Saving gold for a house deposit: planning, timing and the risks

The deposit and other costs

When you buy a house with a loan, the bank finances part of the price and you pay the rest as a deposit. The share financed, or margin of financing, is set by the bank based on its assessment and the rules that apply. Check with your bank.

Beyond the deposit, BNM reminds borrowers not to forget the additional out-of-pocket costs, for example legal fees and insurance premiums. Build these into your savings target.

Affordability first, not just the deposit

The deposit is only the start. BNM states that financial institutions are responsible for establishing that a borrower's income, after statutory deductions, spending on necessities and all other obligations, can meet the debt repayments. In its Annual Report 2020, BNM gives the guide that total monthly debt repayments should not be more than 60% of net income, and asks borrowers to make sure enough remains after instalments for daily expenses and an emergency buffer.

In other words, emptying your emergency fund to pay the deposit can leave you exposed once you move in.

Can gold help?

For a goal several years away, some people save part of their deposit in gold a little at a time, for example through GAP from RM100. But there are two challenges:

• The date is close to fixed. Once you have found a house, the deposit must be paid on the agreement's timetable. If the gold price is down then, you either sell low or delay the purchase.
• Selling takes time. The minimum GAP sell-back is 1 gram, and money is credited after confirmation the next business day or within 2 business days (GAP terms, clauses 3.2 and 3.5). Don't wait until the last day.

A more careful approach: once you start house-hunting seriously, convert part of the gold into cash in stages so the deposit is already sitting in your bank account.

Gold savings do not guarantee a loan approval

The decision to approve a housing loan is made by the bank based on its own assessment, including your income, commitments and credit record. Owning gold does not guarantee a loan will be approved, and we make no promises about loan approval.

If you are planning to buy a home in Sarawak, TokeyRumah ↗ is a property team that helps with buying and selling homes. It is a separate site from TokeyEmas and is not part of Public Gold.

Risks and costs

• Price risk: the value of gold can fall just when you need the deposit. There is no guaranteed profit.
• Spread: if you buy and sell within a short time, you may get back less than you paid.
• Payment timing: sale proceeds are credited after confirmation, on business days.
• Cancellation charges: may apply if a buy or sell instruction is cancelled (clauses 1.17 and 3.7).
• Not a bank deposit: GAP is not a financial product or a deposit (clause 1.2), and gold-related products are not protected by PIDM.

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