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!
Once you have the reason, pinpoint the type of house you’re interested in or factors that may affect your purchase, like the location, security, distance to your workplace, or even who the developer is.
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 or CTOS regularly!
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
It’s all about the money, money, money. When it comes to that, calculate the property you can afford based on your current salary and not the salary you foresee in the next few years.
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.
Additionally, note all the compulsory fees incurred when you purchase a property. This includes the Sale and Purchase Agreement (SPA) fees, stamp duties, down payment for your home, and property agent fees among others.
You should also consider the cost of maintaining your home after moving in to gauge if you can afford the upkeep. Things like renovation, maintenance fees, instalments for furniture, quit rent and parcel rent can add up to more than you expect.
With all this, you can start calculating how much of a loan you can get with your salary or use the PropertyGuru Home Loan Eligibility Calculator for a more accurate estimation.
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.
PropertyGuru Tip
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
Being a first-time homebuyer in Malaysia has its benefits. For instance, there are several government affordable home schemes such as Rumah Selangorku and Residensi Wilayah for those who live or work in any of the Federal Territories.
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!
Aside from these first-time homebuyer programmes, a newly introduced perk is the exemption of stamp duty charges, just for first-time homebuyers!
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!
These include Bank of China’s First Time Buyer Housing Loan, Bank Rakyat’s Home Financing-i My 1st Home Scheme, Maybank’s Skim Rumah Pertamaku (My First Home Scheme), Affin Bank’s My First Home Scheme, OCBC’s My First Home Scheme, and Bank Islam’s SJKP Housing Scheme.
6) Decide between MRTA or MLTA
Your precious things need insurance, just like you, your car, and your home. When it comes to property, it’s called mortgage insurance. You can pick from either Mortgage Reducing Term Assurance (MRTA) or Mortgage Level Term Assurance (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.
PropertyGuru Tip
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
Buying a house is no walk in the park, especially when it’s your first home. As first-time property buyers are sure to enlist the help of an agent, check to see if the agent is legitimate and registered with the Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEP).
Only registered agents are certified to sell a property, so make sure they’re not fake or risk getting conned. There are two types of property agents in Malaysia: Real Estate Negotiators (REN) and Real Estate Agents (REA).
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.
PropertyGuru Tip
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
When purchasing a home, one thing to consider is the developer behind the project. A good developer is reliable, credible, has a decent development record, and most importantly, is not blacklisted by the government.
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.
It could be a SoHo, SoFo, or SoVo unit to cater to both your home and business needs or a townhouse with condo-like facilities but the perks of a landed home. Do you want to live close to public transport stations for an easier commute, or somewhere with good schools for your kids?
If you have pets in tow, research if pets are allowed on the property as they may not under certain circumstances. Also, if living with differently-abled people, check if the property is inclusive and easily accessible for them.
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!
Relevant Guides:
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4 Simple Steps To Use Your EPF Money To Buy House in Malaysia!
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Sale And Purchase Agreement In Malaysia: 4 Important Clauses To Note!
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Bank Loan Execs Share Why Home Loan Applications Are Rejected
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Disclaimer: The information is provided for general information only. PropertyGuru International (Malaysia) Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.