Getting your first property is an exciting milestone for any person who wishes to start their chapter in homeownership. However, you must understand that there are many things you need to take into consideration before you make the massive decision of purchasing a property.
Your budget, the type of home you wish to buy, and how far you are willing to travel to go house hunting are just a few factors you should consider when buying a house. Here are some tips on buying your first home in Malaysia.
Step 1: Calculate Your Budget
The most important step when purchasing a new home is to determine what you can afford, which you can do by creating a budget. Although you should get pre-approval for a mortgage before beginning your home search, it’s still crucial that you set a budget.
Here are some useful tools to assist you in figuring out your finances:
- PropertyGuru Loan Pre-Approval – With 99.9% accuracy, estimate your chances of getting a house loan (for free!).
- Affordability Calculator – a rough estimate of how much you might be able to borrow.
- Home Loan Calculator – a straightforward indicator of your monthly mortgage payments.
Even if a homeowner is getting financing, they’ll also need to have their own savings set aside. You’ll be required to pay 10% of the total purchase price upfront (known as the down payment), with the remaining 90% split over an agreed-upon period of time. First-time homebuyers may have more options for financing, so don’t be afraid to seek out more information about what types of programs could work for you!
Step 2: Locate Your New Home
Location is the most important factor when it comes to property search in Malaysia. The Malaysian property market is increasingly dynamic, and new properties are popping up everywhere in new cities, especially as people start to expand their search outside of major cities into suburbs such as Rawang or Nilai. However, buying a home shouldn’t be an ‘all or nothing’ decision — there are plenty of people who buy luxury properties with posh features but later trade them for a more affordable option in a more convenient location.
This is where a real estate agent is helpful, especially one who is experienced. They can help you assess neighborhoods that are up-and-coming, or guide you to a particular developer based on the exact kind of home you want. For legal paperwork, they’ll steer you clear of the red tape and ensure that everything goes smoothly.
Step 3: Cost comparison
Finding a property is a long and arduous process. If you’re in the process of looking for a new property, don’t rush into buying the first one that catches your eye! While it can be difficult to find exactly what you need, reviewing similar properties against the ones you like will help your real estate agent identify any issues with the existing option or price. This is an excellent way to compare the costs of similar properties and determine whether your money could be better spent elsewhere.
Step 4: Securing financing
It’s always best to take a step back and consider the tough questions, like how you’re going to finance your real estate purchase. Start by considering the type of loan that best fits your budget – look into traditional financing options, ask about seller assistance, and review financing through an online lender.
Step 5: Hire a Lawyer
Lawyers may specialize in different areas, but their thoroughness and attention to detail is an asset that transcends their specialization. Having a reliable lawyer on your side can help you tackle any property-related legal matter in the most efficient manner possible. By taking an in-depth approach to analyzing all the important documents and legal jargon, a lawyer can help you avoid future problems — and save you from costly mistakes.
Step 6: Letter of Intent to Purchase/Offer
If you have found your dream home, don’t let it slip away! Ensure that the seller is aware that you are interested in buying the property. To make sure that they can deliver what they promise, exchange a Letter of Intent to Purchase (also known as a ‘Letter of Offer’) – a document which states your intent to purchase a certain property from them.
The Letter of Intent to Purchase is a legal document that states the terms of an agreement to purchase real estate. It’s similar to a contract, except it’s a nonbinding document. It sets out the basic terms of the sale, such as price and closing date, but it also holds other important details, such as whether you get your earnest money back if you pull out of the deal due to unforeseen circumstances, or another buyer comes along.
Step 7: Sign The Sale and Purchase Agreement
Signing the Sale and Purchase Agreement (SPA) is a major milestone in the home buying process. This makes it essential that you have your attorney review the document before signing. There are many hidden traps that lay in wait for unsuspecting home buyers, so don’t trust such a major financial decision to just anyone! Your attorney will make sure all your bases are covered.
The SPA is a legal document that outlines your purchase. It’s designed to protect you, the purchaser, from possible legal issues as well as to outline your rights and responsibilities when making a purchase. To ensure that every party is happy with the outcome of a contract, make sure you consult with a professional lawyer and have a SPA drawn up.
Step 8: Sign Loan Agreement And MOT
The former is an agreement between you and the bank about the terms of your home purchase. The latter refers to a Memorandum of Transfer, which is a document that legally transfers the ownership of a property from one party to another. Although standard procedures are used throughout, it’s a good idea to have a lawyer review your contract; they can ensure you’re aware of any problems or provisions that could arise and advise you on ways to protect yourself legally.
Step 9: Fees and Costs Must Be Paid
After signing the SPA and paying your 10% deposit, it’s time to start making your home loan repayments. This might take some getting used to — after all, purchasing a home is a long-term financial commitment. But it’s also an amazing feeling knowing that you made this dream come true! However, it’s not just the big payments that you’ll need to plan for. There are all sorts of other fees you’ll need to cover, like the relevant stamp duties and legal charges related to closing a deal.
Step 10: Take Possession of the Vacant Property
It’s easy to get behind on paperwork, but it’s important to keep track of all legal documents. If you have a strata-titled property, the Notice of Vacant Possession must be completed within 36 months of signing the SPA; if you have an individually titled property, this document must be submitted within 24 months of the date on which the land was surrendered to the purchaser.
Buyers sometimes make the mistake of handing over their money before checking every detail of their purchased property. There are several reasons why this happens:
- They don’t want to seem like picky people on the market.
- They may be too excited about finally becoming proud homeowners.
- They may not be expert enough to notice anything amiss in the property or legal documents.
Buying a home is a milestone that comes with a lot of mixed emotions. It can be thrilling to take on a new challenge but also disconcerting to find something that will hopefully fit your family’s needs. By planning properly and being organized, you can streamline the process from start to finish and set yourself up for future success. Looking for a new home? Check out PropertyGuru. They have everything from experienced agents to detailed descriptions of houses, all in one easy-to-use website!
