Being a first time home buyer in Malaysia marks the start of a brand new chapter. It’s one of those big decisions in your life where you have to outweigh all of the possibilities.
The process of purchasing a house takes a long time and questions are bound to come up once you go through the initial stages. Here are some answers to the 8 questions you may have as a first time home buyer.
1. Why are properties so expensive?
This is the first thought that many first time home buyers who are just beginning to search for a house will have. Apart from the fact that property is really expensive, home buyers are attracted to the various benefits that the house has to offer at the beginning of the house search.
Home buyers will be attracted to a house based on how well it is decorated, the amount of space, amenities, facilities and other benefits it can provide to the home buyer. The more boxes the house ticks for the customer, the higher the price of the property will be.
Looking for a house actually requires work; first make a list of the area you’re interested in and your budget, then slowly filter out properties based on the list.
In addition, you can also check out the affordable housing plan launched by the government to find more affordable housing.
2. Condo or townhouse?
If you are planning to buy a new project in KL, you need to take note that most of the properties that are being launched are condos. You have a better chance of purchasing an affordable townhouse if you’re located outside from KL.
Condos offer a variety of amenities including gym, swimming pools, security and many others, on the other hand, townhouses provide ample space (you don’t need to wait for the elevator after grocery shopping, you can just walk straight into your home which makes it a bonus!)
If you’re wondering about the differences between a Condo and Serviced Apartment, you can read this article to learn more.
3. What are all of the terms being used?
In the home buying process, from the initial search to pick out the home of your dreams to the later stages of the buying and selling process, words that are sure to come up include:
- Sales and Purchase Agreement (S&P)
- Stamp duty
- Lawyer fees
This can be rather confusing especially for first time home buyers who are going through this process without any prior experience and do not have a good understanding of their finances.
4. How much do I need to spend each month on mortgage payments to be financially healthy?
Most first time home buyers are worried about the monthly mortgage payment. They are afraid that the mortgage payment will be too high and they will not be able to make the payments on time.
It’s generally recommended that the mortgage loan should be 30% or less of your monthly gross income. Because it’s still important for us to maintain sufficient cash flow to cope with emergencies and you have to also factor in taxes, transportation, health care, insurance and other costs.
5. How to get my bank loan approved?
When we are buying a house, we are advised to apply for mortgage from more than one bank. However, one may wonder why some of the banks offer different financing schemes while some even reject the mortgage application even if home buyer submitted the same documents to the banks.
Before the bank approves a loan, it evaluates the applicant’s income, credit history, DSR (debt service ratio), and other criteria. Different banks have different approval criteria, which is why your bank loan might get rejected.
6. What are the benefits for first-time home buyers?
There are advantages when it comes to being a first time home buyer as seen in many government assistance programs.
There are many initiatives being offered such as Residensi Wilayah (RUMAWIP), 1Malaysia Housing Programme (PR1MA), MyDeposit’s scheme, and others.
7. MRTA or MLTA?
If you are a first time home buyer, this is an important question that you need answers. Often times, inexperienced home buyer can’t tell the difference between these two mortgage life insurance.
But first what is the importance of having mortgage life insurance? It is used as protection for the bank in the event of death or total permanent disability (TPD) that stops you from servicing the loan.
When you are no longer around or do not have the ability to generate income, a mortgage insurance policy frees the borrower’s dependents from any debt as the insurance company will pay off the remaining debt on repayment mortgages.
Read this article to know more about the differences between MRTA and MLTA and which plan should you go for.
8. Do I need to pay close attention to the Sales and Purchase Agreement?
Purchasing a property comes with a number of documents such as letter of offer, memorandum of transfer and loan agreement. When signing a housing contract, it is especially important to look through Sales and Purchase Agreement (SPA/S&P) as it is a legally binding contract which outlines the details of a sale between a buyer and a seller.
With so many documents to look through, first time home buyer tend to overlook crucial details in the contract. Remember to pay extra attention to the address of the new house, personal information, price of the house, interest rate, home warranty, and other vital information. If you have any doubts, you can ask a lawyer to help you.
Interested in purchasing your very first dream home? Here at IQI, we provide services in purchasing the perfect home, with the right budget. Leave your details below and our professional team will assist you.