Previously, we shared with you 6 of the most common property jargons that you should know before buying a property, where you get the basic idea of freehold vs leasehold, what is ‘cukai pintu’, ‘cukai tanah’, and more.
Just in case you’ve missed Part 1 of the must-know property jargons in Malaysia, or want to refresh your memory, you can read the article here.
Now, let’s familiarise ourselves with another 6 must-know property jargons in Malaysia right here. This round, let’s focus more on property jargons that are related to property loan.
First up, a bank valuation is a valuation of the property carried out by banks to determine the value of the property. This step is an important consideration for banks to offer property loans to homebuyers.
There are a few factors that affect the value of the property during bank valuation – the general economic trend during the valuation period, the property location, conditions of the general property market at that time, general demographics, any recent renovations and the condition of the property itself.
A CCRIS (Central Credit Reference Information System) Report is a credit report by Bank Negara Malaysia’s Credit Bureau that tracks a potential borrower’s loan repayment behaviour for the past 12 months.
CCRIS reports inform the individual borrower’s information regarding outstanding payments, bank loan application status, or any special accounts monitored by banking institutions.
CTOS, or Credit Tip-Off Services, on the other hand, is a report that is issued by CTOS Data Systems Sdn Bhd, Malaysia’s leading private credit rating agency.
This report provides information about an individual’s interest in business, and legal matters pertaining to bankruptcy, legal actions and case statuses. It also portrays any overdue payment on loans or bills.
Unlike CCRIS that tracks credit history for the past 12 months, CTOS reports are kept for an indefinite period! You can easily sign up for a CTOS account.
For the purpose of home loans, CCRIS and CTOS reports complement each other, and are basically like a ‘report card’ of your financial position, that banks and financial institutions refer to, in order to decide if a borrower is credible to receive a property loan. Thus, a ‘healthy’ credit score increases your likelihood of credit application approval.
Debt Service Ratio
To put it in simple – and understandable – English, Debt Service Ratio (DSR) is a method that banks use to calculate whether you can afford the loan that you are applying for. This formula basically helps banks to estimate how much you can afford to pay for your monthly property loan instalments.
The general concept of the DSR is based off your monthly nett income, considering the total fixed debt that you have to pay (thus the word ‘service’) each month, such as car loans, student loans etc.
Every bank has its own DSR limit and calculations. DSR requirements also vary depending on the borrower’s level of nett income. Some banks may accept a DSR of 80%, whereas some may only accept 50%.
Deed of Assignment
Moving away from loan-related jargons (it’s easier than Maths in school, right?), the Deed of Assignment is a document that is used to transfer ownership of the property between two parties.
It confirms the transference of ownership from the ‘Assignor’ who currently owns the property, to the ‘Assignee’ who is acquiring the property.
But, how does the Deed of Assignment differ from the Memorandum of Transfer? The difference is that a Deed of Assignment is signed in the event that the property in question does not have a title.
Defect Liability Period
The Defect Liability Period is a specific period where the developer is responsible to fix any defects in your new home. It is something like a ‘warranty period’ of sorts.
Under the Housing Development Act, the Defect Liability Period in Malaysia is 24 months for property with individual title and 36 months for strata title properties, starting from the date of the key-handover.
Developers will thoroughly check through the property before handing over the keys to their buyers, but there may be defects that you as a new homeowner might notice. To make life easier for you to check your new home for defects, we have put together a New Home Defect Checklist for you!
Understanding The Common Property Jargons Is Easy!
Doing great so far? We hope so!
Whether you are considering to purchase under-construction or completed properties, we hope that we have provided you with a basic understanding of the common property jargons in Malaysia, so you can make future property dealings with more confidence! Good Luck!
Revisit ‘Buying a Property: Must-know Property Jargons in Malaysia [ Part 1 ]’, here.
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This article is intended to convey general information only. It does not constitute advice for your specific needs. This article cannot disclose all of the risks and other factors necessary to evaluate a particular situation.
Any interested party should study each situation carefully. You should seek and obtain independent professional advice for your specific needs and situation.