Dual Generation Home Loans Are Not Advisable
A veteran property expert has called on parents to refrain from taking dual-generation home loans as it would only "enslaveâ€ their children, reported Free Malaysia Today.
Dual-generation loans allow parents to take out a loan for a home with their children for a longer mortgage period.
"With the current prices of homes and the inability of many to qualify for a loan on their own, the idea of a dual-generation loan sounds good, magnanimous even" said Ernest Cheong, a chartered surveyor of 40 years.
However, he noted that while the mortgage period for such loans is longer, interest repayments are usually higher also. As such, tying a child who is yet to chart his own life, is like enslaving him to a commitment he might not want.
"Today's generation, particular millennials, are making different life choices than the previous generation. They tend to marry later, have children later, they want more mobility and experiences, so buying a property isn't a priority" explained Cheong.
Moreover, most of today's graduates start their working life with a student loan.
"I hope those who are thinking about taking dual generation loans consider the full implications of their actions" he said.
"What happens if the parent falls sick and can't work in fewer than 10 years into the loan? The burden of making the payments would fall on the child, in the worst case scenario the home could be foreclosed and the child declared bankrupt.â€
According to Cheong, the ages of 20 to 30 are important for today's young adults for building a career or saving up for a family. And given today's high cost of living, fresh graduates find it difficult to survive, let alone pay for a house.
With this, he urged young Malaysians to rent as an alternative to purchasing a house, especially now that the supply glut has created a renter's market.
"Without a loan, you are flexible and in a position to respond to changing circumstances" he said.
He also advised parents, who could not secure a loan due to old age, to help their child save up a bigger deposit, instead of gambling with a dual-generation loan.
"Taking a dual-generation housing loan only denies the younger generation the freedom of choice and a chance to adapt to changing financial situations.â€