PUTRAJAYA: The Public Sector Home Financing Board (LPPSA) will extend its “Skim Muda” after the one-year pilot programme received a far stronger response than anticipated, reinforcing efforts to help young civil servants own their first homes earlier, says the board’s chief executive officer Mohd Farid Nawawi.
He said the scheme, aimed at civil servants aged 30 and below, has continued to receive steady and encouraging applications since it was launched in April.
“Initially, it was introduced on a one-year trial.
“But when we saw the very positive response, we extended it for another year.
“If this momentum continues, we will consider expanding it further,” he said.
As of October, the scheme had recorded 2,596 applications worth RM208mil.
Of these, 304 applications valued at RM95mil were approved within the first six months.
Mohd Farid said Skim Muda offers a financing period of up to 40 years, compared to the previous limit of 35 years.
The extended tenure provides two key advantages, namely higher loan eligibility and lower monthly instalments.
“If you start borrowing at age 30, you will have more housing options and lighter monthly payments.
“We want young people to buy homes early, start with what they can afford and upgrade later when circumstances allow,” he said, Bernama reported.
Mohd Farid said the average LPPSA loan now stands at RM341,000, up from RM295,000 in 2020, aligned with rising house prices and borrowers’ changing financial capacity.
On financing eligibility, he said confirmed civil servants may apply for financing up to 80% of their net salary, though approvals depend on actual affordability.
“If your net salary only qualifies you for RM350,000, that is the amount we approve, even if the house costs RM500,000. This is important to prevent long-term financial strain,” he said.
Mohd Farid also confirmed that LPPSA will increase the maximum financing limit from RM750,000 to RM1mil to enable civil servants to purchase more comfortable homes in line with market trends.
“For homes priced above RM1mil, applicants may obtain additional financing from LPPSA’s strategic partners, including BSN, Bank Islam and Bank Muamalat,” he said.
With over 20 years of experience in the banking sector, Mohd Farid noted that LPPSA’s biggest advantage is its fixed profit rate of 4% throughout the loan period.
Currently, LPPSA manages 771,671 active accounts with financing assets worth RM119bil.
Of this total, about 700,000 borrowers are still serving in the public sector.
“There are 1.7 million civil servants. This means that another million have not borrowed with LPPSA.
“The growth potential is still huge,” he said.
Mohd Farid advised civil servants to buy houses as early as possible and examine the developer’s record before signing any agreement.
LPPSA also assists borrowers affected by abandoned projects or disasters, such as floods, by offering temporary salary deduction deferrals or reduced instalments while waiting for project recovery.
