How To Buy A New House in Malaysia ?

                             

The Complete Guide On Buying A New House In Malaysia

Purchasing a brand-new property can be as easy as 10 steps, and we've listed them out in order for you, here! By following this walk-through, and checking out the pros and cons, you'll be able to seal the deal in no time.

   

Step 1 – Work out your budget

There’s no point in diving into a home search without first knowing what you’re looking for, and when it comes down to it, that begins with your budget. Of course you have to take into consideration your down-payment needs in your overall financing. That’s a lump sum equal to 10% of the total cost of the property that you'll need to have saved up, in order to pay upfront.

Keep an eye out for financing opportunities targeted at first-time home-buyers, especially if you've got your sights set on affordable housing options!

You can’t always be certain which schemes you'll ultimately be approved for, but government finance initiatives like My First Home and Residensi Wilayah (used to be called RUMAWIP) show the kind of schemes that are out there in the market.

Remember to also take into account additional costs, such as stamp duty and other miscellaneous legal fees. These can sometimes be overlooked by eager new buyers (by accident, of course).

But finding out you’ve got just enough money for a new home's down-payment, then realizing you’re RM5,000 short because you forgot to factor in the other legal costs can be a real kick in the dreams!

STEP 2 - Find Your New Property

This is the exciting bit when it comes to getting the best home for you! Luckily for you, we've got tens of thousands of new homes with great potential for you to search through. Whether you’re after a posh luxury bungalow with a helipad in the garden, or a comfortably affordable apartment with great shared facilities, the one important factor to remember: LOCATION!

There are also a range of other factors which impact property value in Malaysia, so it’s important to have a list of what's most important to you during your search.

This is also where you'd probably want to bring in a real estate agent. These experienced professionals know the markets, know the reputation of developers, and know how to navigate the tricky waters of legal paperwork.

They can be a huge help in directing your efforts, informing you of how to get the best deal, and generally being the champion you need.

It really should go without saying, but don’t forget to get as much information as possible on the property.

Crucially, this is also a good time to ask developer's agent important questions, such as the condition of the property, neighborhood, and appliances included, to name a few.

STEP 3 - Compare The Cost

If you’ve found a property you like, don’t just rush right in and throw your cash on the table! It’s important to take a step back and compare the costs against other similar properties.

This is a great way to understand whether you’re overpaying on a property, but also whether there might be some other similar projects that will offer you a better value for your money.In popular areas, there’s bound to be competition for available homes, but Malaysia’s current property overhang leaves some real opportunity to shop around and get a bargain.

That includes things like developer incentives, as well as just putting your negotiating skills to good use and trying to lower the price with more rebates.

Step 4 – Secure financing

For the general public – you’re going to need to secure financing before you sign a deal. Making sure you get this right is an essential step in finding the best new property for you.

It’s important to understand that all banks will rely on your CCRIS Report as well as your CTOS score to assess your suitability for a loan.

That doesn’t necessarily mean that if one bank rejects you, others will too, but it does offer a good insight into the decision making process.

In addition, you'd also need to make sure that you're not stuck with too many debts. This will cause your Debt Service Ratio (DSR) to reach unhealthy levels, instead of the recommended 30%-40% range.

Step 5 – Employ a lawyer

Some people suggest you don’t need a lawyer at all. While it’s true that you’re not legally obliged to employ one, it’s probably common sense to do so.

Lawyers are masters of the finer details, especially with legal jargon involved, and when it comes to an investment like property, you want to make sure those finer details are as accurate as possible.

This is particularly important when it comes to situations like ensuring whether that contract you just signed is legally binding or not (and that you aren't scammed out of your money by hidden clauses).

Step 6 – Letter of Offer/Intent to Purchase

If you’ve found your dream new house, you need to make sure you let the developer know. That’s where the Letter of Intent to Purchase comes in.

The Letter of Intent to Purchase is a document which states your intention to purchase a particular property.

It’s generally combined with an earnest deposit, which is an upfront payment for 2% of the total cost of the property. That 2% also counts towards your overall 10% downpayment requirements.

The Letter of Intent to Purchase sets out the initial conditions of offer and purchase. That includes things like whether you get a return on your earnest deposit if, for whatever reason, the sale falls through.

It also sets out the date by which the Sale and Purchase Agreement (SPA) should be signed, usually within 2-3 weeks of the signing of the Letter of Intent.

Step 7 – Sign the SPA

This whole thing is rolling along nicely! You’ve got your dream house picked, your financing is on the path to being sorted, and you’ve laid out your intentions clearly. Next up, signing the Sale and Purchase Agreement (SPA).      

The SPA is an incredibly important legal document which sets out the full terms and conditions of your purchase. This is exactly why you got a lawyer involved in the first place.

Some developers may offer a free SPA drafting service as a perk, but remember that the lawyer in question is ultimately working with the best interests of the developer in mind.

While a top developer is unlikely to sneak in some sinister clause that means you owe them your first-born to get access to the swimming pool, it’s always good to get your own legal professional to look over the details first.

The fine print of the SPA is a crucial part of getting the right deal on your new property. Saving RM1,000 on a nifty developer rebate only to find out you can’t access any of the exclusive shared facilities would really undermine the value of that purchase.

Step 8 – Sign Loan Agreement and MoT

Unless something has gone horribly wrong, you should have some confirmed home loan offers on the table at this point. It’s now up to you to confirm this offer by signing the Loan Agreement.

This is a legal document which sets out the terms and conditions of your home loan. Although they’re largely influenced by standard procedures from the bank, it’s still a good idea to have your lawyer take a look over it if you can.

This is also where you’ll sign your Memorandum of Transfer. This is the legal document which transfers ownership in the case of properties with either a Strata Title or an Individual Title.

If you’re buying a stratified property as part of a larger development, it might be the case that you’ll sign a Deed of Assignment instead, which conveys ownership of property which is still under a Master Title.

Step 9 – Pay fees and costs

Here comes the big money bit! You’ve got to hand over your hard-earned cash. Once the SPA is signed on the dotted line, you’ll need to pay the remaining share of your 10% downpayment, and ensure your home loan payment is transferred.

Of course it’s not just those big ticket payments that you have to make. You’ll also have to cover all the relevant stamping fees and legal fees required.

It might hurt a little bit watching all that money roll out of your accounts, but remember that you get an awesome new property at the end! Whether that’s an investment property, or your very first home, that’s an exciting proposition all around.

Step 10 – Receive the Vacant Possession

It’s time to receive your Vacant Possession! You did it! This is the part where a house now becomes a home.

The Notice of Vacant Possession must be completed within 36 months of signing the SPA for a strata-titled property, and within 24 months for an individually-titled property.

Getting the right deal on a new property doesn’t stop once you’ve handed over the money. Even top developers can sometimes miss little faults or problems in a property.

It’s up to you to ensure you get the most for your money by performing a detailed check and reporting on any defects or issues, because guess what?

Your brand new property actually comes with a warranty against defects after you've received the keys to your new home!

That's right, it's the defect liability period, where the developer is bound by law to repair any faulty workmanship discovered, but at no cost to the buyer..

The Notice of Vacant Possession precedes receiving your Certificate of Completion and Compliance (CCC).

This is a legally required document issued by the local authority to say your new property is safe and fit for human habitation.

*source credit to propertyguru.com (15.7.2019)*