Almost half of the applications for the Housing Loan Revolving Fund were rejected since its establishment in 1976.

Housing and Local Government Deputy Minister Peter Chin Fah Kui said only about 5,386 out of 10,899 applications for the loan were approved by the ministry between 1976 and April 30 this year.

The deputy minister was answering questions from MP Yap Pian Hon (BN-Serdang) in the Dewan Rakyat today.

The government established the fund with RM30 million to help the lower income group own a house.

On April 25 this year, the government decided to add another RM40 million to the fund. And it was extended to include Sabah and Sarawak with a start-up fund of RM5 million for each, he added.

The fund in Sabah and Sarawak, however, falls under the jurisdiction of the respective state's chief secretaries. Meanwhile, the ministry is still in charge of the fund for Peninsular Malaysia.

Lukewarm response

"After the fund was increased, there were only 180 applications (nationwide)," Chin lamented. "In Selangor there were only seven applications."

The deputy minister said there are two categories of applicants - those who will build their own house and those who will buy low-cost houses.

RM20,000 loan cap

Applicants must fulfill a number of requirements before they are eligible for the loan.

They must be Malaysian citizens aged between 18 and 48 years old and their household income, between RM500 and RM1,200 a month.

They must also be prepared to mortgage their house and land, and pay life and fire insurance premium which will be included in their monthly installment. They must name an heir to pay for their installment in case they are incapable of repaying the remainder of the loan.

The loan is capped at RM20,000. The first RM10,000 is free from service fee but the subsequent amount would be charged at four percent per annum.

Those who want to build their own house must have their own land. They can only use their own building plans or those of the ministry. And their house must not cost more than RM25,000.

For those who want to buy low-cost house, the house must be privately-owned. The cost of the house must be in accordance with the area's property price. The applicants must also submit the advertisements and brochures of the low-cost house and bear the legal fees.

Chin said the loan is also extended to those in rural areas.