Regardless if you are a first-time or recurring homebuyer in Malaysia, it is always good to have an overall idea of the home purchasing process. Apart from adequate property market research, planning how to achieve the desired outcome is crucial. Below is a general overview of the processes involved when buying a residential property in Malaysia.
Find out the average house price
Comparing the cost of other property units in your preferred neighbourhood is definitely something to put on your to-do list. One of the ways to know the average house price in Malaysia’s property market is to simply look up online. There are several property sites where they provide insights on the location’s market value. If the median housing price of your preferred neighbourhood is not available online, try asking the seller or agent personally for a recent property sales report. Knowing the actual house value of Malaysia’s properties will help you to see if it is fairly priced or not. Alternatively, you can visit a show unit or engage with a sales personnel on live chat for a personalised virtual tour to know the design, specifications and configurations within the unit.
Devise a financial strategy
Since you now know the average housing price of your preferred location, you can set aside a realistic portion of your savings for downpayment. The bigger the downpayment, the smaller your housing loan which can save a large sum of money from interest charges. Next, you need to allocate your spending on living expenses, loan repayments, insurance plans and other financial responsibilities. Browse for home loan options offered by different banks to get the best loan repayment deal for your current financial status. Needless to say, each bank has its own eligibility criteria for granting a home loan based on your Central Credit Reference Information System (CCRIS) Report and Credit Tip-Off Service (CTOS) Score. Other than having healthy credit reports for a successful home loan application, you also have to calculate your current debts and see where you stand using a Debt Service Ratio (DSR) calculator. To increase the chances of loan approval, it is recommended that your monthly commitments should not exceed your monthly income.
Engage a lawyer
Even though it is not required to hire a conveyancing lawyer in Malaysia, having a professional who can walk you through the legal process in property documentation and transactions makes a big difference. For example, a property lawyer can advise the homebuyer to prepare a private home defects inspection report so that the lawyer can produce an inspection notice to protect the homebuyer’s interest. This is also helpful for the buyer to know how to inspect a house properly by a professional home inspector.
Often, homebuyers would skim through the terms and conditions due to complicated legal jargons. By having someone to explain the fine print in layman terms while providing legal advice, it helps buyers to avoid falling prey to questionable clauses and property scams. Indeed, choosing to engage a lawyer does increase your total home purchasing cost, but you will save a large amount of money from mistakes that can be avoided in the first place. On another note, homebuyers may not need to worry about lawyer fees if they were to buy from property developers. The fees are usually borne by the developers themselves.
Letter of Intent to Purchase
As the name implies, the Letter of Intent to Purchase is a document that states your intention to purchase the property from the seller (i.e owner or developer). Together with this document, an upfront deposit, or earnest payment, of 2% to 3% of the selling price is required. This deposit is part of the 10% downpayment. You are only required to pay the remaining share of the downpayment after signing the Sales and Purchase Agreement (SPA).
The SPA document consists of offer and purchase conditions, which aim to protect all parties in the agreement, including how disputes will be resolved among the parties. You can ask for legal assistance in drafting the Letter of Intent to ensure all relevant details are included.
Understand your SPA, Loan Agreement and MoT before signing
After laying out your intentions clearly, the following legal document to sign is the Sales and Purchase Agreement. The SPA essentially consists of the terms and conditions of your property purchase. It is a binding contract between the homebuyer and seller that the conditions are mutually agreed upon. Once signed, the deal is officially finalised and no further negotiations can be made. It is best to get a legal professional to run through the terms and conditions with you to ensure no detail is overlooked. Next, is the signing of the Loan Agreement. The fine print of your home loan in the agreement is normally standardised among banks, but do read every term and condition stated to familiarise with the home loan repayment procedure. Apart from the earlier legal agreements, you will also be signing the Memorandum of Transfer at this stage. The MoT is a legal document that transfers ownership of the property to you, followed by paying the remaining downpayment, housing loan payment, stamping and legal fees. After settling with property documentation and having made all the necessary payments, your dream residential home is now ready to be moved in!
Overall, the homebuying process is not as daunting as you think. Even though planning ahead is commendable, thinking too far ahead may delay you from taking the first step towards home ownership. Enjoy every stage of the home purchasing experience, and remember that you do not have to be alone in this journey.
Get in touch with Gamuda Land’s Relationship Associates to inquire about our current and completed developments! You may find just the right home for you and your loved one to grow up and grow old in — right here at Gamuda Land.