Civil servants or government employees have many advantages in buying their dream home, one of which is through LPPSA loans or the Public Sector Housing Financing Board. Basically, the home loan package offered by LPPSA is better than the housing loan package provided by the bank.
LPPSA loans are said to be more profitable because they promise low-interest rates and offer a maximum financing margin of 100 percent without requiring you to withdraw your savings to pay the cost of buying a house such as a deposit or downpayment of your dream home.
For this reason, civil servants are encouraged to buy their dream homes through LPPSA housing loans. This article will explain all information about LPPSA including the application process, LPPSA loan eligibility, LPPSA loan terms and more.
8 Things You Need to Know Before Applying for a LPPSA Loan
The Public Sector Housing Financing Authority (LPPSA) is a statutory body responsible for managing public sector housing financing facilities. The following is complete information about the Public Sector Housing Financing Loan application process (LPPSA) for your guidance if you wish to use this facility.
1. Public Sector Housing Financing Scheme
For those of you who don’t know, this government home loan is specifically designed for public servants to help government servants own their own homes. LPPSA offers two housing financing schemes namely:
- Islamic Public Sector Housing Financing Scheme (SPPSAi);
- Conventional Public Sector Housing Financing Scheme (SPPSA).
2. Types of Public Sector Housing Financing
Basically, LPPSA loans offer seven types of financing to eligible civil servants as follows:
- Purchase of completed residential houses;
- Construction of houses on own land;
- Purchase of residential houses under construction;
- Purchase of land for the purpose of house construction;
- Complete settlement of existing housing loans from banks/financial institutions;
- Construction of residential houses on land financed through LPPSA facilities;
- Renovation of residential houses financed/completed through LPPSA facilities.
3. Government Housing Loan Interest Rate
The SPPSA government home loan interest rate (conventional loan) is set at four percent per year on the approved financing amount. The interest rate is calculated on the reduced balance every month. The SPPSAi financing profit rate (Islamic loan) is set at seven percent per year. A profit rate calculation is also made on the reduced balance every month. In addition, borrowers will also enjoy a profit rate of four percent per year through the Muqasah/Ibra’ Principle.
4. Scope of Public Sector Housing Financing
In addition, this public sector housing financing also includes other matters such as property prices, home insurance payment costs or mortgage protection (MRTA, MRTT), long-term homeownership protection (LTHO) and real estate legal costs related to the preparation of financing agreement documents.
5. LPPSA Loan Term
Eligible civil servants can enjoy the LPPSA housing financing facility twice. Even so, the second financing application is only allowed on the condition that the first housing financing has been fully settled.
|First Home Loan||Second Home Loan*|
|Pension Scheme||35 years or up to the age of 90 years or any earlier.||30 years or up to the age of 90 years or any earlier.|
|EPF Scheme||35 years or until completion of service or whichever is earlier.||30 years or until the end of service or whichever is earlier.|
6. LPPSA Housing Loan Eligibility
Civil servants who have a permanent status and have been confirmed in service are eligible to apply for LPPSA loans. It thus allows civil servants to buy residential houses, and land or do any permitted renovation work.
First Funding Qualification
For the first home loan, the monthly instalment must not exceed 60 percent of the basic salary and fixed allowance. In addition, the total debt must not exceed 80 percent of net income*.
Second Funding Eligibility
For the second home loan, the monthly instalment does not exceed 50 percent of the basic salary and fixed allowance, and the total debt does not exceed 80 percent of the net income*.
Net income is the basic salary and fixed allowance that takes into account the following aspects:
- Fixed Housing Allowance (ITP)/Provincial Housing Allowance (EPW);
- Civil Service Fixed Remuneration (ITKA)/Military Service Fixed Remuneration (ITKT);
- Fixed Entertainment Remuneration (ITK);
- Fixed Remuneration of Key Positions (ITJU);
- Living Allowance (COLA)/Provincial Incentive Payment (BIW)/Incentive Payment Peninsular Malaysia (BISM)/Sabah Sarawak Incentive Payment (BISS);
- My Allowance
If you want to check your LPPSA housing loan eligibility, you can use the LPPSA calculator. You can click this link for more info.
7. Required Documents
Just like a home loan application at a bank, you need to submit supporting documents to allow your loan application to be approved. Here is a list of documents required before you send your home loan application:
- A certified copy of the identification card (MyKad);
- Original salary slip or e-Statement of Salary or Copy of confirmed pension position confirmation letter;
- Head of Department cover letter;
- A verified SPPB Loan or Financing Application Form included
i. Insurance/Takaful Selection Declaration Form;
Ii. Form 2 – Letter of Agreement for Settlement of Housing Loan Debt and Interest;
- Copy of marriage certificate/Registration of marriage in Malaysia;
- A copy of the child’s birth certificate.
8. Review of LPPSA Loan Balance
If you want to review the loan balance, LPPSA provides two review methods that can be considered. You can check your LPPSA loan balance either online or via SMS as follows:
LPPSA Loan Balance Online
To check the balance online, you can follow the steps as follows:
- Visit the SPPB Integrated Housing Loan portal;
- Log in using your ID card number and password;
- Then, select Loan Balance Status to check your total debt
LPPSA Loan Balance by SMS
As for checking the balance via SMS, you can follow the following steps:
- LPPSA<space>Balance<space>ID Card Number and Send to 15888
LPPSA Online: How to Apply for LPPSA
For those of you who are considering applying for a government home loan, this guide may help you. In general, LPPSA housing financing applications can be made online by following the following steps:
- Visit the Public Sector Housing Financing Board portal;
- First-time users need to log in first;
- Then, log in or login LPPSA using the ID and password that have been registered and confirmed via email;
- If you are a new user, you will be taken to the Update Details page;
- Personal information, residential address, family and employment details must be completed;
- The main page displays a selection of financing types that can be selected either as an individual application or as a joint application;
- For new applications, you need to enter details such as initial financing information, position in service, total income and commitment, selection of insurance or takaful, and confirmation;
- Click the Save and Send button;
The application approval period usually depends on the submitted documents. If the document is incomplete, it will most likely take longer. But in general, the government housing loan approval period is usually as follows:
- First Loan: Three working days from the date the application is received;
- Second Loan (second-time property purchase): Five working days from the date the application is received;
- Second Loan (modification of a residential unit): 21 working days from the date the application is received.
LPPSA Housing Loan vs Bank
Government Housing Loans (LPPSA) refers to facilities offered by the government, especially for civil servants. Here is the difference between LPPSA vs bank loan 2022 for your reference and guidance:
|LPPSA Loan||Loan Bank|
|Eligibility||Open to government employees or civil servants||Open to all Malaysians|
|Financing Margin||The second or third home financing margin is the same as the first home loan||The second or third home financing margin will be offered up to a maximum of 70 percent|
|Interest rates||The interest rate remains four percent for a period of 30 years||The interest rate varies according to the bank and loan period|
|Credit Score||Individuals who are blacklisted or have an unsatisfactory CCRIS, CTOS record can still apply||Must have a good CCRIS, CTOS credit score to facilitate the process|
Hopefully this sharing can help you if you want to apply for a government housing loan to buy your new home. Also, if you are considering the best and most comprehensive home insurance for you, visit the Qoala website for more info. Qoala is an insurance platform in Malaysia that provides various types of insurance including car insurance and motor insurance with the guarantee of a safe, affordable and easy insurance buying process.