Since the Budget 2025 tabling last week, there has been some discussion regarding home ownership among young adults in Malaysia.
In a TV3 report on 17 October, the rate of home ownership is still perceived as low in the country, as only 35% of individuals aged 25 to 34 own a home.
They also mentioned the expensive cost of living in the city has caused those in this age group to give up on purchasing a home.
However, it’s still possible to manage a mortgage, as X (formerly Twitter) user ArosliWealth, who also provides wasiat (will) writing services, has shared in a post.
He continued to explain in his X post that it is possible to reduce your mortgage tenure as long as you pay for an extra month once a year. The key takeaway is that you’re given a period of time to pay for the house but it doesn’t mean you have to take the maximum amount of time if you have the means to pay a little bit more.
Additionally, he informed that not all banks would reduce your tenure when you make extra payments so it’s best to inform them of what you’re doing.
Another X user, MarieJualKondo who works in real estate, said in her post many financial advisors have asked their clients to reduce their mortgage by putting in an additional amount to their repayment, but she said the advice is only partially correct.
She explained that for some mortgages, you pay extra every month and it just becomes an advance for the upcoming months, which may prompt the bank to call and inform you that you paid more than what’s owed. This would mean your tenure is not affected at all by the extra payment.
Her advice is to call the bank and ask the bank whether your mortgage tenure can be reduced by paying extra or if it must be a lump sump payment.
It’s not a one-size-fits-all solution
While this method may work for some, financial situations might differ from one individual to another. On top of that, they did not factor in other ways of going about paying off a house loan that may be more effective or financially beneficial.
X user Yana pointed out that instead of paying more every month, you can invest the extra money and when you receive dividends, use that to pay off the mortgage.
There is also the matter of fluctuating interest rates caused by things like the Overnight Policy Rate (OPR), whereby you could be paying more, or less. If let’s say you pay for an extra month and the rates drop in the next month, you’ve already paid for the higher interest rate before it dropped.
When purchasing a home through a mortgage, it’s best to consult a financial expert and proceed after you have thoroughly researched all the available home ownership programmes as well as your own financial means.
