5 Using the equity of your current home as the deposit.
This method is only workable if you already own a property.
Assume that the value of your property that you now have is RM 300,000. And you’ve checked with your banker that your outstanding loan is RM 180,000. This means that you have equity in the property of RM 120,000. Now, let’s say that you want to purchase a property of RM 180,000.
Some banks allow you to put another mortgage on the same mortgage. Other banks prefer that you take out some as a personal loan and some as housing loan. This combination will of course incur some costs.
This same banker will note that the new loan that he wants to offer you will be on these two properties. In other words, he will combine the outstanding loan of the previous property which is RM 180,000 and the new apartment with a price tag of RM 180,000.
So the total loan will be RM 360,000. So this means that you only borrow about 75% of the total property values (RM300,000 +RM 180,000= RM 480,000). This is great for the bank. Remember, banks love security. And because she also notices that you can afford to pay the monthly amount for a loan of RM360,000 (against a total value of the properties of RM 480,000) you are on your way to the second property without putting any money down.
6. Using the equity of your current home to get revolving credit or overdraft for deposit.
With the equity of your home (or your parents) you will be able to set up a revolving credit. Instead of getting a mortgage from your current property, you can pledge to the bank and in return apply for an overdraft facility or revolving credit facility. Many banks in Malaysia offer this to businesses but many have opened up these facilities to consumers. Find out from the bank whether they offer Islamic facilities as this is crucial to maintain barakah in our property purchase.
Typically the cost of borrowing is higher than a mortgage but the process of application is a lot simpler especially if you already are their current customers having an account with them. You only have to pay the cost of borrowing based on the outstanding balance.
As long as the cost of borrowing is not hidden from you, you can include these in the numbers in the calculations of your return on investment for your property.
7. Using 100% loan from friends and family members for deposit
If you have this group of friends, all you need is a lawyer to arrange for agreements with each one of your friends to be able to pool some funds to purchase the properties. Now the smart thing is if you have the knowledge this can be the goodwill that you use in exchange for their sum of money.
You pledge that you will do the due diligence and keep updating them of the status of the properties. Better still if your friends use their names on the Sales and Purchase Agreement and that means it’s a win-win for everybody. You get to have some shares in the properties.
