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| Home Buying Steps Made Easy |
Buying your first own property to be called home is another milestone achieved in your life. Whether it is for investment purpose or own stay, most people are still confused with the steps of buying a new house in Malaysia, or a home. Buying your own property may seem easy but when it comes to going through the procedures of buying a home, you then realize that you have missed out on many steps and wished you know the steps earlier so you could avoid the unnecessary troubles. In addition, there are also many schemes available for home buyers such as the My First Home Scheme.
Therefore, this article aims to guide you through the procedures and steps in buying new house in Malaysia and save you from unnecessary troubles.
A. Planning ahead
First of all, be clear of what you want and stay within your budget. Many home buyers made the common mistake of rushing into buying new house in Malaysia and only to regret later because they missed out the main purpose of buying a new house. Try narrowing down your options and figure out your budget to see how much you can afford to pay before making such big decision. Also, you will need to decide on:
(i) Location
Location is an important factor as it makes a huge impact in your daily life. Firstly, you will need to decide if the property is for investment purpose of own stay. As for own stay, you may prefer to stay out of the jam and busy city and prefer a quieter place whereas if it is for investment purpose, you will need to know your target audience (students, families or working class adults) and address your target audience’s needs. Whether the location should be in the city centre, or right next to public transportation.
(ii) Safety
This will be the main concern of property buyers regardless of the purpose of property buying, be it for investment purpose or own stay. You will not want to stay in an area where crimes are largely committed.
(iii) Education institutions
This is also one of the important criteria that you should take into consideration, whether or not the property is for investment or own stay. If the property is for own stay and you have children, this will save you from the daily road congestion. If it is for investment purpose, the more education institutions will then attract more potential renters (students).
(iv) Proximity to amenities
If you are buying a property for own stay, closer proximity to your workplace will be a good option as you certainly do not want to be stuck in a massive traffic jam daily on the way to work.
(v) Accessibility
Accessibility is important as you want to be connected to many major highways that lead you from one place to another easily. Bad accessibility does not bring any benefits to you even if you are staying close to a highway, say KESAS Highway.
(vi) Size
In fact, size does matter when it comes to buying a new house in Malaysia. Take into consideration the purpose of buying a new house in Malaysia, own stay, family, or investment.
(vii) Facilities
The importance of facilities will differ across individuals depending on the buyer himself. A family staying in a condominium might want different facilities such as swimming pool and gymnasium whereas if it is for investment purpose and is only renting out to students, facilities might not be such a big issue as most students would prefer to stay in their own rooms.
B. Do your preparation
After planning, you need to start with your preparation. Break down the costs that you need to deal with if you were to buy a new house in Malaysia. These will include:
(i) Property Price
Based on your planning above, you will need to start with checking out of the property price after the above considerations. Location of property will decide the property price. Properties in a prime area such as Kuala Lumpur City Centre will always be on the higher price range as compared to those not in the city. Therefore, start your research early, keep a spreadsheet and start comparing prices of properties from different property developers.
(ii) Type of Loan
Decide which kind of loan that you would opt for as there are a different kinds of mortgage loans for you to choose from when you buy a house in Malaysia:
1. Standard Home Loan
The most common housing loan available as the interest rates of the loan are fixed from the moment the property buyer obtains the loan, regardless of the Overnight Policy Rates (OPR) changes or market changes. Benefit of this loan is that property buyer who obtains this loan will have a peace of mind as the fluctuation of the market will not affect the interest rates.
2. Flexi Home Loan
This loan is another alternative option of Standard Home Loan. The interest rates are lower as the buyers place more money into the account, therefore, is suitable for property buyers with more cash flow. Another benefit is that if there are any changes in the market, the loaners get to enjoy the changes of rates as well. As the name mentioned, it is also flexible as it allows loaner to take out the money anytime.
3. Islamic Home Loan
This loan is specially tailored for the Muslim with similar benefits as the Standard Home Loan, however, uses the Base Finance Rate(BFR) when it comes to deciding how much is the bank earning from the Islamic Home Loan.
The most common housing loan available as the interest rates of the loan are fixed from the moment the property buyer obtains the loan, regardless of the Overnight Policy Rates (OPR) changes or market changes. Benefit of this loan is that property buyer who obtains this loan will have a peace of mind as the fluctuation of the market will not affect the interest rates.
2. Flexi Home Loan
This loan is another alternative option of Standard Home Loan. The interest rates are lower as the buyers place more money into the account, therefore, is suitable for property buyers with more cash flow. Another benefit is that if there are any changes in the market, the loaners get to enjoy the changes of rates as well. As the name mentioned, it is also flexible as it allows loaner to take out the money anytime.
3. Islamic Home Loan
This loan is specially tailored for the Muslim with similar benefits as the Standard Home Loan, however, uses the Base Finance Rate(BFR) when it comes to deciding how much is the bank earning from the Islamic Home Loan.
(iii) Downpayment
After deciding on which house to buy in Malaysia, here comes the down payment. Usually, a property’s down payment will be fixed at 10%, depending on how much bank loan you have secured. In other words, if the bank is providing you with a 90% loan, you will then only need to pay a 10% downpayment.
(iv) Sale and Purchase Agreement Fees
Next, the Sale and Purchase Agreement Fees (S&P). This is an important document with the blueprint of the property and it is charged accordingly to specific price tier that is based on the price of property the buyer buys.
(v) Loan Agreement Legal Fees
After that, property buyer will then need to pay for Legal fees. These fees are charged depending on the time and expertise of the engaged lawyer, and also the price of your property.
(vi) Stamp Duty on Memorandum of Transfer
The Memorandum of Transfer (MOT) fees will be the final fees to be paid by home buyers upon the completion of development. These fees are for the ownership transfer of property to the home buyer, also known as the rightful owner, and will only start to be transferred around 6 months after the development’s completion. These fees too, are charged according to a price tier based on the price of the property, along with 6% government tax and a RM1,000 - RM1,500 disbursement fee.
However, do note that there are other costs that need to be taken into consideration as well when you purchase a property, such as:
- Mortgage Level Term Assurance
- Fire insurance
- Loan installment
- Interest
- Utilities deposit for electricity and water
- Renovation and repairing costs
- Maintenance fees
Lastly, the signing of documents. After your planning and preparing sessions, buyers will then proceed to the signing of Letter of Offer to indicate that the property purchaser accept the bank loan, followed by the signing of the Sales & Purchase Agreement. After that, it is signing of Loan Agreement and you are done. This is an agreement between the property buyer and the bank and all the terms and conditions of the loan will be clearly written in the Loan Agreement.
In conclusion, the procedures of buying a home on your own is not difficult as long as you plan ahead and stay within your budget. Remember to always be realistic as you do not want to get yourself into a financial burden after getting a home.
Marsha
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