The Chief Executive Officer (CEO) of the Employees Provident Fund (EPF), Tunku Ali-zakri Alias, announced recently that the rise of the gig economy is causing a decline in EPF contributions and EPF may cease to exist in our lifetime.
The gig economy is a growing part of Malaysia’s workforce and we have observed a trend where demand for co-working spaces is taking over prime office locations. Kelly Services Inc. reported that 31% of the global workforce are gig workers. Such trends are indicative of a new economy that’s thriving with income opportunities.
There is one problem though. Freelancers and self-employed workers often cannot show any steady income documentation and this makes it difficult to get a bank loan, including a mortgage to buy a home.
If you are self-employed, these are the documents you need to submit to apply for a home loan:
- Identification Card – NRIC (copy)
- Property Booking Receipt
- Vendor Sales & Purchase Agreement/Title (copy)/New Sales & Purchase Agreement
- Latest 6 months Company Bank statement
- Latest 6 months Personal Bank statement
- Deposit statement eg. Fixed Deposit, ASB or Bonds (if any)
- Business Registration Number
Unless you have been practising good bookkeeping to build up a credit-worthy profile, these documents will simply be.. daunting.
Let’s say you are running a food truck business at night and during the day you freelance as a designer. You may be earning a decent amount on average and you are happy. You know you can afford the monthly repayments of a home loan. Yet, you may be rejected because you cannot show a steady stream in your 6-months statement due to fluctuations in your gig.
Traditional financing mandates have made it difficult for non-salaried employees to get a mortgage and own a home.
What if we can rewrite the rules?
What if you can now buy a home with only this:
- Identification Card – NRIC (copy)
Property Booking Receipt Vendor Sales & Purchase Agreement/Title (copy)/New Sales & Purchase Agreement Latest 6 months Company Bank statement Latest 6 months Personal Bank statement Deposit statement eg. Fixed Deposit, ASB or Bonds (if any) Business Registration Number
Here’s the promising news for prospective home owners from the gig economy.
FundMyHome offers an alternative solution for first time homebuyers to purchase a home up to a value of RM500,000 without a mortgage.
Buyers need to pay only 20% of the property price and institutional investors contributes the remaining 80%. This covers 100% of the property’s value.
As a result of this shared equity, buyers do not need to get a mortgage and they enjoy zero monthly repayments for 5 years. Meanwhile, investors benefit from a share of any upside at the end of 5 years.
Now, let’s think outside the box for a minute.
The buyer owns 100% of the home with a one-time payment. You sign the SPA, move in and stay for 5 years – the commitment period. In these 5 years, you have a bit of flexibility to plan your finances and personal growth. If you need to move out any point within the 5-year period, you can rent it out and earn rental income.
At year 5, you are now ready to either refinance the home or sell it. If the property has not gone down in value, you will get your equity back (your portion of the 20%) upon sale. This means that you would have STAYED FOR FREE for 5 years!
The question to ask yourself, is…
If you are self employed and trying to get on the property ladder, what can you afford now? And how much time or flexibility do you need to achieve your financial goals?
With FundMyHome, you are given a chance to lock in a portion of your savings in a property now. You have 20% equity with no additional monthly repayments. At year 5, you may be better off if you have been disciplined in managing your cash flow.
Deloitte reported that self-employment is likely to triple to 42 million workers by 2020, with millennials leading the way.
More people are turning to alternative work and many aspire to own a home but are turned away by the traditional barriers of entry, particularly in getting a mortgage. FundMyHome can serve these needs and help them own a home.
If you’d like to understand if FundMyHome is right for you, give our consultants a call at 03-77328820 or WhatsApp them directly at +6 018 388 4165.