Transforming homeownership: an innovative financing model with a future value approach

• Published in: INTERNATIONAL JOURNAL OF HOUSING MARKETS AND ANALYSIS
• Main Authors: Said, Rosli; Sulaimi, Mardhiati; Ab Majid, Rohayu; Aini, Ainoriza Mohd; Olanrele, Olusegun Olaopin; Akinsomi, Omokolade
• Format: Article; Early Access
• Language: English
• Published: EMERALD GROUP PUBLISHING LTD 2024
• Subjects: Urban Studies
• Online Access: https://www-webofscience-com.uitm.idm.oclc.org/wos/woscc/full-record/WOS:001169258000001
• ISSN: 1753-8270; 1753-8289
• DOI: 10.1108/IJHMA-11-2023-0156

PurposeThis study aims to address the critical need for innovative financing solutions in the global housing sector, focusing specifically on Malaysia's distinct housing finance system encompassing both conventional and Islamic loans. The primary objective is to develop a transformative housing finance model that addresses affordability challenges and reshapes the Malaysian housing landscape.Design/methodology/approachThe study presents an alternate housing finance model for Malaysia, integrating lower monthly payments and reduced household debt. Key variables include house price appreciation rates, interest rates, initial guarantee fees and loan-to-value ratios. Inspired by the Help to Buy (HTB) scheme, the model aligns with proven global initiatives for enhanced affordability, balancing payment amounts, loan interest rates and acceptable price thresholds.FindingsThe study's findings promise to address affordability disparities and reshape Malaysia's housing finance landscape. The emphasis is on introducing a structured repayment plan that offers a sustainable path to homeownership, particularly for low-income families. Incorporating the future value adaptation concept, inspired by reverse mortgages and Islamic finance, enhances adaptability, ensuring long-term sustainability despite economic shifts.Practical implicationsThe proposed model promotes widespread access to homeownership, offering practical solutions for policymakers to improve affordability, prompting adaptable risk management strategies for financial institutions and empowering potential homebuyers with increased flexibility.Originality/valueThe study introduces a transformative housing finance model for Malaysia, merging elements from reverse mortgages, Islamic finance and the HTB scheme, offering potential applicability to similar systems globally.