Cash, car, career, credit card
. Now all that’s missing is the final ‘C’: Condominium
. Ready to finally turn your dreams into reality and buy your own home? It takes more than just knowing how much it costs
and what you envision it to be.
Get started on your homeownership journey with PropertyGuru
! Here, we’ve compiled a complete checklist of everything you need to know (and do) as a first-time homebuyer.
11-Step Checklist For First-Time Homebuyers In Malaysia
1) Identify your priority for buying a home
The first question you need to ask yourself is, "Why do you want to buy a home?"
Are you looking for one as an investment or as a family home for you and your loved ones? As a first-time homebuyer, take your time to figure it out because it’s a big decision!
2) Get your credit score ready
When preparing for a home loan, a credit score
is make-or-break. It’s how banks can view your financial health, debt, and repayment rate so they can assess your creditworthiness for a loan.
If you have a good financial standing
and repayment record, banks will more likely offer you a higher Loan-To-Value (LTV)
for a better rate for your mortgage. That puts into perspective how important it is to maintain a healthy credit score!
To build your credit score
, start by applying for a credit card and paying it on time monthly. That way, financial institutions can see your financial records and prompt repayment rate. A stable career and income is also a great way to enhance your score, as you’re perceived as a low-risk borrower.
Aside from these, try to minimise any debt as much as possible, even illegal parking tickets and traffic summons. All these could affect your credit score, which affects your loan application. Keep tabs on your score through CCRIS
If you notice that your existing credit score isn’t very healthy, it’s not the end just yet. Improve your credit score
by making payments on time, reevaluating your financial relationships, and consider rearranging your repayment time frame with your bank.
3) Calculate your affordability and other costs
Unless you’re in charge of your company’s finances, it’s difficult to determine how much of a pay raise or bonus you’ll get.
Furthermore, you can calculate your Debt-Service Ratio (DSR)
by yourself, which is a method banks use to determine if you can afford the loan you’re applying for. If your DSR does not exceed the bank’s limit, you might just get the loan you applied for.
Once you’ve done the math, it’s time to start saving for your down payment. Consider cutting down on unwanted costs like lifestyle expenses if you need to save more. Another money-saving tip is only to spend what’s left after deducting your monthly expenses. That way, you won’t run the risk of overspending!
4) Research eligible first-time homebuyer benefits
Before applying for these schemes, read the fine print carefully as they stipulate the eligibility terms for applicants and property criteria. Some are only for new properties, whereas some cover both new and subsale homes, so read carefully!
Effective till 2025, it applies for the instrument of transfer and loan agreement for your first home, as long as the property price is below RM500,000.
5) Compare interest rates and loans from different banks
With a great mortgage comes great responsibility, and interest. As of August 2022, interest rates in Malaysia, now known as the Standardised Base Rate (SBR)
, have been changed so that all banks will use a standardised rate linked directly to the movement of the Overnight Policy Rate (OPR)
What does this mean? Simply, if the OPR increases by 0.5%, so will the SBR. Since every bank now only has a single rate to refer to, it will be easier to calculate mortgage interest and compare the lending rates of each bank
In terms of loans, there are 3 types of home loans
in Malaysia: basic term, semi-flexi, and full-flexi, all with their pros and cons.
A basic term allows for certainty but not additional payments. Semi-flexi and full-flexi, on the other hand, allow for additional payments for your loan, and the interest can be reduced if the principal amount is paid off quicker.
For first-time homebuyers, it may be easier to apply for bank loans as they have specialised first-home schemes ready for you!
6) Decide between MRTA or MLTA
Both have their benefits and setbacks, but fundamentally, MRTA is a one-off payment at the beginning with a decreasing sum over time, whereas MLTA is paid by monthly payments throughout.
Depending on your current or future priorities, you can opt for MRTA, MLTA, or a Takaful version
that abides by Islamic financial principles. When in doubt, speak to an expert who can help you decide.
7) Pay off your existing debt
If you have existing debts such as PTPTN and car loans, try to pay them off the best you can as they might affect your loan application. The more loans you have, the greater the financial burden. Hence, banks may think twice about approving your application.
What if you can’t pay off everything right now? One way to twist this into your favour is by having a steady income and maintaining a punctual repayment schedule. This all ties back to maintaining a healthy credit score, which will be in handy when the time comes.
Set a recurring monthly event in your calendar to remind you to pay your bills and loans on time. To be even safer, set the event a few days before the allotted pay-by date to take into account the payment processing time.
8) Prepare and keep all your documents
Whether you’re employed by someone else or self-employed, there are several must-have documents
to prepare to prove your creditworthiness for your home loan.
- Copy of Identification Card
- Receipt of property booking
- Sale and Purchase Agreement
- Most recent 3 to 6 months’ payslip
- Most recent 3 to 6 months’ bank statement
- Most recent EA form
- Most recent EPF statement
- Most recent B/BE Income Tax form
- Any other financial statements, like Fixed Deposits, Bonds, etc
Once you have these documents, check to confirm they’re all updated and not missing certain transactions. If certain things don’t add up, ask your employer or bank to clarify before submitting them to avoid continuous back-and-forth procedures.
9) Make sure you have a reliable property agent
Both are permitted to sell property but are distinguishable by their tags – an REN has a red tag, whereas an REA has a blue tag.
If the agent refuses to show you their identification tag or you cannot find them registered in BOVAEP
, contact the real estate agency they claim to be attached with for clarification before you do anything else.
Finding a reliable property agent can be a bit of a chore, but here at PropertyGuru, we have a great selection of agents to help you out! View our list of property agents and specialists here.
10) Research reputable developers
By purchasing from a trustworthy developer
, you’ll be assured of good construction practices throughout the development, better financial security, timely plans and schedules, as well as greater brand recognition.
11) Find the right home
Finding the ‘right’ home is subjective. Some covet prime locations and don’t mind buying a subsale
, while others are all about the new, high-rise life
in the big city. Whichever it is, it should be a home that you can afford and ticks all the right boxes.
To start, keep an eye out for properties that suit your needs or preferences, as well as ideal locations. This is so that when it’s time to purchase, you know what you want, what you can afford, and where you can get it.
Once you’ve settled into your new home, pat yourself on the back for all the effort you’ve put in.
Remember to keep saving too, in the event of unexpected expenses, like a leaky roof or upgrading your fan to an air-con. It’s also a good time to get to know your neighbours and build rapport in your community.
Now that you’re all set and ready to buy your first home, check out available properties in areas of your interest on PropertyGuru Malaysia