FundMyHome 'bold and innovative idea', says news portal

KUALA LUMPUR (Nov 17): The news portal Digital News Asia (DNA) has described the FundMyHome platform as a "bold and innovative idea" that could hopefully spark "other established entrepreneurs to think out of the box and come up with their own innovative, boundary pushing ideas on solving market issues".

DNA's Founder & CEO, Karamjit Singh, writing in a commentary earlier this week entitled "Week In Review: Property maven comes up with innovation based on digital", that: "...without fully understanding how FundMyHome works, some parties are already worried that it could end up sparking a Malaysian subprime crisis where non-credit worthy buyers are able to afford homes through financial chicanery".

But Karamjit added that the "point I want to make about doing something new, something innovative that was not thought possible before is that people will first doubt it, ridicule it and try to kill it. Next comes the effort to try to understand what it really does and when it all clicks into place, comes realisation and wonderment of a solution so obvious.

"That may just happen here with FundMyHome. And it is worth noting that, before [Datuk] Tong [Kooi Ong, EdgeProp Sdn Bhd chairman] was a property man, he was a successful banker who sold his bank and securities company, Phileo Allied Bank (Malaysia) Bhd, to Maybank Bhd for a cool US$311 million (RM1.3 billion) in 2000.

"...hats off to EdgeProp Sdn Bhd and its chairman..."

Speaking during a FundMyHome Media Q&A session on Nov 15, Tong explained that it would be "impossible" that the financing mechanism could cause a subprime crisis.

"Subprime happens because people who cannot afford to borrow or repay their loans take on debt. The buyers under FundMyHome do not take on debt and there are no mortgages to pay, so it's actually impossible. In fact it's the reverse. FundMyHome actually reduces debt rather than increase debt,” he said.

Tong stated that the benefits to FundMyHome homebuyers are that they pay only 20% of the purchase price with no mortgages and monthly payments for five years. It also enables one to move in to the unit immediately.

On the other hand, the trade-offs are that they have to take the risk of property prices falling after five years. However, the risk is capped at 20% of the original valueof the home — the capital they invested in the beginning.

“They [homebuyers] pay just 20% of property price with potential of either savings on or earning rental income; they have no monthly repayments during the five years, no foreclosure risk, no personal liability and have their risk of capital losses capped to the 20% invested,” he replied to a reporter’s query.

“We are providing another possibility for them, FundMyHome is not designed to be a solution for all potential homeowners. But we are confident that we are a solution for some,” Tong stressed.