to start their homeownership journey. 

“The purchaser can dream big in the next five years to get a bigger house if they know how to leverage this product’s features. In the current uncertain economic climate, the AFFIN Home Step Fast-i is the better choice.” Wong concludes.

Notably, AFFIN Home Step Fast-i has won the prestigious award under the category of Mortgage and Home Loan Product of the Year – Malaysia by Asian Banking & Finance, Retail Banking Awards 2023, where the awards ceremony was held on Tue (July 25). 

Read also: AFFIN Bank offers financing to go green

EdgeProp START has partnered with AFFIN Bank to offer ALL homebuyers a RM100 IKEA gift card when they sign up for AFFIN Home Step Fast.

Explore more exclusive rewards and vouchers for your dream home when you sign in to EdgeProp START.