How to buy a condo with tight cash flow


Imagine you walked into a property sales gallery and fell in love with a condo on offer. You then identified a unit but hesitated when informed of the monthly installment. After some quick mental calculation, you came to the conclusion that it will be very tight on your budget, even when your level of income qualifies you to borrow from the bank.

Sheepishly, you tell the sales rep that you need time to think about it – meaning you are not going to buy!

Don’t be disheartened. You can still be able to buy your dream property if you know how!

Let’s look at the ways you can do it.


If you are financially tight, do not go for a condo where the construction is almost half or three quarter completed. Within a short period, your condo will be completed and you will have to start your loan repayment.

Instead, look for a condo where the construction is only at the foundation stage AND go for a high floor unit BUT make sure the price difference for each higher unit is not a lot.

Upon completion of the piling/foundation stage (10% of purchase price), your bank will then release 10% of your approved loan amount (assuming you are borrowing a 90% loan). If your loan amount, say is RM500,000, you only need to service your progressive interest (around RM193.00 monthly @ 4.65% based on RM50,000) until the construction reaches your high floor unit which is 2 to 3 years away – no cash flow problem for the next 2 to 3 years! By this time, your salary or income would most likely have risen and your condo almost completed.

If you cash flow is still tight by then, you can rent it out for one or two years to help you to pay for your monthly installments. At the end of the two years rental period, you may then decide to sell for a profit where you will be exempted from paying the Real Property Gains Tax (after 5 years from S&P date).

So where is the cash flow problem?


Go for new condos from developers and not buy sub-sale.

Nowadays, developers offer sales packages that aim to do one thing – to help their potential buyers to buy without much initial money outlay. They offer high rebates – any rebates that are 10% or more do not require purchasers to make down payment upon signing of the S&P Agreement.

Secondly, do look for sales packages where the rebates are more than 10%. For example, if the purchase price is RM800,000 with a 14% rebate, the developer will give “cash back” of RM32,000 to their buyers upon vacant possession (assuming the margin of financing is 90%). Such cash back can greatly ease the buyers’ cash flow to renovate their new condo or even help they to pay for their bank money installments.

Some developers even offer free S&P/loan agreement stamp duty, legal fees and disbursements.

Buying new properties from developers can ease your cash flow significantly as compared with buying sub-sale properties, where you have to pay for a lot of things.


Do you know that you can still buy your dream home even if you do not have the money to pay for the remaining down payment or when you can only obtain 80% margin of financing from the bank?

You can withdraw from your EPF Account 2 according to EPF withdrawal requirements. The amount you can withdrawal from your Account 2 is the difference between the purchase price and the loan amount plus an additional 10% of the purchase price. With the additional 10%, you can use the money to service your monthly progressive interest and when your condo is completed, your loan installments.


The above are some of the ways that can help you to buy your dream property even when you do not have the money for the down payment or even when your cash flow is tight.

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