Guide to purchase a secondhand property

We found a good article online, and would like to share through, it would beneficial for those who are looking into getting a secondhand property that offers a better location. With so many properties available for sale in Malaysia, such as properties for sale in Putra Heights, finding a house is no longer a long and tedious process. Whether it is for investment purpose or own stay, most people are still confused with the steps of buying a house in Malaysia. Buying your own property may seem easy but when it comes to going through the procedures of buying a home, you then realize that you have missed out on many steps and wished you know the steps earlier so you could avoid the unnecessary troubles.

This article will guide you through the process of buying a subsale house in Malaysia: Sales & Purchase document, Stamp Duty, Memorandum of Transfer, Real Estate Agent’s fees and Valuation Fees.

Before you start planning to buy a property, be clear of what you want and stay within your budget. It is essential that you know your budget. You definitely do not want to end up in a huge debt as buying a property is a huge commitment and it involves a huge sum of money. Have a realistic budget and stick to it. Purchase a property that you know you can afford and are able to commit without leaving you with financial issues.

Here are the legal fees that you will need to spend when you purchase a subsale property:

1.      Valuation fees and cost
Valuation fees are fees that are paid to a professional valuator who helps to determine the property’s worth at the current property market.

2.      Real Estate Agent’s fees
Real estate agent’s fee is a fee that is paid to the real estate agent who helps you in dealing with all the paperwork and reaching an agreeable agreement between the seller and buyer.

3.      Downpayment
After deciding on which house to buy in Malaysia, here comes the down payment. Usually, a property’s down payment will be fixed at 10%, depending on how much bank loan you have secured. In other words, if the bank is providing you with a 90% loan, you will then only need to pay a 10% downpayment.

4.      Sale and Purchase Agreement Fees
Next, the Sale and Purchase Agreement Fees (S&P). This is an important document with the blueprint of the property and it is charged accordingly to specific price tier that is based on the price of property the buyer buys.

5.      Memorandum of Transfer
The Memorandum of Transfer (MOT) fees will be the final fees to be paid by home buyers upon the completion of development. These fees are for the ownership transfer of property to the home buyer, also known as the rightful owner, and will only start to be transferred around 6 months after the development’s completion. These fees too, are charged according to a price tier based on the price of the property, along with 6% government tax and a RM1,000 - RM1,500 disbursement fee.

6.      Loan Agreement Legal Fees
After that, property buyer will then need to pay for Legal fees. These fees are charged depending on the time and expertise of the engaged lawyer, and also the price of your property.

7.      Others
However, do note that there are other costs that need to be taken into consideration as well when you purchase a property, such as:

Mortgage Level Term Assurance
Fire insurance
Loan installment
Interest
Utilities deposit for electricity and water
Renovation and repairing costs
Maintenance fees

Type of Loan

Decide which kind of loan that you would opt for as there are a different kinds of mortgage loans for you to choose from when you buy a house in Malaysia:

1.      Standard Home Loan
The most common housing loan available as the interest rates of the loan are fixed from the moment the property buyer obtains the loan, regardless of the Overnight Policy Rates (OPR) changes or market changes. Benefit of this loan is that property buyer who obtains this loan will have a peace of mind as the fluctuation of the market will not affect the interest rates.

2.      Flexi Home Loan
This loan is another alternative option of Standard Home Loan. The interest rates are lower as the buyers place more money into the account, therefore, is suitable for property buyers with more cash flow. Another benefit is that if there are any changes in the market, the loaners get to enjoy the changes of rates as well. As the name mentioned, it is also flexible as it allows loaner to take out the money anytime.

3.      Islamic Home Loan
This loan is specially tailored for the Muslim with similar benefits as the Standard Home Loan, however, uses the Base Finance Rate(BFR) when it comes to deciding how much is the bank earning from the Islamic Home Loan.

MRTA/MLTA

The Mortgage Reducing Term Assurance (MRTA) or Mortgage Level Term Assurance (MLTA) is housing insurance that is offered by banks. These policies will cover the property or homeowner in case of any uneventful situations such as total permanent disability or death. These policies will also mitigate financial burden from your family so you do not have to worry about the mortgage payment.

Signing of documents

Upon confirming the acceptance of loan from the bank, the purchasers will need to start signing some legal documents. The first document that the purchaser needs to sign is the Letter of Offer issued from the bank. The purchaser should choose the bank that offers the best terms. Upon signing the Letter of Offer, the borrower, or purchaser will need to pay a 2% - 3% downpayment of the purchase price. The balance of the 10% downpayment will be paid upon signing of Sales & Purchase Agreement.

1.      Sale & Purchase Agreement
The purchaser will be given a grace period of 2 or 3 weeks to sign the Sale & Purchase agreement. During the grace period, the purchaser will need to have his/her appointed lawyer to draft the Sales & Purchase agreement based on the seller’s and buyer’s agreement.

2.      Loan Agreement
The Loan Agreement is one of the documents to be signed by the purchaser. This Loan Agreement is an agreement between the purchaser and the bank, where the Loan Agreement states the terms for the mortgage loan. Cost of Loan Agreement is to be borne by the purchaser.

3.      Memorandum of Transfer
The last document to sign will be the Memorandum of Transfer. This document will transfer the seller’s property’s deed to the buyer. Upon signing all the 3 documents, the purchaser will have to make payments on the Stamp Duty, legal fees and other miscellaneous charges.

The buyer’s lawyer will need to ensure all outstanding fees, such as property’s land tax, utility bills and quit rent are fully paid. The seller’s lawyer will be able to provide the Agreed Apportionments that shows the details of bills that have been paid.

In conclusion, the procedures of buying a home on your own is not difficult as long as you plan ahead and stay within your budget. Remember to always be realistic as you do not want to get yourself into a financial burden after getting a home.

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