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 – Work Out Your Budget
There’s no point in diving into a home search without first knowing what you’re looking for, and when it comes down to it, that begins with your budget.
We’ve got a range of great tools to help you work out your financing:
- Affordability Calculator – a very basic guideline on how much you might be able to borrow.
- Home Loan Calculator – a simple indicator of your monthly home loan repayments.
Of course, you have to take into consideration your down payment needs in your overall financing. That’s a lump sum equal to 10% of the total cost of the property that you’ll need to have saved up, in order to pay upfront.
Keep an eye out for financing opportunities targeted at first-time homebuyers, especially if you’ve got your sights set on affordable housing options!
You can’t always be certain which schemes you’ll ultimately be approved for, but government finance initiatives like My First Home and Residensi Wilayah (used to be called RUMAWIP) show the kind of schemes that are out there in the market.
Remember to also take into account additional costs, such as stamp duty and other miscellaneous legal fees. These can sometimes be overlooked by eager new buyers (by accident, of course).
But finding out you’ve got just enough money for a new home’s down payment, then realising you’re RM5,000 short because you forgot to factor in the other legal costs can be a real kick in the dreams!
A) List of affordable housing schemes in Malaysia
- 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
- 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
- Up to 110% financing
- First-time homebuyer
- Malaysian only
- Maximum monthly income of RM5,000
B) What if I don’t qualify for these housing schemes?
Most of these housing schemes are limited to the B40 and M40 group, so competition is tough. If you don’t qualify, don’t give up hope just yet!
Outside of these schemes, many developers continue to offer financing options with reduced or even zero down payment.
All you have to do is hunt for the right one that suits you and your financial situation, and you’ll still be able to buy a house without a down payment.
C) Can a foreigner buy a house in Malaysia?
Yes, whether you’re an expat home-hunting or an investor looking for the right opportunity – Malaysia welcomes foreigners with open arms.
Click here for a full, complete guide to foreigners buying property in Malaysia.
D) How much does a house cost in Malaysia?
Property prices in Malaysia vary greatly depending on the type of property and the location.
Median property prices range between RM300,000 and RM500,000. Terrace homes range between RM300,000 and RM800,000, while condominiums/apartments range between RM300,000 and RM600,000.
Of course, states like Selangor, Penang and Johor lean greatly towards the pricier end of the spectrum. To view median property prices by state, check out our article here!
E) Do you have enough for the upfront costs?
When working out your budget, know that upfront costs don’t just mean the down payment alone. Below is a simple table on some of the expenditures which go into the upfront costs alone.
Item |
Rate |
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Approx 10% of property purchase price
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Stamp duty on Memorandum of Transfer (MOT)
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1% – 4% of property purchase price
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Stamp duty on Sale and Purchase Agreement (SPA)
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RM10 per stamping
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Stamp duty on loan agreement
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0.5% of loan amount
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Real estate agent fees
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3% of property purchase price
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Mortgage insurance (MRTA/MLTA)
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Subject to your situation/needs
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F) How much is the down payment on a house in Malaysia?
The minimum down payment on a house in Malaysia is typically 10% of the property purchase price. You’re welcome to pay more upfront if it’s within your means.
The first part of a down payment is usually paid as part of an earnest deposit. In most cases, that’s a non-refundable 2% payment.
G) Make sure you have extra cash for miscellaneous fees and charges
On top of the fees listed above such as earnest deposit, down payment, stamp duties and agent fees – you should make sure to have a cash buffer on hand for other fees that you’ll encounter throughout the process.
These include bank processing fees, legal fees for the SPA and loan agreement and property valuation fees if applicable.
H) Can you afford to pay the monthly instalments?
That’s the upfront costs alone, now let’s look at the bigger picture – can you afford this property long-term?
The monthly instalment depends on:
- Your property purchase price
- Type of home loan you have (Term, Flexi, Semi Flexi?)
- Tenure of the loan (typically 35 years or until 70 years old)
- Home loan interest rate
With so many factors that go into the picture, a home loan calculator can help you figure out how much your monthly instalment may cost.
Step 2 – Find Your New Property
This is the exciting bit when it comes to getting the best home for you! Luckily for you, we’ve got tens of thousands of new homes with great potential for you to search through.
Whether you’re after a posh luxury bungalow with a helipad in the garden, or a comfortably affordable apartment with great shared facilities, the one important factor to remember: LOCATION!
There are also a range of other factors which impact property value in Malaysia, so it’s important to have a list of what’s most important to you during your search.
How can a real estate agent help?
This is also where you’d probably want to bring in a real estate agent. These experienced professionals know the markets, know the reputation of developers, and know how to navigate the tricky waters of legal paperwork.
They can be a huge help in directing your efforts, informing you of how to get the best deal, and generally being the champion you need.
It really should go without saying, but don’t forget to get as much information as possible on the property.
Crucially, this is also a good time to ask developer’s agent important questions, such as the condition of the property, neighbourhood, and appliances included, to name a few.
Step 3 – Compare The Costs
If you’ve found a property you like, don’t just rush right in and throw your cash on the table! It’s important to take a step back and compare the costs against other similar properties.
This is a great way to understand whether you’re overpaying on a property, but also whether there might be some other similar projects that will offer you a better value for your money.
Here are some great places to check to get insight on property costs and trends:
- PropertyGuru AreaInsider – offers insight on sales data in targeted areas.
- National Property Information Centre – provides insight on national and regional trends.
- Valuation and Property Services Department – gives you data on previous property transactions in the area.
In popular areas, there’s bound to be competition for available homes, but Malaysia’s current property overhang leaves some real opportunity to shop around and get a bargain.
That includes things like developer incentives, as well as just putting your negotiating skills to good use and trying to lower the price with more rebates.
Step 4 – Secure Financing
For the general public – you’re going to need to secure financing before you sign a deal. Making sure you get this right is an essential step in finding the best new property for you.
It’s important to understand that all banks will rely on your CCRIS Report as well as your CTOS score to assess your suitability for a loan.
That doesn’t necessarily mean that if one bank rejects you, others will too, but it does offer a good insight into the decision making process.
In addition, you’d also need to make sure that you’re not stuck with too many debts. This will cause your Debt Service Ratio (DSR) to reach unhealthy levels, instead of the recommended 30%-40% range.
PropertyGuru Tip
The DSR is basically a method used by banks to calculate whether or not you’re able to repay that loan you’re applying for.
A) Here’s how to calculate your Debt Service Ratio
Not sure where your DSR stands at? You can calculate an approximation for yourself using this formula.
B) Check your CCRIS and CTOS report in these few easy steps!
You don’t have to be in the dark with regards to your CCRIS and CTOS either. First, you can check out What Is CCRIS & How To Get Your CCRIS Report here.
As for CTOS, do you know how to request for your CTOS report? Unlike CCRIS, you can only check your basic CTOS credit report for free twice a year in January and July.
For a more comprehensive report, you can purchase the MyCTOS Score Report for a fee of RM24.85 (at the time of writing).
For an added layer of cyber-security, you may opt for the CTOS SecureID which is priced at RM86.90 per year.
To get your free basic MyCTOS report for the first time, you need to register here. From there, you can access it online or via the CTOS mobile app.
C) Tips on selecting a bank to apply for a housing loan
When choosing a bank to obtain your home loan from, check out their available home loans to see if it fits your bill. Not all banks may have the home loan to fit your needs.
That means that before deciding on a specific bank, you’ll first have to decide on what type of loan suits your financial situation best.
D) Preparation to apply for a housing loan
You’ve done the research, and you’re ready to apply for that home loan!
1) First things first, prepare the required documents as required by your bank.
2) Cross your fingers and wait for approval
Your loan approval will typically take 1-2 days or more if there’re any hiccups. You may be asked to present more documents to prove that you can afford the loan.
3) Sign your Letter of Offer
Once approved and both parties have agreed on the price and terms, you will then need to pay the earnest deposit and sign the Letter of Offer to confirm your intent to purchase.
E) If Your Housing Loan Is Not Approved, What Can You Do?
If your loan was rejected, it’s not the end of the world. There are a million and one reasons why that may be so. In this article, bank execs share some common reasons why home loans are rejected
Step 5 – Employ A Lawyer
Some people suggest you don’t need a lawyer at all. While it’s true that you’re not legally obliged to employ one, it’s probably common sense to do so.
Lawyers are masters of the finer details, especially with legal jargon involved, and when it comes to an investment like property, you want to make sure those finer details are as accurate as possible.
This is particularly important when it comes to situations like ensuring whether that contract you just signed is legally binding or not (and that you aren’t scammed out of your money by hidden clauses).
Tips On Choosing A Real Estate Lawyer
If you do choose to go ahead with a lawyer, how should you go about hiring a good one?
- Find one that specialises in conveyancing
- Do your research and review their experience
- Double-check that they are registered with the Malaysian Bar here
- Make sure their rates are in line with your budget
Step 6 – Letter Of Offer/Intent To Purchase
If you’ve found your dream new house, you need to make sure you let the developer know. That’s where the Letter of Intent to Purchase comes in.
The Letter of Intent to Purchase is a document which states your intention to purchase a particular property.
It’s generally combined with an earnest deposit, which is an upfront payment for 2% of the total cost of the property. That 2% also counts towards your overall 10% down payment requirements.
The Letter of Intent to Purchase sets out the initial conditions of offer and purchase. That includes things like whether you get a return on your earnest deposit if, for whatever reason, the sale falls through.
It also sets out the date by which the Sale and Purchase Agreement (SPA) should be signed, usually within 2-3 weeks of the signing of the Letter of Intent.
Step 7 – Sign The SPA
This whole thing is rolling along nicely! You’ve got your dream house picked, your financing is on the path to being sorted, and you’ve laid out your intentions clearly. Next up, signing the Sale and Purchase Agreement (SPA).
The SPA is an incredibly important legal document which sets out the full terms and conditions of your purchase. This is exactly why you got a lawyer involved in the first place.
Some developers may offer a free SPA drafting service as a perk, but remember that the lawyer in question is ultimately working with the best interests of the developer in mind.
While a top developer is unlikely to sneak in some sinister clause that means you owe them your first-born to get access to the swimming pool, it’s always good to get your own legal professional to look over the details first.
The fine print of the SPA is a crucial part of getting the right deal on your new property. Saving RM1,000 on a nifty developer rebate only to find out you can’t access any of the exclusive shared facilities would really undermine the value of that purchase.
Step 8 – Sign Loan Agreement And MOT
Unless something has gone horribly wrong, you should have some confirmed home loan offers on the table at this point. It’s now up to you to confirm this offer by signing the Loan Agreement.
This is a legal document which sets out the terms and conditions of your home loan. Although they’re largely influenced by standard procedures from the bank, it’s still a good idea to have your lawyer take a look over it if you can.
This is also where you’ll sign your Memorandum of Transfer. This is the legal document which transfers ownership in the case of properties with either a Strata Title or an Individual Title.
If you’re buying a stratified property as part of a larger development, it might be the case that you’ll sign a Deed of Assignment instead, which conveys ownership of property which is still under a Master Title.
Types of Property Titles
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Types
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Description
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Title document held by the developer or landowner at the point of construction.
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Individual Title
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Individually located properties such as landed properties.
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Strata Title
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Condominium/apartment complexes where individual property units form part of a larger shared development.
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Types of Property Documents
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Types
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Description
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Letter of Offer
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Document which sets out your initial desire to purchase, and a seller’s willingness to sell.
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Sale And Purchase Agreement (SPA)
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Comprehensive agreement setting out the terms and conditions of a purchase.
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Loan Agreement
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Legal document to officially confirm the home loan agreement that you have signed with your bank.
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Memorandum Of Transfer (MOT)
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Document which legally confirms the actual transfer of ownership.
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Step 9 – Pay Fees And Costs
Here comes the big money bit! You’ve got to hand over your hard-earned cash. Once the SPA is signed on the dotted line, you’ll need to pay the remaining share of your 10% down payment, and ensure your home loan payment is transferred.
Of course it’s not just those big ticket payments that you have to make. You’ll also have to cover all the relevant stamping fees and legal fees required.
It might hurt a little bit watching all that money roll out of your accounts, but remember that you get an awesome new property at the end! Whether that’s an investment property, or your very first home, that’s an exciting proposition all around.
Step 10 – Receive The Vacant Possession
It’s time to receive your Vacant Possession! You did it! This is the part where a house now becomes a home.
The Notice of Vacant Possession must be completed within 36 months of signing the SPA for a strata-titled property, and within 24 months for an individually-titled property.
Getting the right deal on a new property doesn’t stop once you’ve handed over the money. Even top developers can sometimes miss little faults or problems in a property.
It’s up to you to ensure you get the most for your money by performing a detailed check and reporting on any defects or issues, because guess what?
Your brand new property actually comes with a warranty against defects after you’ve received the keys to your new home!
That’s right, it’s the defect liability period, where the developer is bound by law to repair any faulty workmanship discovered, but at no cost to the buyer..
The Notice of Vacant Possession precedes receiving your Certificate of Completion and Compliance (CCC).
This is a legally required document issued by the local authority to say your new property is safe and fit for human habitation.
The Pros And Cons Of Buying A New Property
So we’ve talked about the 10-step process of buying your new property, and making sure you get the best deal in the end.
But what are the pros and cons of buying a home that’s shiny and new, rather than picking a sub-sale property? Let’s finish up with an easy-reference guide.
Pros of New Property |
Cons of New Property |
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That fresh new property feel!
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Can be more expensive.
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Financial incentives from developers such as rebates and legal fees.
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Often have to wait 24-36 months for construction and handover.
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Customisable design and fittings can create a more personal feel.
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No lived-in experience or sales history to guide purchasing or investment decision.
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Potential to select a specific unit which best fits your preferences.
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Can be more challenging to compare house prices and value.
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Strata Title and Individual Title legally required within a defined time period.
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Potential (but low) risk of abandoned project.
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Often includes more modern and state-of-the-art facilities.
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No chance to meet the neighbours before you move in!
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12-24 months of defect liability period to report any faults.
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Common Home Buying Issues
“Home Buying 101” isn’t taught in schools, so there are many problems that can occur along the way – especially for first-time buyers. Here are some examples of the most common home-buying issues and how to deal with them.
1) You can’t get your loan approved
The classic homebuying barrier. Loan rejection can be due to many reasons, and they can mostly be avoided by getting a pre-approval letter from banks beforehand.
2) You overestimate your financial capabilities
First-time homebuyers commonly underestimate how much it actually costs to own a home. Down payment and legal documents aside, don’t forget to factor in insurance, interests, renovations and general property upkeep.
3) You skimp on hiring a property agent
The maximum a real estate agent is legally allowed to charge you is 3% of the property purchase price. If you’re willing to fork that figure out, a good agent will be the powerhouse that helps you oversee the process from start to finish.
4) You don’t shop around enough
Be it the home loan, property agent, general location or the actual property itself – don’t get rushed into making on-the-spot decisions. Compare wisely so that you can settle on a final decision that gives you the most bang for your buck.
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