The Association of Banks in Malaysia (ABM) has urged first-time home buyers to consider applying for government schemes such as My First Home Scheme (SRP) for assistance in property purchase.

In a statement Wednesday, ABM said, 11 commercial banks and 11 Islamic financial institutions in Malaysia were participating in the scheme and the list could be obtained on SRP's website.

"The buyers are advised to avoid obtaining more credit, which may not be sustainable in the long term, and over-stretching themselves financially," said the association, adding that there may also be hidden costs or charges which might not be apparent.

ABM said generally speaking, home buyers were reminded that there were various financing options for them.

Commercial banks had been offering housing loans to applicants who were eligible and in screening housing loan applications, banks considered many different factors, it said.

"The business of commercial banks is in the main lending or extending credit while adhering to their respective risk appetites and/or the guidelines set by the regulators," it said.

The association said the borrower might also want to consider getting pre-approved housing loan before looking at purchasing a property.

"In assessing one's eligibility for a housing loan, monthly home loan installments and other long-term monetary commitments such as hire purchase loans should not exceed more than 40 per cent of gross monthly income," it said.

Housing loan applicants 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 consumers, it said.

ABM has 27 members, comprising commercial banks that currently operate in the country with the main objective to establish and promote a sound banking system in cooperation and consultation with the regulators.