Being a first time home buyer in Malaysia marks the start of a brand new chapter. It’s one of those big decisions in your life where you have to outweigh all possibilities.
The purchasing process takes a long time and questions are bound to come up once you go through the initial stages. Here are some answers to the 8 questions you may have as a first time home buyer.
1. Why are properties so expensive?
This is the first thought that many first time home buyers who are just beginning to search for a house will have. Apart from the fact that property is costly, home buyers are attracted to the house’s various benefits at the beginning of the house search.
Homebuyers will be attracted to a house based on how well it is decorated, the amount of space, amenities, facilities and other benefits it can provide to the home buyer. The more benefits the house offers, the higher the price of the property will be.
Looking for a house actually requires work; first, make a list of the area you’re interested in and your budget, then slowly filter out properties based on the list.
Besides, you can also check out the government’s affordable housing plan to find more affordable housing.
2. High-rise or landed property?
If you are planning to buy a new project in KL, you need to note that most of the properties that are being launched are high-rise properties. You have a better chance of purchasing an affordable landed property if you’re located outside from KL.
High-rise properties offer a variety of amenities including gym, swimming pools, security and many others, on the other hand, landed properties provide ample space (you don’t need to wait for the elevator after grocery shopping, you can walk straight into your home which makes it a bonus!)
If you’re wondering about the differences between a Condo and Serviced Apartment, you can read this article to learn more.
3. What are the documents required?
In the home buying process, from the initial search to pick out the home of your dreams to the later stages of the buying and selling process, you might come across with the documents below:
Letter of Offer
Sales and Purchase Agreement (SPA)
Loan documents
Memorandum of Transfer
Lawyer fees
This can be rather confusing, especially for first time home buyers going through this process without any prior experience and do not have a good understanding of their finances.
4. How much should I spend on monthly loan payments?
Most first time home buyers are worried about the monthly loan payment. They are afraid that the loan payment will be too high, and they will not make the payments on time.
It’s generally recommended that the monthly loan payments be 30% or less of your monthly gross income. Here’s an example; let’s say your household brings in a total of RM5,000 every month in gross income. Multiply your monthly gross income by 30% to get an estimate of how much you can afford to spend a month on your loan. You shouldn’t be spending more than RM1,500 on your monthly loan payments if you’re following the recommended 30%.
Because it’s still important for us to maintain sufficient cash flow to cope with emergencies and you have to also factor in taxes, transportation, health care, insurance and other costs.
5. What about the bank loan approval?
When buying a house, we are advised to apply for the loan from more than one bank. However, some may wonder why some of the banks offer different financing schemes while others even reject the loan application even if the home buyer submitted the same documents to the banks.
Before the bank approves a loan, it evaluates the applicant’s income, credit history, DSR (debt service ratio), and other criteria. Below are the criteria to apply for a home loan:
You must be a Malaysian citizen or a foreigner with a valid working permit and visa.
You have to be 18 to 75 years old upon loan maturity.
Your joint applicant must be a direct relative such as spouse, parents, siblings, or child.
You must have a good repayment record with your existing loan.
Different banks have different approval criteria or requirements. Thus you need to check carefully with your respective banks. There are also times when your bank loan might get rejected to have to look through your application once more.
6. What initiatives are available for a first time home buyer?
There are advantages in being a first time home buyer, as seen in many government assistance programs.
Many initiatives are being offered, such as Residensi Wilayah (RUMAWIP), 1Malaysia Housing Programme (PR1MA), MyDeposit’s scheme, etc.
If you are a first time home buyer planning to buy a home in 2020, you should look out for the Rent-To-Own (RTO) scheme, and Youth Housing Scheme mentioned in this year’s Budget.
7. MRTA or MLTA?
If you are a first time home buyer, this is an important question that you need answers. Often, the inexperienced home buyer can’t tell the difference between these two mortgage life insurance.
But first, what is the importance of having mortgage life insurance? It is used as protection for the bank in death or total permanent disability (TPD) that stops you from servicing the loan.
When you are no longer around or do not have the ability to generate income, a mortgage insurance policy frees the borrower’s dependents from any debt. The insurance company will pay off the remaining debt on repayment mortgages.
Read this article to learn more about the differences between MRTA and MLTA and which plan should you go for.
8. Does the reputation of the developer matter?
As a first time home buyer, it is important to consider purchasing your home from a reputable and reliable developer. Prepare to research adequately on good and reputable developers that are available in your vicinity.
If you happen to purchase a property from a bad developer, there will be consequences, and you will most likely regret buying property from them. A bad developer runs into financial problems or management issues and will ultimately produce a poor quality project.
Besides that, you might experience delays in the project deliverability, and the lacklustre artistry can cause issues such as cracking interior walls and broken floor tiles. To avoid those issues, you have to choose a good property developer who has an in-depth understanding of planning laws and construction requirements to provide a great home in return.
To find out the progress of the projects you’re interested in, check out the official The Ministry of Housing and Local Government (KPKT) website.
Here at IQI, we provide services in purchasing the perfect home, with the right budget.
If you are interested in purchasing your very first dream home, please feel free to get in touch with us.
Wesley Tan: +6017-688 9998
Jasone Gan: +6017-6018899
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