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New Year, New Home: Guide to Buying a House in Malaysia

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Guide to Buying a House in Malaysia - Great Eastern Life Malaysia

You’ve worked hard, you’ve saved up and now you’re ready to make the journey into homeownership! This will be THE year when you finally get to buy your very own house for yourself or your family. This journey, especially for first-time buyers, will be an exhilarating adventure filled with promise and potential.

The Pre-Purchase Process

As exciting as the prospect of home ownership can be, it could also be quite daunting as this is a huge financial undertaking, but fret not! We have prepared a simplified 3-part guide and checklist to address some of your questions, ranging from how to go about buying a house in Malaysia, to identifying the documents you’ll need throughout the process.

In addition to that, we’ll also guide you through the vital aspects of setting a budget and shortlisting your property preferences. Additionally, we’ll also list out resources to help make your first time buying a home a less scary experience!

(Disclaimer: While this article can serve as a starting point, there are many other factors that you would need to do further research on, such as the real estate market, which we cannot account for.)

1. Understanding Your Motivation

Before diving into the home-buying process, it's crucial to clarify why you want to purchase a home. Whether for investment or as a family residence, your purpose will guide your decisions, including the house type, location, amenities, and budget.

If you are buying it for investment, amenities and budget will be your top 2 priorities as you want to maximise your rental earnings in the near future. This means that you will also stay away from expensive and lengthy renovation processes as you want it to be ready-to-rent as soon as possible! Meanwhile, having good amenities just means that there’s a higher chance for the property to rise in value, as renters today love to be near public transportation, grocery shops and restaurants.

Meanwhile, if you are buying it as a family residence, then its location will matter the most because location translates into the type of neighbourhood and density of the residential area. Beyond location, convenience comes into play when buying a home for your family. Proximity to schools and workplaces reduces commutes and boosts quality time. If you have children, consider their ages and needs: Does a bustling downtown condo suit their active, social nature, or would a spacious landed property with a backyard provide the breathing room they require? Factor in your own work-life balance as well. A condo within walking distance of your office might streamline mornings, while a detached house in the suburbs could offer a clearer separation between work and home life. Ultimately, the ideal home balances convenience with the unique dynamics of your family, fostering a comfortable and thriving environment for everyone.

2. Finding the Right Home

Finding the right home means something different to everyone. It is a safe shelter that accompanies you as you progress through different stages in life. This is because a home is somewhere you return to every night, and these are the factors that you should strongly consider when house hunting, in order to find the right one:

  • Land tenure - freehold or leasehold
  • Property type - apartment, condominium, serviced residence, or landed property
  • Number of bedrooms, bathrooms and allocated parking spaces
  • Distance to amenities such as hospitals and shopping centres
  • Distance to your workplace
  • Finding a reputable developer
  • If you have pets, check if the property (especially high-rise properties) allows pets

There are also some additional aspects you could find important such as the concept of the township, accessibility, and a safe and secure environment. After all, it will be a long-term commitment and should be able to accommodate your family’s growing needs.

3. Credit Score Management

Your credit score is vital for loan approval. Ensure a healthy financial record and minimise debts, even small ones like parking tickets. Regularly check your score through CCRIS or CTOS, and work on improving it if needed.

4. Financial Planning

Be realistic about what you can afford based on your current income. Buying a new home isn’t just about paying the listed price, but also having to take into consideration a whole slew of other fees, including servicing your loan, renovation and repairs (especially if you’re purchasing a pre-owned house), maintenance costs, and additional expenses.

If you need assistance, you can always consult our life planning advisors for advice on how best to go about planning your finances.

5. First-Time Buyer Benefits

If you’re a Malaysian, there are quite a few government schemes1 and benefits for first-time buyers as of January 2024, such as:

  • Skim Rumah Pertamaku which allows you to apply for 100% loan from banks.
  • MyDeposit Scheme which provides assistance for you to pay for the deposit of the purchase price.
  • First-time buyers also enjoy stamp duty exemptions for properties below RM500,000 until 2025 under i-MILIKI.
  • State-specific schemes, such as the Rumah Selangorku for Selangor and Residensi Wilayah for Wilayah Persekutuan.

Check out the eligibility criteria as these benefits could help you make the process of buying your dream home an even more rewarding one.

6. Housing Loan Comparison

Familiarise yourself with Malaysia's new Standardised Base Rate (SBR) system for loans and compare interest rates and terms from various banks. Consider different loan types — basic term, semi-flexi, and full-flexi — and choose one that suits your financial situation.

7. Mortgage Life Insurance Decisions

When buying property in Malaysia, most banks require borrowers to take out mortgage insurance when they get a housing loan. You typically have the choice between Mortgage Reducing Term Assurance (MRTA) or Mortgage Level Term Assurance (MLTA) for your property.

  • MRTA works like term insurance where it offers protection with no cash value, but at lower premiums.
  • MLTA works like a life insurance policy which offers protection, savings, and cash value with more flexibility, but at higher premiums.

Each has its benefits and drawbacks, and it's crucial to select one that aligns with your priorities. However, if you’d like to truly safeguard yourself and your property, consider other coverage options such as an additional mortgage protection and home insurance plan.

8. Document Preparation

You should also start preparing and compiling essential documents related to the home purchasing process, such as:

  • Copies of your identification card (IC)
  • Most recent payslips (up to 3-6 months)
  • Most recent bank statement (up to 3-6 months)
  • Most recent EA form
  • Most recent BE form (Income Tax Submission)
  • Most recent EPF statement

Ensure all documents are relevant and correct. This will make the loan application process go a lot smoother!

9. Property Agents

If you find the process of buying a house too overwhelming, you could consider seeking the services of property agents. While they may charge a commission, they could also help take off the mental burden of juggling everything on your own.

Just ensure that the agent is legitimate and registered with The Board of Valuers, Appraisers, Estate Agents and Property Managers or Lembaga Penilai dan Pentaksir Malaysia!2

10. Get the Right Home Insurance

It’s never too early for you to kickstart your research on what is the right home insurance for your new home. You’ve spent all the time, effort and money on getting your ideal home, so it stands to reason that you’ll want to ensure your family home is adequately protected from all the uncertainties and unfortunate circumstances.

Buying your first home could be quite a daunting task, but with some research and patience, you’ll eventually achieve purchasing your dream home. And even if you’re not planning to buy a home right now, it’s good to have an idea of the financial requirements and processes involved so you’ll be better equipped when the time comes. After all, it’s never too early to lay the foundation for purchasing your dream home!

References:
1. https://www.malaysia.gov.my/portal/content/30704
2. https://lppeh.gov.my/WP2016/calling-all-currently-practicing-property-managers-to-get-registered-between-jan-2018-onwards-and-dec-2018/

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