Are you in the property market looking to purchase your first home? Whether you are a single looking for a bachelor pad, or a young couple looking for a family home to settle down, the journey to buying your first home will always be your most memorable one.
Deciding to buy your first home is one of life’s biggest commitment. If you find that the home-buying journey is quite stressful and you just don’t know where to start – you’re in luck.
Follow through these 10 steps, and you’ll be able to own your first home quite soon.
Complete 10-step guide to buying a home in Malaysia
Step 1 – Begin with a Budget
First, you should assess your financial standing and begin with a feasible budget. Take advantage of online property financing tools such as home loan calculators to roughly assess the monthly home loan instalments that you are able to afford.
Remember to consider the downpayment that you will need to pay upfront, this is usually a lump sum of 10% of the total cost of property.
With the HOC 2020-2021 campaign underway until 31st May 2021, you will get to enjoy many incentives under the campaign. Here’s what you should know about the HOC2020 – 2021!
Step 2 – Find your property
Once you have established the monthly instalment that you are able to commit based on your financial standing (taking into consideration of the 10% downpayment that you will have to pay upfront), you can go ahead and find the property that suits you.
Whether you are looking for a high-rise home, or landed property, the one most important factor you should always bear in mind when looking for your first home is: location.
Usually, the location of a home directly influences its pricing. This is especially true for homes that are in major cities such as Kuala Lumpur and Selangor; homes in the city centre may be priced higher than those in the outskirts or suburbs. Consider if you’re okay with commuting by public transport to work, or whether you prefer a home nearby to your child’s school.
Step 3 – Compare the Costs
If you have found a home that you really like, do not immediately act on your emotions and go right at it! Take a rationale step back to compare the property price and other involved cost against similar properties.
This includes things like developer incentives, home ownership programmes for first-time homeowners. By doing this, you can understand more of the current property market trend, and know if you are overpaying on a property.
Step 4 – Secure Financing
So, you have compared the property costs and finally settled on the home of your dreams. What’s next?
Before actually signing a deal, you’re going to need to secure a home financing, which is a home loan. First, you’d have to understand how banks decide to approve or reject your loan.
It all depends on your CCRIS report and your CTOS score that determines your suitability for a loan. Which is why experts recommend that you do not get involved in too much debt such as credit card debt or student loan debt.
Each financial institution has its own set of guidelines for document submission, so kindly check with your preferred institution for application.
If your home financing is approved, congratulations – you can move on to Step 5! If your housing loan is rejected, do not fret. Try to find out the reason for rejection, and get a second option or find ways to improve on your situation.
Step 5 – Engage a Lawyer
Right, some may suggest that you skip this step or that you do not need a lawyer at all. In Malaysia, homebuyers are not legally obliged to employ a conveyancing lawyer, but due to the procedures involved, we recommend that you do hire a lawyer who can guide you in the right direction.
Watch this video to find out how lawyers can help in your home-purchasing process.
Step 6 – Letter of Intent to Purchase
After all the 5 steps above, you are really sure that you want to purchase the property of your dreams!
Now, you need to make sure that the developer knows your intention to purchase – which is the purpose of the Letter of Intent to Purchase. This letter outlines the initial conditions of offer and purchase, it will also include by which date the Sale and Purchase Agreement should be signed.
Step 7 – Sign the S.P.A.
You’ve made it this far, and the day has finally arrived to sign your Sale and Purchase Agreement (S.P.A.)!
What is an SPA? It is a legal document that contains details of the property transaction between the buyer and seller. Once that is signed, it means that the sale and the purchase of the property is legally agreed upon by you as the buyer, and the seller.
This is where a conveyancing lawyer may help to protect your best interest as a homebuyer, especially for a first-time buyer who may not understand the legal terms and jargons in the agreement. It is always good practice to get professional opinion from your lawyer when it comes to legal agreements.
Step 8 – Sign Loan Agreement and MoT
At this stage, you should probably have home loan offers from your bankers. It’s now up to you to confirm this offer by signing the Loan Agreement.
The Loan Agreement is a legal document that outlines the terms and conditions of your home loan, including the loan amount, interests, loan repayment schedule and more.
This is also when you will sign your Memorandum of Transfer (MoT), which is a legal document which transfers ownership for properties with a Strata Title or an Individual Title.
Step 9 – Pay Upfront Fees and Costs
Okay, right up to this point, all the processes only involved you signing some kind of legal document. Now, this step is where money is involved – it’s time for you to pay up!
Once the S.P.A. is signed, you are required to pay the remaining share of your 10% downpayment, and ensure that your home loan payment is transferred. Besides that, you will also have to cover any relevant stamping fees and legal fees involved.
Under HOC 2020 – 2021, homebuyers can enjoy stamp duty exemption on the Instrument of Transfer and Loan Agreement for purchase of residential homes between RM300,000 and RM2.5 million!
Step 10 – Receive the Vacant Possession and Keys
For new homes still under construction, depending on the terms and conditions stated in the S.P.A., the Notice of Vacant Possession must be completed within 36 months of S.P.A. signature (for strata-titled properties) or 24 months (for individual-titled properties).
This is the part where you can actually receive the keys to your home that you have been waiting so long for!
Your brand new property also comes with a defect liability period, within which there is a warranty against defects that the developer is bound by law to rectify, at no cost to the buyer.
Looking to Purchase Your First Home?
Benefit from the HOC 2020-2021 that is currently ongoing until 31st May 2021!
Check out which Plenitude Property homes are eligible under HOC 2020-2021 here, and take advantage of the incentives to own your first dream home.
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.