Purchasing your dream home for the first time requires meticulous and strategic planning. If you are a first-time home buyer and have little clue how purchasing a property works, consider this article as a guide..
Things to Keep in Mind Before Buying a House
- Finding the right property: Finalise a property according to your needs. Requirements will vary depending on whether you want to buy a property for investment or for your living.
- Get financing: You may require a home loan to purchase a property. Research is essential before you decide which bank to go for your home loan financing. Some of the factors to consider are interest rates, tenure, and flexibility in repayment.
- Down payment: This is an important step in buying a house. Whether you buy from the developer or seller, you must be ready to pay a down payment of about 5 to15%. First, sign the booking form and then pay 1-2% booking fees. This will give you 2 weeks’ time to get the Sale and Purchase agreement. After signing the agreement, pay the remaining down payment of about 10%. Thereafter, finance the rest of the purchase price with a bank loan.
- Your affordability: Along with the monthly installment, many other expenses, such as the maintenance fee, fire insurance premium, water, and electricity bill also come into consideration. Hence, when you are thinking of buying your first home, keep all these expenses in mind as well.
Home Loans for First Time Home Buyers in Malaysia
Many banks in Malaysia provide property financing for the first-time home loan buyers. Refer to the table below:
|Name of the Home Loan Financing||Key Benefits||Keep in Mind|
|CIMB My First Home Scheme||Get longer loan tenure of up to 35 years||No processing fee|
|RHB My1 First Home Loan||High financing margin of up to 100%||Gross Household Income
|OCBC My First Home Scheme||Longer loan tenure of up to 35 years. Financing between RM100,000 and RM500,000||Permanent employee at your present company employed for minimum 6 months Your age should not exceed 65 years at the end of the financing period|
|HSBC Ideal Home Loan Plan||Pair the home loan with Takaful products to ensure complete house and personal protection No monthly fee and set-up cost needed||Not applicable for refinancing The loan is calculated on variable rate basis|
Features and Benefits
- High financing margin of up to 100%
- Longer repayment tenure
- Get a loan for completed/under construction residential property
- No processing fee
- Nationality criterion: Malaysian citizen
- Age criterion: 18 to 65 years of age
- Income criteria: As per the bank’s discretion
In most banks, the single borrower’s gross household income should not be more than RM5,000 monthly and for the joint borrowers, it should not surpass RM10,000 each month.
- A photocopy of identity card or passport
- Latest 3 months’ pay slips
- A copy of Sale and Purchase Agreement
- Recent EPF statements
- A copy of the land title
For self-employed personnel:
- Business registration documents
- Latest 6 months bank statements
- Latest financial statements
- Other supporting documents
Things You Should Know As a First Time Home Buyer
- Fixed vs Variable Interest Rate: Depending on the bank, the interest rate can either be fixed or variable (floating). While the fixed interest rate remains constant throughout the loan duration, the variable/floating interest rate is pegged to the base lending rate (BLR), which is specified by the Central Bank (Bank Negara Malaysia). Each bank decides its interest rate based on the BLR.
- Penalty for Early Loan Settlement: At some point of time, if you decide to lessen the loan tenure, refinance your home loan, or fully pay it off, you have to opt for early settlement of the loan. If this happens during the lock-in period, you have to pay a penalty.
- Pay More to Reduce the Principal Loan Amount: Find out from your bank if you can make extra payment to decrease the principal loan amount. Usually, a flexi loan allows you to make extra payment by depositing the extra money into your linked current account. On the other hand, for a term loan, you may have to give a prior notification to your bank.
Home Loan Calculator
Use the online home calculator to figure out how much of monthly instalment you need to pay to repay your home loan. Fill up the required fields of the online calculator available on the bank’s official website. Select a plan as per your needs and then proceed to apply for the loan.
Buying a home is like a dream come true. Select the right financing package that best suits your needs. Make sure you have all the necessary documentation in place for a hassle-free loan application.