Many people love to buy things that they cannot afford. Sad to say that properties are also included in this category. We have to realize that we still have to pay the monthly installments associated with the property purchase.
It is a good practice that buyers know where they stand in terms of repayment capability before buying their first property or for investments. If your capability of repayment only allows you to buy RM500,000 worth of property, you cannot go and buy a RM1,000,000 property. Many people are subjected to impulse buying. Yes I know the RM 1 million property looks bigger, more comfortable and nicer with top of the range facilities. The big question is can you afford it. Your risk of non-repayment is very high. You don’t want to be in the national figure for bankruptcy. Please do not take this lightly, it can disrupt your future plans.
I also noticed that many property investors in the hush to make quick money trying to outsmart the banks in lending. With a single income, he/she go and purchase a few properties together. Submit their documentation to several banks and the banks will think it’s the same property. They are trying to escape the 70% ruling by Bank Negara and also buying many properties with limited income. Let’s say all the banks approved the loan. What happen if the property cannot sell and rent when it’s completed? I received an email from a guy who bought 5 properties with the same method and he told me the next month he could not pay for the installments. His properties cannot rent and sell?
Today the risk of doing this is very high especially for those who wants to escape the 70% clause. The banks start to check CCRIS (Credit Rating) before the loan is release. If they found out that the purchaser have previous loan more than 2 properties for residential they have the right under the letter offer to restructure the loan from 90% to 70%. The purchaser have to clear the balance of 20%.
Buying a property will take up to 3 months for the legal process to kick in. Anything can happen within the period. The longer it takes the higher the risk.
I am not saying property investment is not good. Take extra precaution so that you do not regret later. Buy the right way. I will always makes sure I can pay 12 months installments before I buy a property. Do a proper financial plan to chart your future.
From the Desk of