Malaysia has experienced a surge in property prices in the recent times making it close to impossible to own home in the earlier years of one’s life. It can be absolutely overwhelming when buying your first home in Malaysia if you do not have the funds or know little about it or how to get a home loan. Here are 5 things that you need to know when buying your first house or apartment in Malaysia.
Top 5 things you ought to know for buying your first home in Malaysia
Here are five financial prerequisites that are musts before you sign on the Sales and Purchase Agreement (SPA).
1.The DownPayment Factor:It does not matter whether you are buying the property from a seller or directly from the developer, you will need to pay a downpayment of 5 to15%. you will need to search and look for the ideal house that suits your budget and desires. Then you would be required to fill up and sign the booking form once you have made a decision. You also have to make an earnest deposit of around 1 to 2%, or the booking fees amount. You will have 14 days in your hand to fetch the SPA. The SPA hence would require you to make the rest of the down payment which may be anywhere around 8 to 13% of the total amount. You would obviously then need to get home finance in the form of a loan from a reputed bank. Often you might be able to avail based on your type of property and your credibility, you may be able to avail lower or higher financing margin based on the 90% financing, in Malaysia. Incase your bank is lending you only 85% or less the purchase price, you will require to dish out another 5% for the difference. You also could give the down payment and get it back in short term period if you are able to make some smart negotiations, get discounts or rebates from the developer. Hence, you need to get your first duck which is money, to start the row, when buying your first house or apartment.
2.Get Your Home Loan Set UpOnce you have made your down payment ready, you need to fix up the whole home loan situation. This means you have to see how much monthly installment can you make against it, and whether the interest rates that are being offered to you are worth it or not. Banks are stricter in the current market when it comes to assessing one;s DSR or Debt Service Ratio. In other words it is your monthly capacity to pay up the amount. Based on factors such as your age the term for loan repayment could be 30 to 40 years for making the complete mortgage. The current interest rate is approximately around 4.3%, for a 30 year loan tenure which may require to pay a monthly payment of RM1000 to serve a loan amount of up to RM200,000.
3.Affordability of EMI:You have to keep in mind all the other expenses that come with owning a new home, such as new furniture, maintenance costs, etc. Hence the mortgage installment should not be digging too much into your monthly expenses along with the extra expenses and lead you to debt. You also have to consider expenses such as yearly fire insurance premium, quit rent and assessment. Then the regular expenses such as Indah Water Konsortium, water and electricity bill, along with the initial deposit for all these utilities. Hence your expenses will increase when you are staying at your own house, as compared to staying with your parents or renting an apartment. So think about all such factors.
4.What About The Transaction cost?There are other major transaction costs that one must consider as well. All these amount may add to around 5% of the whole amount. This includes:
Stamp Duties for SPA
Real estate broker commission
Other legal fees
The loan agreement stamp duty rate is 0.5% for any amount.
5.Cost for Renovation and FurnishingOnce you are handed the apartment or home as a new homeowner, you will get and sometime have to do more alteration and enhancement especially when it comes to renovations and furnishings. Remember, you are already paying the home loan monthly installments and hence a personal loan for this purpose will be a bad idea. Instead use your credit card for the same since you the interest payable on the expenditure will be comparatively lower. Just keep it in mind not to mess around your credit score in the process.
Do not deplete all your accumulated savings after the purchase. So, ensure that you are not going overboard, since it is your own home. Enjoy responsibly.