Interested in the property buying process in Malaysia? This guide explains the overall procedures in purchasing a property through the secondary market.
Plan your budget
Depending on the loan package or housing scheme. You will normally be able to get a 90% loan grant of the cost of the property price. The bank officer factors in various considerations when deciding whether to lend you the capital or not. Firstly, they will look at your credit score and credit history to decide if you have a good credit record and if you are able to pay back the instalments plus interest rates. Speaking of interest rates, some loan schemes have fixed and floating interest rates, meaning it can a fine line between whether you are making a profit or loss, hence its best to take that into consideration. Remember to spare some additional capital for the legal fees, and stamp duty. A good benchmark is to ensure that the monthly instalments should not take any more than 1/3 of your income and ensure that you do not have any expensive payment plans or unaffordable purchases that risk breaking your credit rating.
Research in the Area and average transacted price
Every home buyer wants to get the best possible deal for their money’s worth. Meaning he/she would aim to avoid paying for a property that priced above the market price or even paying for a depreciating property that is not worth its value. The only way to avoid this is to do your homework. A well researched home buyer will be able to make a case for a lower price and negotiate for an acceptable price according to the budget. Before even visiting the area, you will get an idea of your ideal requirement in mind before committing to a vague deal.
Search for a Property
There are endless ways to looking for a property but how should you start? If you have the time, call up a property agent in the area you are interested and ask for the available properties are currently listed with them. On the other hand if you are property savvy and would love to get an idea of what the market offers, search online for classifieds and listing sites and you will see what each area has to offer. However, if you are short on spare time and are not property focused, you can use a free matching service like Bumbung.co to get your request matched with available listings.
This is an important phase in a the buyer process. This is a time to really evaluate the property if it meets your requirements.
This is also a good time to get insights through your agent, you should ask the reason for selling the property and how long has it been for sale.
During the house viewing you should check if the property is a leasehold, freehold or a bumi-reserved land. Many people perceive leasehold to be unattractive due to assumptions that you will have to return the land to the government. Additionally, you must ensure the property title is what you are looking for. Strata titles may have a monthly maintenance cost that you must fulfill.
Negotiate for a mutually agreeable price
Its vital that you priorities the best interest of your set budget and not go above and beyond it. Sellers will normally keep their prices high and will be hesitant to lower it. Its best to negotiate well for a win win situation. When appraisal figures come into play, the value you pay should be along that benchmark and it is best to avoid overpaying for your property.
Apply for a loan
Now that you have a deal pending in line. Its time to apply for a loan if you aren’t paying for it in cash. Make visits to different banks and make a choice on which bank offers the best deal for you. Some factors to consider is the floating vs fixed interest rate, the interest rate amount, the highest amount that they bank can provide and any additional fees that it charges or perks that are useful to you.
Now that you have made your choice, the bank will appoint a value to visit the property to provide the bank with an appraisal. With the appraisal amount, the bank officer will issue a loan offer letter for you to sign, detailing the payment procedures, duration and frequency. He/she will produce a valuation report which will be charged to your loan sum or paid separately.
Sign the Booking form and pay 2% of the purchase price
By signing the booking form and paying 2% of the purchase price, you have a stake in the property and the property is under reserved for the period of your offer. The booking form will include the essential items such as the names of the transacting parties, the property address, agreed price and more.
Sign the SPA agreement
This is your contract that binds you and the seller to a contract that requires the both of you to fulfill your individual part of the obligation. Make sure all the details pertaining to the agreement to be accurate that there is no leeway for any discrepancies. Ensure that you agree to the clauses of the agreement as you will need to deliver then within the stipulated time frame. Pay the balance of the 8% to put in as a down payment. Read our comprehensive guide on the SPA procedures to learn more.
Sign the loan agreement and pay the remaining balance
The lawyer will draft a loan agreement that binds you with your bank that will be providing your loan. The loan agreement is mainly drafted to protect the bank and ensure that you fulfill your monthly payments. Make sure that you capable of paying the monthly loan installments plus interest to prevent the bank from acquiring your property in an event of a payment default. Your bank may require you to get a loan insurance if they aren’t satisfied with your financial health. Check the payment dateline to ensure that you do not incur any late payment charges. Refer to the duration stated in your agreement, the usual deadline is 3 months.
Delivery of Vacant Possession and Collect your keys
Vacant possession is a period that ensures that the property is fit to be occupied. Within the SPA agreement, there is a completion date set that is agreed by both parties. This date marks the pre set time for the contract duration, failing it will incur penalties to the breaching party.
Once the remaining amount has been settled, vacant possession must be delivered along with the keys within the time frame specified in the SPA.
Ensure all pending and late utility bills pertaining to the property have been paid by the owner before the handover.
When all these steps have been completed, you have successfully purchased a property from the secondary market. Are you looking for a New property instead? Here is the guide to the process of buying new property developments.