Banking institutions will continue to provide home financing facilities to eligible customers, said the Association of Banks in Malaysia (ABM) and the Association of Islamic Banking Institutions Malaysia (AIBIM).

In a joint statement today, the two associations said there are various types of home financing offered by commercial banks and Islamic banking institutions targeted at specific segments of buyers.

"For first time home buyers, banking institutions also offer special home financing packages to suit their needs.

"Home buyers should work with their financiers when making the suitability and affordability assessments for any facility applied for to pave the way for more robust financial management on the part of the customers," they said.

They said first time home buyers might also want to consider applying for government schemes such as "Skim Rumah Pertamaku" for assistance in their property purchase.

Some other financing options that home buyers should consider are "MyDeposit" or First Home Deposit Scheme, PR1MA HOPE Home Assistance Programme, and Rent to Own Programme under PR1MA, they said.

The associations said based on a recent survey, the top reasons why banking institutions decline home financing applications are the applicant's high debt service ratio, adverse credit history, insufficient income, or weak documentation/banking records to support the application.

Buying a home is a major financial purchase and a home financing facility usually forms the highest value item of a customer's debt portfolio.

Thus it is crucial that banking institutions establish that a customer has the financial capability to make repayments/payments during the financing tenure, they said.

They added that generally, an evaluation for financing would be based on how an applicant matches up to a set of criteria encompassing five broad areas or the 5Cs of credit, namely character, capacity, collateral, conditions and capital.

ABM has 27 members comprising the commercial banks that currently operate in Malaysia while AIBIM represents the interests of 25 member banks of interest-free banking institutions in Malaysia.