Buying the property of your dreams is always a unique experience.
There are many phases that you may have to face in the process.
In fact, it is quite an uphill task.
Here is our step by step guide on buying a property in Malaysia.
It seeks to make property buying literally cake walk for you.
1. Know Your Purpose
This is invariably the first step in buying a property. Once you have the objective in place, you can easily identify the right type of property to put your money in.
First and foremost, you have to decide why you want to buy this property for? Whether it is for own stay or for investment purpose
A) For Own Stay
Then make a note of the number of people who would be staying. That will help you decide how big a property you need. Then look for other conveniences like strategic positioning, availability of public transport and the like.
B) For Investment
You can either invest to flip when the prices shoot up or put the property on rent. If you plan to flip then the duration for which you will hold is crucial. On the other hand, for properties that you will rent out the strategic positioning and average rent you can charge is crucial.
Find out this 25 Things To Do Before Buying a House
2. Identify Your Value Priority
Take a realistic view. You cannot have the best of all the parameters. So you need to prioritize based on what is important for you.
- Budget: On average the budget is crucial. Either you are applying for a loan or buying from your savings, the amount that you can spare will dictate your choices.
- Location: The location directly impacts the resale value and price appreciation prospects of the property. If you plan to stay your convenience too comes to play.
- Safety: Find out how safe is the locality and the relative safety arrangement of the apartment society you are zeroing in on.
- Freehold/ leasehold: Based on the specific objective you have in mind, look for whether you want to go for freehold or leasehold property. The relative price also changes according.
- Facilities: Sometimes your property prices can also depend on the facilities available. Also, based on that, you can decide whether it is suitable for staying or just an investment.
- Township: If you are going for a readymade township, the relative availability of many facilities like a shopping centre, schools and hospitals can easily be guaranteed. Particularly if you plan to stay or put it out on rent, it is an important consideration.
- Traffic condition: The ease of traffic movement is another factor to watch out for. This will determine how easily the place is accessible from the key areas of the city. You surely do not want to stay in an area that is difficult to reach or where you spend a lot of time to reach.
- Layout: Also look out for the overall layout of the property. The idea is to make sure that you opt for properties that maximize the available space and helps you take advantage of the greater area.
Buying a house is often about exploring for the most profitable and budget-friendly option.
The property market across Malaysia is booming. As a result, you have a wide range of properties coming up everywhere.
The question is what is best suited for you? For that research is mandatory.
Go through real estate news journals, register on websites of key developers and follow developments in the real estate sector.
This will help you identify the most relevant options within the budget that you have decided upon.
Only thorough research will help you identify the key factors you should look for and also learn the ropes of negotiation effectively.
That in many ways becomes your actual training in house hunting.
Find out this 13 Types of Property In Malaysia That You Should Know
4. Visit Showroom
This is the first point of reference.
Carefully pay attention to what you see. Gauge how it works out and whether the property suits your purpose or not. Ask questions and explore every possible element.
You must be fully aware of what you are paying for before you commit even a single penny.
The showroom is where you are seeking the property at its sleekest best. Invariably developers call for specialized interior designers to deck up these showroom properties to make the best impression.
If you like the layout and design, you can take it as references on how to design your house.
5. Find Out All the Property Details
Look for all types of details about the property especially the layout, materials use and location.
Scour the newspapers and the developer’s website as well. Check with the realtor agents and talk to urban development experts for a detailed insight into the property, the merits and the demerits.
Try to be as comprehensive in your research as possible. That is what will ultimately help you in making an informed choice.
Find out this 27 Information To Find Out When You Purchase A Property
6. Find Out What is the Developer Offer Package
Never be shy about asking questions to the developer or agent.
Find out what is the package that they offer:
- Rebate: Are there any special discount offers that you can take advantage of? Remember property is generally a huge cash commitment and every small percentage counts.
- Cashback: In order to attract more buyers, sometimes developers or banks who have tied up with the developers may offer special cashback deals. Make sure you understand the terms of the deal and make a choice accordingly.
- Free legal fee, stamp duty and disbursement fee: Remember that developers are as keen about selling their property as you are keen about buying it. Often developers in an effort to attract more customers offer peripheral services like legal fee, disbursement fee and stamp duty for free. All of these need money so why not save if you get a chance.
- Fully refurbished: Some properties come as fully refurbished or are only partially refurbished. Some may not be refurbished at all. Do not just go by the price of the property. Check what is included.
- How much down payments need to pay: This is another crucial factor. How much money you need to prepare during SPA signing time, your overall loan liability is dependent on it.
7. Check Affordability
You may finally come across the property of your dreams but it is important to view it practically. Is the price justified?
Assess the price against existing parameters for a realistic picture.
A) What is your DSR (debt service ratio)?
B) How much is the monthly
Both these elements will help you understand the sustainability and price to return ratio. It helps you understand the overall Return on investment.
8. Select Units
Select the specific units that best fit your needs. Would you like a garden facing one or prefer the ones that face the road.
Also in certain properties, the design of the overall unit may change depending on its positioning. So it becomes essential to carefully calibrate all of these points and then zero in on one that comes across as the best fit.
This will ensure that you are able to get the best deal with the most favorable positioning.
9. Proceed Booking
Once the selection process ends, the booking game begins. This is primarily a token amount that communicates your intent to buy the property subject to the loan approval. It gives the developer an indication of your intent and commitment.
- Submit booking fee: The booking fee payment is the first step in this. The exact extent and amount may, however, differ from developer to developer. Find out if this is refundable.
- Sign booking form: You will have to sign the booking form along with the payment.
- Submit IC (identity card): The developer will normally ask for some time of identity proof too. This is primarily to authenticate your credentials.
This is the first step towards the actual closure of a property deal.
10. Survey Best Interest Loan
When you are scouring for bank loans, it is never a good idea to go for the first available one that you get. Always go for multiple options.
Compare and contrast the available rate of interest offered by each one. Most times, developers liaison with a specific panel bank.
These panel banks invariably offer a way more attractive rate of interest compared to the rest.
Also, loan approvals from these panel banks are much simpler compared to the others. So it always makes sense first to finalize the property and then apply for a bank loan.
Find out this: 6 Things To Be Considered When Applying For A Home Loan
11. Prepare Documents
Once you have decided on the specific loan and the rate of interest it is time to apply for the loan.
For that, it is necessary to do the paperwork decided by the bank. The bank approves your loan only on the basis of these documents.
- Payslip: This is proof of your monthly source of income and the exact amount of money that you have in hand.
- Bank statement: This along with the payslip determines your loan worthiness. Basically, the bank tries to ascertain your ability to meet the monthly EMI (Equated Monthly Installment)with the existing fund flow in your account.
- EPF statement: This again is a peek into your financial wherewithal going forward. This is what ascertains that even if you change job, you still have adequate funds to pay off the loan.
- Income tax form: It gives a sneak peek into the loan applicant’s state of finances as well as the income statement.
- Identity Card: This is to confirm the identity of the loan applicant
However, remember that the key documents can differ from bank to bank. Normally the bank takes about a week to inform whether your application is accepted or rejected by them.
Once approved, you can give the developer the loan offer (LO) letter that the bank provides.
In case a bank rejects your loan application, you can try to apply for other banks.
If unfortunately all banks reject your application, you can request the developer to refund the booking fees with the banks rejection letter
12. Sign SPA & Pay Down Payment
After the loan is approved, the first step is invariably signing the SPA.
That is what kicks off the whole process of drawing the loan agreement and eventually, it’s signing, which will signal closure of the deal.
Usually, the bank informs the developer once the loan is approved. Either the bank or the lawyer appointed by them contacts you.
The down payment process kicks off after the formal signing of the SPA.
There is no strict procedure for paying the down payment. You can use your credit card or pay via cheque or cash depend on the developer preference.
13. After SPA Signing
Once the SPA is signed, your lawyer will take forward the procedure. They will send this signed SPA to the government office.
Stamping of these papers is necessary for the next step. The developer simultaneously informs the bank that the SPA is signed by the home buyer.
It is at this juncture the entire process of the loan agreement is initiated. The agreement is drawn up as per the terms of the SPA and gives the bank a real-time indication of the property buyer’s intent and commitment towards buying the property.
14. Sign Loan Agreement (LA) And Pay a Legal Fee
The signing of the loan agreement is the next logical step.
Normally the lawyer contacts you within two weeks of signing the SPA. The loan agreement is drawn up.
Simultaneously you must also prepare to pay the legal fees towards this agreement. This is in addition to the charges for drawing the agreement and the stamp duty charges, and you must keep this amount ready along with the rest.
You can either undertake a bank transfer or pay via cheque. This is the final step in the overall process.
Once the agreement is signed, the deal is closed formally, and you can proceed with the possession formalities.
15. Process Is Complete
Once you reach this stage, you can rest easy. You have completed all the steps required for successfully negotiating a deal to finalize your dream property. All that is now left is taking possession of the property and planning for the furnitures and renovation part. The hard part, in short, is done with.
You can now plan the decorating elements and take a call on the kind of amount you can spend on the interiors.
You have already committed to the home loan so you have a fair idea about the amount that you can spare going forward.
Therefore, this is a comprehensive step by step guide for buying a property. It helps you prepare better for the challenges ahead.
Most importantly this gives you real-time understanding of the time required for applying for loans and processing the agreement before you can buy the property.
So, get set and go ahead for your next property buy.