Step-by-Step to Buy a House

Are you looking to buy a new home? You’ve come to the right place! Not only do we possess a comprehensive list of new properties for sale, we’ve also created this awesome 10-step guide on how to go about the purchasing process.

And if that isn’t enough, we’ve finished it up with a handy pros and cons guide to help you decide whether or not a brand new property is the right choice for you.

Step 1: Determine Your Budget

It’s pointless to start looking for a home without first understanding what you want, and when it comes down to it, that starts with your budget.
We have a number of useful tools to assist you in figuring out your finances:

Affordability Calculator — a rough estimate of how much you could be able to borrow.

A concise indicator of your monthly home loan repayments is provided by the Home Loan Calculator.

Of course, your down payment requirements must be factored into your entire loan. That’s a lump payment equivalent to 10% of the total property cost that you’ll need to save up in order to pay in full ahead.

Keep an eye out for financing solutions geared for first-time homebuyers, especially if you’re looking for affordable housing possibilities.

You can’t always predict which schemes you’ll be approved for, but government finance projects like My First Home and Residensi Wilayah (formerly known as RUMAWIP) demonstrate the range of options available.

Additional expenditures, like as stamp duty and other incidental legal fees, should be factored in as well. These are often ignored by eager first-time purchasers (by accident, of course).

Finding that you only have enough money for a down payment on a new property, only to discover you’re RM5,000 short because you failed to include in the other legal charges may be a genuine nightmare!

A) What if I’m not eligible for these housing programmes?

Because most of these housing plans are only open to those in the B40 and M40 age groups, competition is fierce. Don’t give up hope just yet if you don’t qualify!

Many developers continue to provide financing solutions with low or no down payment outside of these plans.

All you have to do is find the proper one for you and your financial position, and you’ll be able to purchase a house with no money down.

A) Option of ffordable housing schemes in Malaysia

Housing Scheme	Pros	Eligibility
BSN MyHome (Program Perumahan Rakyat)	– Up to 100% of purchase price inclusive of (MRTA / LTHOT / Legal Fees / Stamp Duties) – MRTA cover of up to 5% of purchase price	– First-time homebuyers – Single or married, aged 18 – 60 years old – Minimum income of RM1,000 per month
PR1MA (1 Malaysia Housing Program)	– Stamp duty exemption – Rent to Own scheme	– Malaysian aged 21 and above – Monthly household income between RM2,500 and RM15,000 – Applicants must not own more than one property
My First Home Scheme	Up to 110% financing	– First-time homebuyer – Malaysian only – Maximum monthly income of RM5,000

B) Is it possible for a foreigner to buy a home in Malaysia?

Yes, whether you’re an expat searching for a place to call home or an investor looking for a good investment, Malaysia welcomes foreigners with open arms.

For a comprehensive guide to foreigners buying property in Malaysia, click here.

C) What is the average price of a property in Malaysia?

The cost of real estate in Malaysia varies substantially depending on the type of property and location.

Property prices in Malaysia range from RM300,000 to RM500,000 on average. Terrace residences start at RM300,000 and go up to RM800,000, while condominiums and apartments cost between RM300,000 and RM600,000.

States like Selangor, Penang, and Johor, on the other hand, tilt heavily toward the more expensive end of the range. Check out our article here to see median property values per state!

E) Do you have enough money to cover the initial costs?

When planning your budget, keep in mind that upfront charges don’t merely refer to the down payment. The chart below shows some of the expenses that go into the upfront price alone.

A deposit is required.	Approximately 10% of the buying price
Stamp duty on a Transfer Memorandum (MOT)	1%–4% of the purchasing price of the property
Stamp duty on Purchase and Sale Agreements (SPA)	RM10 for each stamping
Stamp duty on a loan contract	0.5 percent of the loan’s total amount
Fees charged by real estate agents	3% of the property’s buying price
MRTA/MLTA (Mortgage Risk Transfer Act/Mortgage Lifetime Transfer Act	Depending on your scenario and requirements

F) What is the cost of a down payment in Malaysia?

In Malaysia, the minimum down payment for a home is usually 10% of the total purchase price. If it’s within your budget, you’re allowed to pay more up front.

An earnest deposit is frequently used to cover the first component of a down payment. In most circumstances, this is a non-refundable 2% deposit.

G) Make sure you have enough cash on hand to cover any unexpected fees or charges.

In addition to the fees stated above, such as earnest money, down payment, stamp duties, and agent fees, you should keep a cash buffer on hand for any additional fees that may arise during the process.

These fees may include bank processing fees, legal fees for the SPA and loan agreement, and, if required, property valuation fees.

H) Do you have the financial means to pay the monthly instalments?

That’s just the up-front fees; now consider the broader picture: can you afford this house in the long run?

The monthly instalment is determined by the following factors:

Purchase price of your home

What kind of mortgage do you have (term, flexi, semiflexi?)?

The loan’s duration (typically 35 years or until 70 years old)

Interest rate on a home loan

With so many variables to consider, a home loan calculator can assist you in determining how much your monthly payment will be.

Step 2: Locate Your New Residence

Finding Home

When it comes to finding the right home for you, this is the most exciting part! Fortunately, we have tens of thousands of new houses with lots of possibilities for you to look over.

Under RM500,000, a new property is being launched.

Whether you’re looking for a luxurious luxury house with a helipad in the garden or a comfortable, reasonable apartment with wonderful shared facilities, one thing to keep in mind is LOCATION!

There are a variety of additional elements that influence property value in Malaysia, so make a list of what’s most essential to you before you start looking.

What can a real estate agent do to assist you?

You should probably bring in a real estate agent at this point. These seasoned individuals are familiar with the markets, the reputations of developers, and the intricacies of legal documentation.

Who pays for real estate agent fees: the buyer or the seller?

They can be a big help in guiding your efforts, providing information on how to secure the best bargain, and generally acting as your champion.

It should go without saying, but make sure you acquire as much information on the property as possible.

Importantly, now is a good opportunity to ask the developer’s representative crucial questions, such as the property’s condition, the neighbourhood, and whether or not appliances are included, to mention a few.

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Step 3: Compile a Cost Comparison

If you see a property you like, don’t rush in and put your money down straight away! It’s crucial to step back and compare the costs to those of similar houses.

This is a terrific approach to figure out if you’re overpaying for a property, as well as whether there are any other similar projects that could provide you with a better deal.

Here are some excellent resources for learning about property pricing and trends:

The National Property Information Centre (NPIC) provides information on national and regional real estate trends.

Department of Valuation and Property Services – provides information on recent property transactions in the area.

There will undoubtedly be competition for available homes in popular places, but Malaysia’s present property overhang provides some genuine opportunities to shop around and obtain a good deal.

This could include things like developer incentives or simply using your negotiation abilities to try to lower the price with more rebates.

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Step 4: Obtain Financing

For the general public, you’ll need to arrange finance before signing a contract. It’s critical that you do this right if you want to discover the ideal new home for you.

It’s crucial to realise that your CCRIS Report, as well as your CTOS score, will be used by all banks to determine your loan eligibility.

That isn’t to say that if one bank rejects you, others will as well, but it does provide some insight into how decisions are made.

Furthermore, you must ensure that you do not have an excessive amount of debt. Instead of the suggested 30 percent -40 percent range, your Debt Service Ratio (DSR) will rise to dangerous levels.

Tip from Us

The DSR is a way that banks use to determine if you’ll be able to repay the loan you’re seeking for.

A) Here’s how to figure out what your Debt Service Ratio should be.

Are you unsure of your DSR’s current status? You can use this formula to calculate an approximation for yourself.

DSR

B) Follow these simple procedures to check your CCRIS and CTOS reports!

You also do not have to be in the dark about your CCRIS and CTOS. To begin, go here and read What Is CCRIS and How To Get Your CCRIS Report.

Do you know how to obtain a copy of your CTOS report? Unlike CCRIS, you can only obtain a free copy of your CTOS credit report twice a year, in January and July.

For RM24.85, you may get the MyCTOS Score Assessment, which is a more comprehensive report (at the time of writing).

You can add an extra layer of cyber-security with the CTOS SecureID, which costs RM86.90 per year.

For the first time, you must register here to receive your free basic MyCTOS report. You can then access it either online or through the CTOS mobile app.

C) Advice on choosing a bank to apply for a mortgage

Application for a Loan

Check out the available home loans at the bank you’re considering for your house loan to determine if it meets your needs. Not all banks will be able to provide you with a house loan that meets your requirements.

That means you’ll have to decide what form of loan best suits your financial circumstances before choosing on a certain bank.

Read our guide to learn everything you need to know about Malaysian house loans!

D) Getting ready to apply for a home loan

You’ve done your homework and are ready to apply for a mortgage!

1) First and foremost, get the necessary paperwork as specified by your bank.

2) Wait for approval while crossing your fingers.

If there are any issues, it could take up to two days for your loan to be approved. You may be requested to provide further documentation to demonstrate your ability to repay the loan.

3) Sign your Offer Letter.

You must pay the earnest deposit and sign the Letter of Offer to signify your intent to purchase once you have been accepted and both parties have agreed on the price and terms.

E) What Can You Do If Your Home Loan Isn’t Approved?

It’s not the end of the world if your loan is turned down. There could be a million and one causes for this. In this article, bank executives discuss some of the most prevalent causes for house loan rejection.

Step 5: Hire a Lawyer

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Some argue that you don’t need an attorney at all. While it’s true that you’re not required by law to hire one, it’s definitely a good idea.

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

This is especially crucial when determining whether or not the contract you just signed is legally enforceable (and that you are not being conned out of your money by hidden provisions).

Choosing A Real Estate Lawyer: Some Pointers

How should you go about finding a good lawyer if you do decide to hire one?

Look for a firm that specialises in conveyancing.

Do some study and think about what they’ve been through.

Check to see if they’re registered with the Malaysian Bar.

Check to see if their prices are within your budget.

In Malaysia, should you create your own legal documents?

Step 6: Letter Of Offer/Intent To Purchase

If you’ve found your ideal new home, you should notify the developer right away. The Letter of Intent to Purchase is used in this situation.

The Letter of Intent to Purchase is a document that expresses your desire to buy a specific property.

It’s usually accompanied with an earnest deposit, which is a payment of 2% of the total property cost up front. This 2% contributes to your overall 10% down payment requirement.

The original terms of the offer and purchase are outlined in the Letter of Intent to Purchase. This covers items like whether you get a refund on your earnest deposit if the transaction falls through for whatever reason.

It also specifies the deadline for executing the Sale and Purchase Agreement (SPA), which is normally 2-3 weeks after the Letter of Intent is signed.

Step 7: Fill out and sign the SPA

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The whole thing is going swimmingly! You’ve chosen your dream home, secured your finance, and stated your objectives clearly. Then it’s time to sign the Sale and Purchase Agreement (SPA).

The SPA is a crucial legal agreement that outlines all of the terms and conditions of your acquisition. This is precisely why you enlisted the help of a lawyer in the first place.

Some developers may offer a free SPA drafting service as a perk, but keep in mind that the lawyer is ultimately working in the developer’s best interests.

While a reputable developer is unlikely to include a condition stating that you owe them your firstborn child in order to use the pool, it’s always a good idea to have your own legal counsel check over the terms first.

The SPA’s fine print is an important aspect of getting the best bargain on your new home. Saving RM1,000 on a clever developer rebate only to discover you can’t use any of the special shared facilities would seriously devalue the purchase.

Step 8: Complete the loan agreement and the MOT.

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You should have several confirmed house loan offers on the table at this stage, unless something has gone catastrophically wrong. It’s now up to you to sign the Loan Agreement to confirm this offer.

This is a legal document that outlines your home loan’s terms and conditions. Even if they’re mostly affected by the bank’s normal procedures, it’s still a good idea to have your lawyer check over it if you have the opportunity.

You’ll sign your Memorandum of Transfer here as well. In the event of properties with either a Strata Title or an Individual Title, this is the legal document that transfers ownership.

If you’re purchasing a stratified property as part of a bigger development, you may be required to sign a Deed of Assignment, which transfers ownership of property that is still subject to a Master Title.

Property Documents Types

Document Names	Description
Letter of Acceptance	This document outlines your original wish to buy and the seller’s readiness to sell.
Purchase And Sale Agreement (SPA)	A contract that lays out all of the terms and conditions of a purchase.
Agreement on a Loan	This is a legal document that confirms the home loan agreement you signed with your bank.
Transfer Memorandum (MOT)	This is a legal document that confirms the transfer of ownership.

Step 9: Paying Fees and Costs

Now comes the exciting part: the big money! You must surrender your hard-earned wealth. You’ll need to pay the remaining portion of your 10% down payment and make sure your home loan payment is transferred once the SPA is signed on the dotted line.

Of course, you don’t simply have to make those big-ticket payments. You’ll also have to pay for all of the necessary stamping and legal fees.

It could hurt a little to see all that money disappear from your accounts, but remember that at the end of the day, you’ll have a fantastic new home! Whether you’re looking for an investment property or your first house, it’s an exciting prospect.

Step 10: Receiving The Vacant Possession

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It’s finally time for you to get your Vacant Possession! You’ve done it! This is the point at when a house transforms into a home.

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

Getting the best bargain on a new home doesn’t end when you hand over the cash. Even the most seasoned developers are prone to overlooking minor flaws or issues in a home.

It’s up to you to make sure you get the most bang for your buck by doing a thorough inspection and reporting any faults or difficulties, because guess what?

After you’ve gotten the keys to your new house, your brand new property comes with a warranty against defects!

That’s true, it’s the defect liability period, during which the developer is required by law to fix any detected defects in craftsmanship at no cost to the buyer.

Prior to receiving your Certificate of Completion and Compliance, you must first receive a Notice of Vacant Possession (CCC).

This is a legally necessary certification from the local government stating that your new home is safe and suitable for human habitation.

The Benefits and Drawbacks of Purchasing a New Home

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So far, we’ve discussed the 10-step procedure for purchasing a new home and ensuring that you get the best bargain possible.