There are many things you would consider buying at 25 years old and a house is rarely in the top 10 things you need or want to buy. Even if you believe it’s a good idea, is it financially possible?
First of all, it takes years to save up for a downpayment. And if you are earning an average income of RM2,500 – RM3,000, you may not be eligible to get a mortgage for a home of your choice.
A RM300,000 home will require you to earn a minimum of RM3,500 in order to get a 30-year mortgage and you must be able to commit RM1,400 in monthly repayments.
Let’s say you have sufficient funds for a down payment now because you have been saving and working part-time. If you are still not eligible for a mortgage, you can delay the purchase by working your way up towards a RM3,500 salary – which will take another 2 – 3 years.
It is possible that you will buy your first home before turning 30 but property prices would have gone up by then. You may not get the same value for a RM300,000 house.
Here’s an alternative.
Through FundMyHome, you can own a home with relatively low barriers to entry.
Under FundMyHome, you only need to pay 20% of the property price to own the home and the other 80% will be contributed by institutional investors. No mortgage required.
With the 20% down payment you already have, you can have a 20% stake in the home immediately. And for 5 years, there will be no monthly repayments to worry about!
Instead, you can leverage on these 5 years to:
1. Improve your finances
Pay off any debt and have the flexibility to manage your finances properly. You also have some breathing room to utilise your salary increments and bonuses for other things – that epic adventure you wanted to make at 25, with some delayed gratification, you can do it at 28 on a less tighter budget.
2. Build good credit score
If you have taken a personal loan to pay for the 20%, you can start building good credit rating by making your repayments on time. This will put you in a better position to get a mortgage from the bank when you’re ready.
3. Earn passive income
You can rent out a spare room for a couple of hundred ringgit to relieve your finances. Or if you need to, you can also rent your home out within the 5-year commitment period with FundMyHome.
By the end of 5 years, you must decide if you want to continue staying by refinancing the home through FundMyHome or via a mortgage, or sell it.
Remember, you have a 20% equity in the property.
If you had put RM60,000 for a RM300,000 property through FundMyHome, you will get it back if you can sell it for the same value at Year 5 (an independent valuation will be conducted to determine its prevailing value).
Through FundMyHome, it is possible to own a home at 25 and be better off by 30.