Step 1: Finding the suitable property
The first step to buying a property should be looking for the right property that meets all your requirements. Requirements are unique to individual and some individuals may have more requirements than the other. Depending on whether you are buying a property for investment or for your own living, the requirements may also vary. If you have trouble deciding between which type of properties to go for, you can visit our guide to choosing landed or high rise property.
Step 2: Securing the deal
Once you have found the right property, you will be asked to pay a 2% – 3% booking fee to the property developer/real estate agent and a booking receipt will be given to you. Within 14 days from this day, you will be requested to sign the Sales and Purchase Agreement (or what is generally known as an S&P) and to pay the remaining 7% - 8% of deposit, depending on the loan amount that you can obtain. (In some instance where the valuation of the property is lower than the property purchase amount, the Bank will only approve a loan of up to 90% of the valuation amount. Hence, you will have to pay the remaining balance between the property purchase price and the loan amount. Due to this reason, we strongly encourage that you secure your financing within this 14 days as you do not know the loan amount which will be approved.)
Step 3: Getting financing
This is the most time consuming part of the process aside from searching for the right property. You would want to get a loan from a Bank which either charges the lowest interest or has an attractive product feature or is the most convenient to you. During this process, you will have to submit an application form together with all the supporting documentations (such as a photocopy of your Identity Card, pay slips, EPF statements, booking receipt and etc) to the Bank and the Bank will assess your credit profile to determine if they want to approve or reject your application. If the Bank decides to approve the loan, they will issue an Offer Letter which you have to sign in acceptance.
Step 4: Sealing the deal
Sealing the deal in the eyes of law means you have to appoint a solicitor to execute the S&P Agreement and Loan Agreement. Depending on certain factors, you may have to execute your S&P Agreement and Loan Agreement with different solicitors. Once you have signed on the necessary agreements, the solicitor will take on from there to stamp the agreement (where you are required to pay the Stamp Duty as well as the Legal fees) and perform the transfer registration at the Land Office Registry. Depending on certain aspects, the transfer registration may sometimes take up to a year to complete. However, in a normal situation, it should not take more than 3 months.
Once everything has been completed, the Bank will disburse the loan amount to the seller and the keys will be delivered to you. This completes the whole process where you are now officially the owner of the property.
Tips, tricks and potential pitfalls:
- Aside from your down payment, remember to watch out for the other entry costs of purchasing a property (Legal Fees, stamp duties, valuations etc.) Use our Home Loan Calculator to calculate your entry costs
- Until 31 Dec 2014, if your first home purchase is kept below RM400,000, you are entitled to a 50% discount on the stamp duty for your Sale and Purchase Agreement as well as your loan documentation. Use this to your advantage.
*Update: The new limit entitlement for the 50% stamp duty exemption is now for properties RM500,000 and below in accordance to Budget 2015. This will take effect starting 1st January 2015
- Be wary of the property valuations. Just because you bought the house at a certain price does not mean the banks will value the property at a similar price. Banks normally can only give loans up to 90% of purchase price or valuation, whichever is lower. So if the valuations are less than your purchase price, you may have to top up the difference in cash!