ABOUT 60% of the 1.6 million-strong civil service are expected to benefit from a recent directive to lower salary caps for getting a housing loan, said public sector union group Cuepacs.

The 60% are civil servants who earn less than RM4,000, said Cuepacs president Azih Muda, adding that the directive would help more of them qualify for loans from the Public Sector Home Financing Board (LPPSA).

This would increase home ownership among low ranking civil servants who are still struggling to afford houses built under the 1Malaysia Public Sector Housing Project (PPA1M), said Azih.

“This is a golden opportunity for civil servants and I hope they take it. We’ve been asking the government to lower the requirement for some time now,” Azih told The Malaysian Insight.

The government’s old directive meant that government employees could not take loans with repayments that were above 60% of their salaries.

Azih said the directive was meant to ensure that civil servants had a net take home pay of 40% of their salaries after all deductions for loan instalments.

The new directive would remove the 60% salary cap which was announced yesterday by chief secretary to the government Ali Hamsa.

Although the government has allocated about RM2.2 billion in Budget 2018 for PPA1M and the 1Malaysia People’ Housing Scheme (PR1MA), low-ranking civil servants still had trouble affording them, said Azih.

“PPA1M units are between RM180,000 and RM300,000. About 46% of those who applied for loans from the LPPSA were rejected when this directive was in force.”

Azih said he was not worried that the lower salary threshold would make it harder for civil servants and their families to manage their monthly finances.

This is because those who borrowed more than 60% of their salaries would get a take home pay of less than 40%.

“Even before this directive they were already spending more than 60% of their pay on other stuff. So maybe with a housing loan, they will be more careful with their money.” – November 16, 2017.