Tips Buying a House

How to apply a loan house

This page is to help young generations to buy a house especially in Malaysia. With this page, you will saved a lot of times and troubles from doing some research.

Understanding “First Home Scheme”.

Before we start, do you know about “First Home Scheme” by the government? That is the types of loan for youngsters who just started working without any saving to buy a house at 100% loan amount (zero down payment). But the downside of this scheme is the high interest rate. I recommend not to take this scheme if you have saving and good amount of EPF 2^nd account balance to pay the down payment and any additional fee.

If you still interested with First Home Scheme, please links below for more details:

 http://www.srp.com.my/en/index.html

Or you can continue with this page for normal method without first home scheme.

Picking the Right House

1.       Choose a house design that meet your needs. Always ask this questions to yourself before buying a house. (To determine types of house you going to buy)

a.       Do you need this house for a long term?

b.      Do you need extra room?

c.       Do you need multilevel of house?

d.      Do you need extra land outside the house?

2.       Know your capability to buy house. (To determine house price range that you can afford.)

a.       How much extra money can you spend for the house?

b.      What is other commitment you need after buying the house?

c.       Do you still have saving after buying this house?

d.      How much you can save after buying the house?

3.       Know house area/neighborhood. (To identify the house location).

a.       How far is the house from your working location?

b.      How far is the house from centre of town?

c.       How far is the house from nearest commercials area?

d.      How far is the house from main road (heavy density road)?

e.      How good is that neighbourhood? (area density/good neighbour/robbery case in area).

f.        How good is the traffics to that house area during peak hour? (to avoid/minimize heavy traffic jam).

You can find house for sale at links below:
http://mpropertiesads.blogspot.my/ 

Accepting the house with the House Seller/Developers

Most of the house sellers/Developers will request for deposit money/booking fee. Standard amount of booking fee is RM5,000. Take note some booking fee is refundable (when is booking is cancelled) or use it to pay some amount down payment. Method of payment must be clear and with proof of payment so you won’t have any troubles in the future.

When doing bank inquiry

You can enquirer and survey all bank without spending any money. Most of the banks will do house valuation to determine the house price. Total bank loan approval is depending on the house valuation or the selling price by house seller/developers which depending on which one is lowest. (Take note: you can re-negotiate with house sellers to lower the price when the valuation is way below the selling price). The bank also will evaluate buyer salary to determine maximum monthly amount the buyer can afford. Few things need to consider when applying the bank;

1. Bank interest rate.
2. Maximum loan period (it is depend on the expiry date of the lease of state land/land title of the house).
3. Lock in period (the period where you can clear total loan amount or if you plan to resell the house).

Take note that you only can do loan maximum 90% from the total amount of loan approve. Example;

House Value (after house valuation) = RM500,000

90% from total amount of loan approve = RM500,000 x 90% = RM450,000 (Maximum bank loan offer)

Total amount you need to prepare for down payment = RM500,000 – RM450,000 = RM50,000

The lists of documents that you need to bring to bank before you go bank;

1.  Copy of Lease of state land/land title of the house (you can get it from house sellers/developers)
2. 3-6 months salary Payslips
3. Buyer / joint buyer copy of identifications
4. Latest EPF statements.

You can check bank interest rate at links below;

https://www.imoney.my/home-loan

What you need to understand when applying the house loan;

Some additional fees to consider;

Take note that some bank allowed additional fees below to be paid as financing (included into loan amount);

1. MRTA = This insurance scheme is mandatory to take when buying a house in Malaysia, this insurance will cover the remaining loan balance when the buyer (loan applicants) losing the ability to work due to accidents. (amount varies from RM5000-RM20000 depend of types of house and loan durations).
2. Legal Fee = The amount of fee you need to pay to your lawyer.
3. S&P documentations fee = The amount of fee you need to pay for the documents preparations. Usually this will be included into Legal fee.
4. Valuation Fee (only to be paid to house evaluator once loan is confirm) = Price varies depend on types of house.

 When do some Sales and Purchase agreement with the lawyer firm. Make sure to include deposit/booking fee so you can deduct remaining balance to be paid to sellers/developers.

This blog is written based on author experience. If you have some thought or better idea to share, please write in comments section. Thanks.