Steps to buying a home

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2019 could be the best year for one to buy a property especially if you are a first-time homebuyer considering the many incentives being doled out by property developers and the government such as stamp duty exemptions.

The soft property market has prompted many property developers to offer rebates and freebies from free legal fees to free air-cons while there are many motivated sellers on the secondary market who are now more willing to lower their asking prices.

Thanks to an initiative by the Real Estate & Housing Developers’ Association Malaysia (Rehda) and the government, properties are being sold with at least a 10% discount under the National Home Ownership Campaign (HOC) 2019 which is currently ongoing until June 2019.   

So, if you really want to tap into the buyers’ market and have been dreaming of owning your own home, this is a good time to consider buying one. But first, start with equipping yourself with the right information on what the whole buying process entails as this will probably be the largest investment you will ever make.
Here are some tips for your home buying journey.

Why should I buy a home/property?

Owner-occupier

  1. To build equity in a home
  2. The satisfaction of owning my own home
  3. Convenience of living in my own home
  4. Can be an asset for my retirement fund

Investor

  1. One of the most secure and least volatile investments
  2. A good hedge against inflation
  3. Often offer decent long-term returns
  4. Can be a source of rental income

What should I do before I buy?

  1. Build a good credit profile
    This will include a record of good repayment behaviour for loans, evidence of substantial savings and prompt payment of taxes due. A good credit profile will help the buyer get a bank loan more easily.
  2. Do the math
    Review your financial position and work out the budget for a home purchase. Remember to take other costs beyond the house price into account such as renovation costs, furnishing costs, maintenance fees, utility bills and property taxes.
  3. Find the right house
    Hunt for your dream home after you have sorted out your budget and priorities. In your search, pay attention to these:
    • Developer’s reputation
    • Location — connectivity and accessibility; environment and amenities
    • Pricing
    • Property type
    • Property management and maintenance
  4. Do your research
    After you have short-listed a few properties, it is time to do some research on each. It is advisable to go to the actual site to check out the area or neighbourhood. An owner-occupier should pay greater attention to the community, amenities and developments nearby while investors should keep an eye out on the potential rental yield and the property price.
  5. Get everything ready
    Once you have made your choice, get the relevant documents and necessary payments ready and apply for a housing loan. Usually, the initial payments you would need to make include the booking fees, down payment, legal fees, stamping fees and also stamp duty of transfer. At this stage,
    you can visit or call up a few banks to get an idea of how much you can borrow.

 

Buying from developers
Step 1: Check your loan eligibility.
Step 2: Choose the unit.
Step 3: Sign the sales form and pay a booking fee.
Step 4: Apply for a housing loan.
Step 5: Sign the letter of offer from the bank once the loan application is approved.
Step 6: Appoint a lawyer to handle the loan documents.
Step 7: Sign the Sales and Purchase Agreement (SPA) and loan documents.
Step 8: Pay the balance deposit (10% downpayment minus the booking fee paid earlier) and other charges, such as legal fees on the SPA and stamp duty for Memorandum of Transfer (MoT).
Step 9: The SPA lawyers shall do the necessary to register the transfer of the land title.
Step 10: If you are buying a completed house, the bank will release the full loan sum to the developer once the title is transferred. If you are buying an under-construction house, the bank will release the loan sum progressively to the developer’s Housing Development Account.
Step 11: Take possession of the house after the full loan sum is disbursed.

Note: The timeline above is applicable provided: (i) The house is not charged to any third party (eg. bank) by the developer; (ii) Individual title of the unit has been issued. Source: Chur Associates

 

Buying from the secondatry markets
Step 1: Check your loan eligibility.
Step 2: Search for the right house.
Step 3: Sign the booking form and pay a booking fee (normally 2% to 3% of the purchase price) to the agent.
Step 4: Appoint a lawyer to handle the preparation and signing of the SPA.
Step 5: Apply for a housing loan.
Step 6: Sign the letter of offer from the bank once the loan application is approved.
Step 7: Appoint a lawyer to handle the loan documents.
Step 8: Sign the SPA and loan documents.
Step 9: Pay the balance deposit (10% down payment minus the booking fee paid earlier) and other charges, such as legal fees of the SPA and loan documents, estimated stamp duty for MoT and the differential sum (if any).
Step 10: The lawyers shall do the necessary to register the transfer of the land title.
Step 11: Full disbursement of loan from the bank to the seller’s lawyer as stakeholder once the title is transferred.
Step 12: Take possession of the house.

Note: The timeline above is applicable provided: (i) The house is not charged to any third party (eg. bank) by the seller; (ii) The title to the house has been issued and duly registered under the seller’s name. Source: Chur Associates

Alternatively...

Buy via FundMyHome.com
Step 1: Find a home by choosing from a list of participating homes
Step 2: Pay only 20% (Institutions contribute 80% so buyers have no repayments) If you are eligible for FundMyHome + DepositKu scheme, you get RM30,000 loan to help you pay for the 20% (subject to approval by the Housing and Local Government Ministry.  
Step 3: Sign the relevant documents
Step 4: Move into your home! In year 5, refinance or sell.

 

This story first appeared in the EdgeProp.my pullout on March 1, 2019. You can access back issues here.