PTPTN borrowers can settle their loans if allowed to buy property: Property agents

Permission given for National Higher Education Fund Corporation (PTPTN) borrowers to take up housing loans, despite being blacklisted by banks, could be a tool to settle their student loans if used wisely.

Instead of purchasing a house to live in, property website kakiproperty.com founder Mohd Najib Mohamed (above) said there are several options for youths to generate capital gain through the investment.

"If this (announcement) is implemented, it can be a tool for borrowers to help settle their PTPTN loans quicker.

"From a house, they can generate cash flow and capital gain," Mohd Najib told Malaysiakini on the government's move to exempt PTPTN loan borrowers, who have been named in the Central Credit Reference Information System (CCRIS), from being blacklisted by banks.

Elaborating on ways to generate capital gain, Najib said house owners could either re-sell or rent out their property, as well as refinance their housing loan for a profit.

Najib, who is also a property agent, said this was based on his observation of youths who generated tens of thousands of Ringgit through investing in property and using the income to settle their PTPTN loans.

"Once capital gain is generated, the borrowers can settle their PTPTN loans in a lump sum, and I know many youths now do that. They can settle RM30,000 to RM40,000 in one payment after three to four years.

"They use the asset they bought to settle their PTPTN loans," he explained, noting that many youths are unaware of these strategies due to a lack of financial literacy skills.

As such, Najib said youths in universities should be taught financial literacy skills that will prepare them to settle their PTPTN loans.

"That is most important, because that (PTPTN) loan is the first (loan) they will have (after graduating)," he added.

Housing and Local Government Minister Zuraida Kamaruddin (above) made the announcement on July 10 at the launch of the Hi HOME programme, raising concerns over its implementation.

On July 24, Zuraida clarified that a new mechanism will be introduced to ensure blacklisted PTPTN borrowers do not default on their housing loans.

She also said fresh graduates had high creditworthiness, as they have secured a job, and they don't have other loans to service.

At the same time, Zuraida said banks will continue to have the final say on whether to approve or reject loan applications.

On concerns that the exemption will be abused by those who refused to settle their PTPTN loans, property website Hartabumi.com Radzi Tajuddin said they are unlikely to pass through banks' comprehensive risk assessment mechanisms.

"I don't foresee the possibility that these individuals, with a bad track record of servicing their PTPTN loans, being easily approved for a housing loan, or that they can manipulate the system.

"Banks will adopt their standard risk assessment mechanisms, and so this new initiative will help those who really want to improve their ability to settle PTPTN loans, and not those who refused to pay," he said.

Najib and Radzi both concurred that the new initiative could benefit individuals listed on CCRIS due to weaknesses of the system itself.

Najib said students who took PTPTN loans for their diploma studies and requested a deferment of payment until after obtaining their degrees, will be considered as failing to make payments and listed on CCRIS.

Radzi, meanwhile, noted that once a student has been listed under CCRIS, it would a long time to remove their names despite having resumed payments or restructured their loans.

Further details about the new initiative is expected to be revealed by Zuraida and Youth and Sports Minister Syed Saddiq Syed Abdul Rahman in October. - Mkini