BUYING a property is never an easy thing. It is probably going to be the biggest investment the average person makes in his life.
The entire process is daunting from beginning to end, from finding the right real estate agent, sourcing for a perfect home, negotiating the best possible price, getting ready the required funds to going through the paperwork, etc.
From start to finish, the process could take anything from three months to a year. The period will be filled with uncertainty, worry and apprehension. That’s why it’s always the right thing to seek the services of suitably-qualified professionals to guide you through the labyrinth of the entire process.
A good real estate agent and a competent lawyer on your side can make the biggest difference to the process.
Since the process is very lengthy and unfamiliar to the layman, especially first-time buyers, it is best to do a thorough research before embarking on a maiden property-buying journey.
Most people make the basic mistake of deciding first on the property they want, and only then trying to find the necessary funds for the purchase. This is like putting the cart before the horse.
Many people get stuck half way through the sale when they realise they do not have the necessary funds to pay for the various costs associated with the purchase. Then, when they try to back track, they sometimes find that they are not able to, and sometimes they end up losing their deposits.
First-time home buyers should be prudent to exercise care and caution. Here are some basic guidelines:
DETERMINE YOUR BUDGET
Many people are of the impression that all they need to get started is the initial 10 per cent deposit. This cannot be further than the truth. There are many other costs associated with buying a house in Malaysia. So the first thing you need to do is to take into consideration all the costs involved and then determine how much you can afford.
LOAN ELIGIBILITY
It is always a good idea to determine how much loan you are eligible for before you decide on what kind of house you can purchase. Talk to your bank, give them all the necessary documents and let them process your application. They will normally be able to tell you how much loan you will qualify for. Once you know this, work backwards to determine the price range of the property you can comfortably afford.
EARNEST DEPOSIT
If you are buying a property from the secondary market, you will need to pay an initial deposit of two or three per cent of the purchase price as the earnest deposit. This is usually payable once negotiations are complete and the estate agent issues you an offer letter.
SOLICITORS’ FEE
Once this is done, your solicitors will commence with the paperwork to draw up the sale and purchase agreement (SPA). You will also need to engage with a solicitor from the bank’s panel to prepare your loan documentation. So remember, there will be two sets of solicitors’ fee that you will need to pay.
BALANCE DEPOSIT
Once the paperwork is complete and the SPA signed, you will have to pay the balance deposits of the 10 per cent purchase price. You should be ready to pay this money within two or three weeks of signing the offer letter.
BALANCE PURCHASE PRICE
This is usually payable when the sale is completed and the title is registered in your name. This can take anything from three months to a year, depending on the statutory approvals required. Once this is completed, you will need to pay the balance 90 per cent of the purchase price. Depending on your loan amount, you will have to top up to make the difference between your loan amount and 90 per cent of the purchase price.
STAMP DUTY
In Malaysia, it is always the purchaser who pays the Stamp Duty. This sum will need to be deposited with your solicitors before the completion of the purchase. Stamp duty will also need to be paid for the loan agreement.
VALUATION
The bank will require a registered valuer to conduct a valuation of your property and submit a valuation report. This cost will also have to be borne by the purchaser.
REAL ESTATE AGENT’S FEE
This fee is usually paid by the vendor, unless you contracted the agent to act on your behalf to conduct the sale. In that instance, the agent’s fee will have to be borne by you.
MORTGAGE REDUCING TERM ASSURANCE (MRTA)
It is always a good idea to purchase adequate MRTA for your property purchase. This will ensure that your family does not lose the property if they are unable to pay the mortgage in the event something untoward happens to you.
OTHER FEES
Several other costs will also be needed to be taken into account such as registration fee for the transfer, search fee, adjudication fee, etc. There may also be various disbursement charges that you will need to bear.
RENOVATION COSTS
There is every chance that the property you purchased will need some renovations and repairs before you can occupy it. It is always a good idea to put aside the necessary funds for this. Once you take possession of your property, do try and complete at least all the major renovation and repair works before moving in. Remember, conducting major renovation to your property after you have moved in is the most arduous and difficult task.