Guide to Buying a Property (Malaysia)

How to Buy A New House - 12 mins read

Purchasing a brand-new property can be as easy as 10 steps, and we've listed them out in order for you, here! By following this walk-through, and checking out the pros and cons, you'll be able to seal the deal in no time.

Are you looking to buy a new home? You’ve come to the right place! Not only do we possess a comprehensive list of new properties for sale, we've also created this awesome 10-step guide on how to go about the purchasing process. Step 1 – Work out your budget There’s no point in diving into a home search without first knowing what you’re looking for, and when it comes down to it, that begins with your budget.

Of course, you have to take into consideration your downpayment needs in your overall financing. That’s a lump sum equal to 10% of the total cost of the property that you'll need to have saved up, in order to pay upfront. Keep an eye out for financing opportunities targeted at first-time homebuyers, especially if you've got your sights set on affordable housing options such as government finance initiatives like My First Home and Residensi Wilayah (used to be called RUMAWIP) Additional costs, such as stamp duty and other miscellaneous legal fees. These can range from RM20,000 on-wards. First-time homebuyers

• Married youths between 25 and 40 years old

• Household income below RM10,000

Home Ownership Campaign (HOC) Up to full stamp duty exemption

• Instruments on securing loans exemption

• 10% house discount

• Selected properties only

• Residential properties only

• Malaysian only

• SPA stamped between 1 June 2020 and 31 May 2021

PR1MA (1 Malaysia Housing Program)

• Stamp duty exemption

• Rent to Own scheme

• Malaysian aged 21 and above

• Monthly household income between RM2,500 and RM15,000

• Applicants must not own more than one property My First Home Scheme

• Up to 110% financing

• First-time homebuyer

• Malaysian only

• Maximum monthly income of RM5,000

Do You Have Enough For The Upfront Costs? Downpayment Approx 5-10% of property purchase price

Legal fees - Sales and Purchase Agreement SPA and Loan agreement

Property Valuation Fees

Stamp duty on Memorandum of Transfer (MOT) 1% - 4% of property purchase price

Stamp duty on Sales and Purchase Agreement (SPA )0.5% - 1% of property purchase price

Stamp duty on loan agreement 0.5% - 1% of property purchase price

Mortgage insurance (MRTA/MLTA) based on bank requirements and included in your monthly instalments

Can You Afford To Pay The Monthly Instalments? The monthly instalment depends on:

• Your property purchase price

• Tenure of the loan (typically 35 years or until 70 years old)

• Loan interest rate

A home loan calculator can help you figure out how much your monthly instalment may cost. Step 2 – Find Your New Property The one important factor: LOCATION, and it’s important to have a list of what's most important to you during your search.

How can a real estate agent help? This is also where you'd probably want to bring in a real estate agent. These experienced professionals know the markets, know the reputation of developers, and know how to navigate the tricky waters of legal paperwork. They can be a huge help in directing your efforts, informing you of how to get the best deal, information of the property, neighbourhood and appliances included. Step 3 – Compare The Costs If you’ve found a property you like, don’t just rush right in and throw your cash on the table!

In popular areas, there’s bound to be competition for available homes. Step 4 – Secure Financing It’s important to understand that all banks will rely on your CCRIS Report as well as your CTOS score to assess your suitability for a loan. That doesn’t necessarily mean that if one bank rejects you, others will too, but it does offer a good insight into the decision making process. In addition, you'd also need to make sure that you're not stuck with too many debts. This will cause your Debt Service Ratio (DSR) to reach unhealthy levels, instead of the recommended 30%-40% range. The DSR is basically a method used by banks to calculate whether or not you're able to repay that loan you’re applying for. Check your CCRIS & CTOS report in these few easy steps! For a more comprehensive report, you can purchase the MyCTOS Score Report for a fee of RM24.85 (at the time of writing). For an added layer of cyber-security, you may opt for the CTOS SecureID which is priced at RM86.90 per year. To get your free basic MyCTOS report for the first time, you need to register here. From there, you can access it online or via the CTOS mobile app. When choosing a bank to obtain your home loan from, check out their available home loans to see if it fits your bill. Not all banks may have the home loan to fit your needs. That means that before deciding on a specific bank, you’ll first have to decide on what type of loan suits your financial situation best. Preparation to Apply for a Housing Loan. You’ve done the research, and you’re ready to apply for that home loan! 1) First things first, prepare the required documents as required by your bank. 2) Cross your fingers and wait for approval Your loan approval will typically take 1-2 days or more. You may be asked to present more documents to prove that you can afford the loan. 3) Sign your Letter of Offer Step 5 – Letter Of Offer/Intent To Purchase The Letter of Intent to Purchase is a document which states your intention to purchase a particular property. It’s generally combined with an earnest deposit, which is an upfront payment. It also sets out the date by which the Sale and Purchase Agreement (SPA) should be signed, usually within 2-3 weeks of the signing of the Letter of Intent. Step 6 – Sign The SPA The SPA is an important legal document which sets out the full terms and conditions of your purchase. Step 7 – Sign Loan Agreement And MoT This is a legal document which sets out the terms and conditions of your home loan are usually standard procedures from the bank. This is also where you’ll sign your Memorandum of Transfer. This is the legal document which transfers ownership in the case of properties with either a Strata Title or an Individual Title. If you’re buying a stratified property as part of a larger development, it might be the case that you’ll sign a Deed of Assignment instead, which conveys ownership of property which is still under a Master Title. Types of Property Titles Types

Master Title

Title document held by the developer or landowner at the point of construction.

Individual Title

Individually located properties such as landed properties.

Strata Title

Condominium/apartment complexes where individual property units form part of a larger shared development.

Types of Property Documents

Letter of Offer Document which sets out your initial desire to purchase, and a seller’s willingness to sell.

Sale And Purchase Agreement (SPA) Comprehensive agreement setting out the terms and conditions of a purchase

Loan Agreement Legal document to officially confirm the home loan agreement that you have signed with your bank.

Memorandum Of Transfer (MOT) Document which legally confirms the actual transfer of ownership.

Step 8 – Pay Fees And Costs Once the SPA is signed, you’ll need to pay the remaining share of your 10% downpayment, and ensure your home loan payment is transferred. You’ll also have to cover all the relevant stamping fees and legal fees required. Step 9 – Receive The Vacant Possession The Notice of Vacant Possession must be completed within 36 months of signing the SPA for a strata-titled property, and within 24 months for an individually-titled property. The Notice of Vacant Possession precedes receiving your Certificate of Completion and Compliance (CCC) a legally required document issued by the local authority to say your new property is safe and fit for human habitation. It’s up to you to ensure you get the most for your money by performing a detailed check and reporting on any defects or issues The defect liability period, where the developer is bound by law to repair any faulty workmanship discovered, but at no cost to the buyer.