The government's attempt to introduce a new financing method for aspiring homeowners under the PR1MA affordable housing programme may be a noble effort but it could end up saddling them with more debt, says Parti Amanah Negara.

Amanah's Youth's housing committee chairperson Mohd Ammar Atan said this in reference to the newly-launched Special PR1MA End Financing (SPEF).

Mohd Ammar noted that while SPEF allows for lower initial repayment and high loan, its interest rate of 4.75 percent is higher than the average of 4.45 percent for conventional loans.

"The SPEF scheme may be noble in its intention but it could indirectly cause an increase in the burden of household debt," he told a press conference in Kuala Lumpur today.

PR1MA units costing between RM100,000 and RM400,000, consist of apartments or terrace houses.

Ammar said the higher interest rate meant that borrowers would pay around RM35,000 more by the end of a RM400,000 loan tenure.

The SPEF scheme requires borrowers to only repay the loan's interest for the first five years.

The repayment of principal plus interest will only come after the five-year period.

It also allows borrowers to use their Employees' Provident Fund (EPF) Account 2 to cover their repayment, which will entitle them to a bigger loan.

However, this option would mean that borrowers cannot access funds in their EPF Account 2 for other purposes until the loan is fully settled.

Ammar expressed concern that this may affect the retirement plans of borrowers.

"We are studying the matter in detail and will come up with proposals.

"We will then submit a memorandum to the Ministry of Urban Wellbeing, Housing and Local Government next week," he said.