Long term housing loan

Housing Loan

Photo courtesy:http://business.rediff.com

To own a home is everyone's dream. However buying or building a house may require you to take up a loan, if you aren't well off.

The Malaysian Housing and Local Government Minister, Datuk Chor Chee Heung urged house buyers to take up long-term housing loan which extends to second generation. And his point for suggesting, here

“If loan repayment is extended to the second generation, that means the family will remain intact,..” Background music "KUANG, KUANG, KUANG...JENG!

The Minister seemed to have found the solution to family breakups! Don't you think so? So if anyone is facing family problem please consider taking up this long-term loan

He also refuted “I don’t think it is a burden for the next generation because the repayment is spread over a long time,” adding that the younger generation is financially strong and can even afford to buy another house.  How does he KNOW that the younger generation will be financially strong?

Another smart alec, MBSB chief executive officer Datuk Ahmad Zaini Ithman said the idea of offering longer-term housing loans was to preserve the value of assets or investments. News source The Star. As far as I know the longer the term, the more interest you pay which inflates the repayment amount to almost 100% -150% of the original loan amount. So, as far as the house owner is concern the value of property is equal to the total loan amount paid. Imagine taking an inital loan of RM300,000 for up to 70 yerars of age and end up paying RM700,000. One can buy two houses for the amount repaid! How does the loan preserves the asset's value? It only eats into the appreciated value.

Long-term housing loans comes with high interest rate and long repayment period, not mentioning the HIDDEN CLAUSES to trap the naive house buyers. Ask any financial expert and they would suggest you to be debt free and repay your loans as soon as possible. How sure is the Minister that the children will repay their parents debt? In this era, where parents are neglected at old age how sure is he that the family will remain intact?. Then comes family feud of owning the house between siblings. So many possibilities.

All parents think of a better future for their children and not create burden for them. No doubt it is a house but it is not the child's responsibility to continue service the loan. I don't want my child to be a debtor, I want them to inherit a debt-free home.