Jan
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Buying A Property In Malaysia
January 3, 2010 | 1 Comment
First of all, a very warm welcome to the year 2010! This is the first article that I’m writing from my new home. I purchased this property at the end of 2009 and I must say that it took quite some time for me to settle down. For those who’ve experienced this, waiting for 6 months to a year is not unusual. The process is complicated and the reason that I’m writing this article is to give the first time buyers a virtual walkthrough beforehand and also serve as a reminder to others (myself included) should we intend to purchase another property in the future. This article will highlight the many pitfalls involved.
I always believe that everyone should own their home, regardless of the size and location. If you can do better, you can always upgrade to a better one, and if you’re in a bad situation, you can always go back to your home. I would also advice those who are keen on investing in a property to at least want to live in this house. Should your investment does not work out as expected (no buyer, not able to rent out, etc..), as least you can still use it as your home instead of letting it rot but still pay for the installments monthly. Another advice is that if you already have a car, try not to tempt yourself into buying another car instead of getting a house, always remind yourself that the car is the worst investment of all time!
I was purchasing a completed service apartment by applying for a Flexi loan. The procedures might be slightly different for you if you’re getting other types of property, and maybe under development, but I believe the overall experience should be more or less the same.
The Hunt
Choosing your home is no easy task. Even when I’ve decided on the condo/apartment that I wish to buy, I still need to view the units and make sure that it is the unit that I will be staying for awhile. One wrong decision here and you’ll be demotivated for a very long time (30 years usually). Perhaps this is the challenge for us who is buying a completed property, but I still think properties under development will have their own set of challenges. Lucky or not, I spent 3 months looking for my unit, and I got exactly the unit that I had in mind when I started!
Booking Fees
During my 3 months search, it got so competitive that I brought my cheque book with me when I went for viewing with the property agent so that I can place the booking on the spot if the unit is suitable. Most of the time, it is first come first serve basis when it comes to booking.
There was same issue the owner had with the existing tenant that hold me back from issuing my booking fee on the spot. I had to thank my agent for being able to convince the owner that I’m very serious in buying and there’s no need to ask for other agents to help sell the unit.
Once everything is cleared, I placed my booking fee. It should be around 2% or 3% of the purchase value, and you will need to sign on the Letter Of Offer. Bear in mind that the Letter Of Offer needed to be signed by the buyer (Purchaser) and the seller (Vendor) to be of legal value. Which means that the owner can still accept offers from other agents. Once the owner signed the Letter Of Offer, your agent will give you the original copy. With this Letter, you can now start applying for loan. At this stage, referring to the Letter Of Offer, you should have 14 working days to get your loan approved. You will be penalized/fined if you don’t, so start working on it!
Loan Application
My brother is a banker, so I got very detailed information on the types of loans available and how to apply them in a way that it gets processed quickly without delay, to avoid the penalty. There are generally 2 types of loans, Conventional and Flexi. I’m not going into the details on the differences of these 2 but basically Flexi loans (the one that I chose) have the flexibility for you to deposit and withdraw from a current account that you own, and the loan interest will be calculated daily based on the amount of extra cash that you deposited into the account.
Each bank has their strength and weaknesses, some has better interest for completed properties, some has better interest for Conventional, some has better interest for Flexi, some provides higher value for your property, hence the ability to get higher loans, and so forth. So it is wise to apply for several banks for more options.
To apply for housing loan, you need a set of these for every bank :-
1. Letter Of Offer
2. Copy Of Identification Card
3. Copy Of Income Tax Form
4. Copy Of Income Tax Payment Receipt
5. Latest 3 Month’s Salary Slip
6. Latest 3 Month’s Bank Statement
- First Page (That States Your Name And Account Number) & Statement, Certified True Copy (You Need To Go To The Branch To Get It Stamped) – Depending On Bank’s Requirements.
- Make Sure Your Statement Matches With The Amount On Your Salary Slip Or You’ll Have A Very Difficult Time Getting It Approved!
7. Name Card Current & Previous (If You Just Changed Job)
Getting A Lawyer
Once you have your loan approved, the next step is to appoint a lawyer to process the deal. Most of the time, the Purchaser’s lawyer alone is enough but sometimes the Vendor might want their own lawyer to protect themselves. The lawyer will prepare the new Sales & Purchase document where it will be signed by both parties, the Purchaser & Vendor. During the signing, you will need to pay the remainder of the down payment (usually 10% minus the amount you paid during booking).
At this moment, if for any reason that you’ve decided that you do not want to sign the S&P, you will lose your booking fee. And also, in the event that you sign it before getting a bank loan approved and that loan ended up being rejected, you will lose your 10%. So make sure to get your loan approved within 14 working days before signing the S&P! Once signed, all you can do now is wait for your lawyer to process the transaction.
It is very important to set up your current account before the release of fund from the bank, or the funds will have nowhere to go to. This is quite a tricky step if you are not confident of when the First Disbursement (the release of funds from the bank) will occur. Since the bank will charge a service fee (Rm 10 per month in my case), it is also not clever to set up your account too soon because the bank will charge you every month for nothing. Since I expect my First Disbursement to occur in between the 3rd and the 6th month, I set up my current account on the 2nd month.
Towards the final phase before I get the Key to my property, I was asked by my lawyer to do a joint inspection with the Vendor on the property. I think this is just a formality as I don’t think the previous owner will pay for any visible damage since you’ve already paid for the property, it’s yours now!
I will then need to contact my lawyer to let them know if the property is in good condition and if they should proceed. Once you give them the green light they will proceed to process the loan and will instruct the bank to release the First Disbursement. In my case, since the previous owner bought the property in cash, I do not need to wait for the Second Disbursement. This reduced my waiting time by 1 to 2 months.
The Key!
Once the First or Second Disbursement is released to the Vendor, the lawyer will contact you to pick up the Key! Congratulations! The first phase of your headache is now over! At this point, most buyers will want to at least do some renovation, according to budget and taste. This will further increase your wait to an extra month or two.
So that’s all you need to know to get your own property! Like in all of my articles, I hope to provide some kind of value, not just empty blogging. So once again, welcome to the year 2010!
There’s no place like home!
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Comments
1 Comment so far
For the letter of offer, the owner do appoint the agent but it is not the real agent in other words the agent itself is doing his/her own business without having a company. what should we do?If we want to pay the booking fees to the agent?