The LPPSA (Lembaga Pembiayaan Perumahan Sektor Awam) government loan program is designed to provide affordable financing options for public sector employees in Malaysia seeking to purchase or renovate their homes.
The LPPSA loan aims to ease the financial burden of housing investments, making homeownership more accessible and achievable. This initiative reflects the government’s commitment to supporting the well-being and stability of public servants through tailored financial solutions.
Here are 7 Things You Need To Know About LPPSA
100% Borrowing Margin
The LPPSA government loan offers a 100% borrowing margin, allowing public sector employees to finance the entire purchase price of their home without needing a down payment. This full coverage ensures that borrowers can secure their desired property without the initial financial burden typically associated with home purchases, making the journey to homeownership more accessible and straightforward.
Interest Rate Fixed at 4%
To provide stability and predictability, the LPPSA loan features a fixed interest rate of 4%. This fixed rate remains constant throughout the loan term, protecting borrowers from market fluctuations and allowing them to plan their finances with greater confidence and ease.
Required Borrower to Purchase Full Amount Coverage & Period for MRTA/MRTT
Applicants for the LPPSA loan are required to obtain Mortgage Reducing Term Assurance (MRTA) or Mortgage Reducing Term Takaful (MRTT) coverage for the full loan amount and duration. This insurance coverage ensures that in the event of unforeseen circumstances, the outstanding loan balance is fully covered, safeguarding both the borrower and the lender.
Maximum Up to 90 Years of age
The LPPSA loan offers a maximum 90 years of age of the borrowers (or max 35 years period), allowing public sector employees especially those who are 50 years and above to still qualify for full loan period of 35 years.
Each Government Servant Can Apply Up to 2 Times for LPPSA in Their Lifetime
Eligible government servants can apply for the LPPSA loan up to two times during their lifetime. This provision allows public sector employees the opportunity to secure financing for multiple housing needs, whether for purchasing a new home or renovating an existing one. To apply for the 2nd LPPSA, borrowers need to ensure they have cleared the first LPPSA, else the application will be rejected.
What if you want to apply for 2nd LPPSA but still serving instalment for the 1st LPPSA?
Refinance. You refinance the first LPPSA which means bank taking over the repayment and that cleared you from the 1st LPPSA 🙂
For the 1st LPPSA, you can do a joint name with spouse, kids, either one of the parents, siblings as long as both persons are government servant. For 2nd LPPSA, either one of the borrowers need to be government servant.
LPPSA Did Not Use CCRIS in Approval Consideration
Unlike other conventional bank loans, LPPSA does not consider the Central Credit Reference Information System (CCRIS) report in its loan approval process. This approach ensures that eligible applicants who may have a less-than-perfect credit history are still considered for financing, focusing instead on the applicant’s employment status and loan repayment capability. For eg if the borrower takes a personal loan which is not listed in the salary slip, the personal loan will not be considered as a part of borrower’s commitment.
No Progressive Interest for Under Construction Highrise Purchase
For high-rise properties under construction, the LPPSA loan eliminates progressive interest charges. This means that borrowers do not incur additional interest costs during the construction phase, which helps to reduce the overall financial burden while waiting for the property to be completed.
Delayed Repayment
Buyers have the advantage when it comes to repayment whereby they only required to pay either on the the 25th month of after 95% disbursement of of progressive payment (to developer), whichever comes first. This is for landed property.
As for highrise properties, the repayment only comes 37th month or after the 95% disbursement of progressive payment, whichever comes first.
How Much Property Do I Qualified For?
Borrowing margin depends on the salary:
| Nett Income (RM) | Maximum Repayment Qualification (RM) |
| 6,500 ke atas | 750,000 |
| 6,000 | 720,000 |
| 5,700 | 680,000 |
| 5,500 | 650,000 |
| 5,000 | 600,000 |
| 4,700 | 560,000 |
| 4,500 | 540,000 |
| 4,300 | 510,000 |
| 4,000 | 470,000 |
| 3,800 | 450,000 |
| 3,500 | 420,000 |
| 2,900 | 340,000 |
| 2,300 | 270,000 |
| Sehingga 1,700 | 200,000 |