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How BSH assists with home loan repayments

In 2019, the government of Malaysia introduced the Bantuan Sara Hidup (BSH) program. BSH is a financial welfare program designed to ease the financial hardships of the bottom 40% (B40) of income earners in the country. It was created as a replacement for the Bantuan Rakyat 1 Malaysia (BR1M) program which ran between 2012 and 2018.


The government has clearly defined who is allowed to apply for BSH assistance. These people include households comprised of a married couple who cumulatively earn less than RM4,000 per year. Individuals may also apply for BSH assistance. Certain individuals who earn less than RM2,000 per year may do so. These include single individuals aged between 40 and 59, single parents, widows and widowers, and people with disabilities who are aged between 18 and 59.


Those who apply for BSH assistance must be Malaysian citizens except in the case of spouses of Malaysian citizens who are part of a household earning less than RM4,000 annually. In such situations, a foreigner who is married to a Malaysian citizen may apply for financial assistance if the foreign spouse is a resident of Malaysia and a holder of a MyPR or MyKAS.


Individuals who qualify for BSH aid are entitled to RM300 through this program. Households, meanwhile, may claim anywhere from RM500 to RM1,000 depending on their total income. Eligible households are also entitled to a further RM120 for every child who is 17 years old or younger and unemployed as well as the same amount for every child who is 18 years old or older and a full-time student at an institute of higher learning. These benefits related to children may only be claimed for up to four children.


The government has recognized the fact that BSH applicants are likely to face difficulty when repaying any outstanding loans from financial institutions. These difficulties have been exacerbated by the effects of the ongoing Covid-19 pandemic. Therefore, the government recently introduced a program designed to assist B40 borrowers with the repayment of their loans.


This enhanced targeted repayment assistance program provides these B40 borrowers with two options. One of these is a moratorium on all loan installments for three months. The other is a reduction of all monthly repayments by 50% over a six-month period. This program will be in effect from December 1, 2020, to June 30, 2021.


The government has also permitted B40 borrowers who are eligible for BSH assistance to personally liaise with financial institutions in order to determine the payment schedule for their loans which would be of most convenience to them. Such loans include personal finance loans, vehicle loans, and housing loans. Therefore, low-income borrowers are now more able to make a full repayment on their home loans than before; all that is necessary is for them to supply evidence to financial institutions that they qualify for BSH aid.


Some of the options available to BSH beneficiaries who opt to restructure their home loan repayments include extending loan tenures, negotiating for a lower interest rate, and refinancing loans. By using these options, loans can be refinanced and monthly installment payments can be reduced in order to facilitate ease of payment.


Statistics compiled by the World Bank have shown that in Malaysia, people who earn income at lower levels tend to be more likely to use loans and credit cards to increase their living standards. This is because borrowing is often used by those who do not have much money to secure a place to live. After factoring in all necessary loan repayments whether for housing or otherwise, many households do not have much discretionary income and therefore must make use of housing loans.


There are also some forward-thinking people who realize that property owners may be their way out of the lower-income category. This is because, in this way, they will eventually be able to obtain financial returns on investment and build up their wealth. However, people in the B40 group generally do not have the financial means to purchase property without using housing loans. Since there are many reasons why B40 people may be burdened with housing loans, the government’s program to assist BSH recipients with their home loan repayments comes as a tremendous boon to them.


The government has understood that people in the lowest-income group will benefit from being able to pay their home loans accordingly. This is why it is so important for any BSH beneficiary to utilize the government’s new loan repayment plan to its fullest extent. Not only will it allow them to relieve themselves of a considerable financial burden; it could also be their gateway to a brighter future for themselves and their families.