Valuation fee?

When we purchase a house, we have to sign an agreement called the Sales & Purchase Agreement (commonly known as SNP or SPA)  which clearly states our purchase price of the property. Besides paying the usual downpayment of 10% deposit upon signing, there are also some other charges incurred. The first one would be valuation fee.

Upon the approval of loan for the property, the bank will appoint a property valuation company to evaluate the report for Application of Credit Facility. This is to ensure that the property you applied for the loan is matching with the market value. All the cost of the valuation report will be paid by the buyer as it also allows you to know that whether you are buying a property that worth its price.

Here are an estimation of how valuation fees calculated base on the property you purchased :

For First RM100K = 0.25%
Remaining up to RM2 mil = 0.2%
Remaining up to RM7 mil = 0.167%
Remaining up to RM15 mil = 0.125%
Remaining up to RM50 mil = 0.10%
Remaining up to RM200 mil = 0.067%
Remaining up to RM500 mil = 0.05%
Remaining more than RM500 mil = 0.04%

Effective 1st October 2009, the fee is subject to a minimum fee of RM400 per property

If you bought a 450k house,
First 100k = RM100,000 x 0.25% = RM250
Left 350k = RM350,000 x 0.2% = RM700
Total = RM950

If you bought another 150k house,
First  100k = RM100,000 x 0.25% = RM250
Left 50k = RM50,000 x 0.2% = RM100
Total = RM 350

Since the minimum fee is RM400 per property, you still have to pay RM400 for the second house above. However, there are actually different charging rates depending on the valuation company chosen. You can actually enquire the bankers regarding the details of the charges if you think that it is unreasonable.

To prevent getting overcharged, ask for an estimated price first before they conduct the evaluation report and compare the quotation with few valuation company. Chances are you can ask the banker to choose the valuation company that you picked which could in turn save you hundreds.

Just try to be reasonable and ask politely. I am sure there will always be a better deal when you ask nicely. Opt for a win-win situation.

Happy investing!

W.

Collecting your new house keys?

If you bought a property from new projects, usually it takes up to 3 years to finish building from scratch. You started paying the loan interest and house mortgage for 3 years until you finally can get into the house. Now that is a memorable moment isn't it? 

There are a list of things that you have to know before you can officially move in and stay in the house.
Here is the quick guide on the process of receiving the keys to your new house from the developer.

1. Delivery of Vacant Possession a.k.a collecting your house keys.

Giving 'vacant possession' refers to a legal obligation to ensure that a property is in a good condition for the owner to move in. 

Delivery of Vacant Possession is when the property is ready to be handed to you. This will usually happen between 24 months to 36 months from when you made the initial down payment for the property, and signed the Sales and Purchase Agreement.

By this time, construction work has ended and the building is complete and ready to be lived in. The only works remaining are usually some landscaping to the rest of the estate.

As the property move into completion, you will receive a letter from the developer to arrange a date for Delivery of Vacant Possession. When the property is finally completed, you will need to turn up at their sales office to sign forms and collect the house key of the designated property.

On the same day you collect the property, you will also receive a copy of the Certificate of Completion and Compliance (CCC).

2. Certificate of Completion and Compliance

Formerly known as the Certificate of Fitness (CFO), the CCC is a document released by the local authority council that declares a particular property is completed and safe to be occupied.The CCC will be issued by the Professional Architect or Professional Engineer who is registered with the respective Board of Architects Malaysia (BAM) or Board of Engineers Malaysia (BEM).

Legally speaking, the CCC is a requirement stated in the Sales and Purchase Agreement that proves the design of the building is approved and safe. Make sure that the property has obtained CCC when you collect your house keys.

3. Sign a form when you receive the key

When you collect your house keys, you will need to sign several documents to acknowledge your acceptance of keys to your new property. As you sign the documents along with the date, the Defect Liability Period for your property starts counting down.

Part of this set of documents will include a simple list of the lighting fixtures, appliances, electrical sockets and other built-ins.

4. Defect Liability Period

The Defect Liability Period is just like a “warranty” period for your property. Homeowners will usually have  18 to 24 months to check and report any defects, poor workmanship or leaking of the building. Have a clean check when you first get into the house. Report and have it fixed immediately before you start furnishing your house as that will further complicate the process.

The developer will usually provide a Defect Complaint Form that lists the common areas in the house. Use it to mark out any problems you find, such as loose electrical sockets, misaligned flooring, etc. Even if you think it’s a tiny little problem, mark it out for the developer to take a look. If you ignore it, you will have to bear the cost to fix it later on.

5. Get the contact for the management office

This is important in case you got lost in your new condo park or you couldn't find certain facilities in the premise. A basic management team should be arranged by the developer for the first few months before the community decide to vote and forms their own management to take care of the shared areas. Contact number can be useful when you have doubts such as how much and where you have to pay for the maintenance fees and check the rules&regulations of the condo.

After all these, you are free to install your internet lines, furnitures, electrical appliances and all kind of stuff into your house. Enjoy your stay and hope there will be no big maintenance for the house in at least the next 10 years.

W. 

HUGE charges when you buy your property !

It is very important to know that there are actually extra charges to pay for when you buy a property. A condo with nett price of 450k does not mean you just pay out the 10% downpayment (45k) and its done.

There are actually quite an amount of different charges that applies to the buyer which we have to ready another sum of money to pay for it. When buying a house, the buyer should set aside enough cash to pay the initial expenses, these include the deposit, charges for the memorandum of transfer (MOT), legal fees and stamp duty.

 This post will talk about the type of extra charges when you buy a property.

The stamp duty is commonly paid by the buyer. Documents like the sale and purchase agreement (SPA) must be stamped within 30 days of execution, otherwise the government will impose a fine.

After the loan to purchase a property was approved by bank and signed the SPA by buyer, the bank will appoint a valuation company to conduct a valuation report for Application of Credit Facility where you have to pay for the valuation fee.

After its done, you got to pay for the lawyer fees for handling your signed documents and name changing on the property. Well we couldn't deny the importance of these process and I am sure we should pay them for their hard work. After all, some firms can offer you cheaper rate but can delay the processing of your documents , which could ultimately lead to more problems occurring later on.

To help first time home buyers in getting their home, the government has implemented some stamp duty exemption for certain percentage. The first RM300,000 will be fully exempted from stamp duties. So if the value of the property is RM450,000, you will get a full exemption on your first RM300,000 and will pay the prevailing stamp duty rate for the balance RM150,000 only.
*This offer is only applicable to the first property bought under your name.

From the photo , you can see that the extra amount of money you need to pay can cost up to RM25k! Excluding those rich families, how easily can we fork out another RM25k out of the air? Duhhh

Good news is, nowadays with the soft property market, developers are giving sweeteners for new projects like they will pay for the legal fees of SPA & loan , some even stand to pay for your stamp duties! Look out for those special package offers and they might just save you a FD!

Many first-time house buyers make the mistake of underestimating the amount of money they need in the initial stage of purchase. They take into account money they need for their deposits, less their loan amount. Some also calculated in the amount of money required for repairing and renovation or furnishing. Unfortunately some forgot to count in those charges and it could make them splurge out of their budget.

Plan your financial condition well and happy investing!
*The apps to estimate your extra charges are LKC Property Malaysia Charges in playstore.

W.

Luminari - Butterworth, Penang

If you feel that the price of property in Penang Island is too high, try looking your ideal home or investing property at the Mainland. Here is a new project by OSK in Butterworth, 5mins away from the Penang Sentral.

Comprises of 1tower with 2wings, 462units in total with sizes of 950sqft , 1050 sqft, 1200sqft and 1335 sqft. It is being sold from 480k to 600k (Not calculating in the rebates and discounts available, read till the end!) There are also some retail shoplots on the ground level which can be good for providing foods and especially Starbucks coffee which will definitely raise the class of the condo.

The freehold condo is considered to be a Service Apartment therefore it is commercial titled.

[Investor's Perspective]
The condo is in Jalan Chain Ferry, Seberang Perai Utara, Butterworth and it sits close vicinity to the upcoming Penang Sentral – an integrated transportation hub which links directly to the existing Electric Train Service (ETS), bus terminal and ferry terminal. Future undersea tunnel could also be connected to there. If you're worried about the Penang Transportation Master Plan that might never take place, here it is : Penang Transportation Master Plan is given green light.

It is partly seaview if you are in the high floors. Right next to the Woodsbury Suites if you know that.

It is estimated to be done in 2020 and the Penang Transportation Plan should also be confirmed by that time then. With the progress on connecting Island and Mainland, the Butterworth area is bound to have a higher price appreciation within the next few years.


[Agent's Perspective]
I will definitely press hard on the factor that Penang Sentral is just 5minutes away from the condo. It has shoplots downstairs, Giant supermarket nearby and a transportation hub in sight.This project is great for investing and airbnb purpose as tourist will come over Mainland for staying overnight when Island cost them too much or its full,and it is easier for them to take the ferry and reach your units immediately from the Penang Sentral hub as well.


Proposed package :
1) 7% rebate and free legal & disbursement fees on SPA signing.

If sign SPA within 60days
1) additional 3% rebate is offered (total 10% rebate off  the price)
2) free loan stamp duty
3) free 2 units of inverter aircon and water heater

Well, 10% rebate is really a big amount if you calculate it. More offers might come as you discuss with the agents face to face to know more.

If you gets tired of the traffic in Penang Island, why not try buying a house in Mainland? Well I've been good living in Mainland for so many years!

Other projects in Penang that you might be interested in
[Golden Triangle 2] & [Urban Suites]

W.

Places to avoid for your property?

All of us will have few places to avoid when we buy our home. Who wants to wake up looking at a landfill/ dumpsite or smelly wastewater treatment plants? Below are few popular terms that everyone would want to avoid , for your reference. *Do not underestimate their smell/sight.

1) Landfill / dumpsites

*Not a scenery that you want to wake up to.

This is probably the first no-no for property buyers. No one wants to wake up and look at the dumpsite every morning or wake from the smell of it. No one wants a landfill near to their house. It is not pleasant looking and it will be harder to sell off the property later on, not to mention the price appreciation of the property is quite unlikely to be high. Do check the nearby locations and view the balcony before you buy that property and confirm that the smell will not be brought in by the winds.

2) Wastewater Treatment Plants

*Open treatment can be unpleasant if its a windy day.

Pretty much the same idea with landfills. The smell is not pleasant to anyone. Large scale Indah Water treatment plants could be a major turn off for most property buyers. Open air treatment plants permeate a constant “unpleasant” smell in the air. Even if the property is located a good distance away, wind blowing in the “right” direction would likely bring unpleasantly strong odour. Unless the price are really attractively low, try not to get your lifetime home near to a landfill dumpsites or water treatment plants.

3) Cemetery or Temples

*Burning of joss papers

Take a look at the apartments near to the Chinese graveyard at Bukit Gambir, Penang during Ching Ming festival. Beside the smell of burning joss sticks and "kimzhua" (burning joss papers), the ash could also fly into your house on a windy day as well. Many buyers wouldn’t even proceed with the property viewing if they know there's a temple or cemetery next door. Malaysians, especially the chinese, also does not prefer to live near to cemeteries due to religious issue. Naturally,it won’t sit well with your luck charts or your feng shui master.

4) Poor Maintenance from management

*Poor facilities maintenance and securities

Poor maintenance affects all properties, including landed properties. When buyers pay the maintenance fee every month, they expect their surrounding neighbourhood views and their safety to be taken care of.  Dirty walls, pools, gyms and broken fences or security hut with no securities in it are some of the things that gives the neighborhood a bad impressions to the buyers. 

For high rise condominiums, poorly kept common areas and facilities such as swimming pools, gyms etc or even dirty corridors with broken lamplights are signs that the maintenance fund might be in jeopardy. Because buying a condo unit might actually put one in debt, a condo with poor maintenance is a BIG NO in property buying as it makes the condo harder to be rented out, which mean it will be a negative cash flow to the owner. Bad bad thing.

5) Schools, Hospitals and others

*Unless you're a big fans of trumpets and tuba.

We all have been in a school before and we know how noisy are the hourly bell rings or the trumpet sounds of the school band practice. Be prepared for the noise and your carpark might be jeopardized by those parents that are waiting for their children to come out.

In time of bad lucks, chances are you could even spent more than 10minutes to get out from your house and out to the main roads due to the "ethical" parking of people especially near to schools or hospitals. 

A shoutout to all "parkers", its okay to hog the carpark but please leave your name and contact numbers on your dashboard so that other people can contact you, in case you blocked the driveway or some emergencies happen. Be good to others, who knows your car might be burning and no one could contact you? *just joking but please be ethical lah.

6) Eateries and Pasar Malam

*Obtained from uniselife.wordpress.com

This is actually quite subjective as one man's meat is another man's poison. This can actually be a good point for people who love to go for supper and the short distance is perfect for them. But for careful buyers, they will think that those "char koay teow"' can cause their home to have the sort of oily smell and can be bad to their health. *or pleasant smell causing them to be hungry often*

If you look at the aftermath of pasar malam, the roads are usually very dirty and it can potentially causes the infestation of rats and pests. They could be carrying diseases like typhoid fever and that definitely is a no-no for those over-loving parents that cares about their children. 

What are the other no-nos that you would avoid in your property purchase?
Comment below and let us learn together!

W.

Why you should have confidence in property investment?

Take a look at our environment around, no matter you lives in Johor or Penang, look at our society now. Chances are 9 out of 10 people are looking at their cellphones and not talking to each other like we used to do 10 years ago.

Ask your relatives or check out your friend's family tree. Do they have big families living together now? ( Chinese people used to have few families living together in a big house.)

If you are keen on the trends, you can know that the generation nowadays tend to keep to themselves in term of their social life. Most of them are talkative, but only to people they know. They have a lot in their mind but they speak to no one.

As mentioned in this article by Forbes , generation nowadays relied on e-mail, text messaging, instant messaging, or social media to reach others on the job and in their daily lives.

So what does it has to do with property investments?

The big families that used to stay in one house now has to break down into 3 families for 3 houses. Their offspring that most likely doesn't like to talk much would prefer to stay on his own. So he moves out, buying a house or renting one if he can't afford to buy yet.

Demand for houses will always be increasing. Yes, it may be oversupply of house properties in Penang right now, but will the land of Penang become larger over time? Will it enlarge as fast as the population growth?

Believe me, property investments are one of the less-riskier but high-return investments out there, provided that you did your homework well and did not overpay for your property.

Happy learning and investing together!

W.

Guide to Refinancing

Want to Know more about Refinancing?

Refinancing is getting a new mortgage to replace the old one. It is usually practiced by borrower to get a better interest rate.  In this post, we will talk about why and how refinancing works. In this unstable economic state nowadays, it can be difficult for some people to pay the home mortgage on time. When this happens, refinancing can be an option for them. However, it is important to understand it well before doing it as it could actually cost you more than save if you do it wrongly.

There are also other common reasons why homeowners or investors refinance their properties.
The most common forms of debt are home mortgages, car loans and student loans. The borrower agrees to make certain payments based on a rate of interest when they obtain the loans. Terms provide the details of the loan and specify the interest rate, payment amount and payment date(s).

 A common goal is to pay less interest over the life of the loan. Some of the mortgage taken long time ago was more expensive back then (around 8%) , so refinancing with the interest rate nowadays (4-5%) can actually save you up to thousands! 

• The chance to shorten your mortgage loan tenure ( if you choose not to cash out)
• The opportunity to get another cheap property with the cashed out money from refinancing.
• Pay for emergencies ( debts, medical fees for operations and more)
• The desire to convert to a different mortgage product type that they feel can suit them better.

Shortened Mortgage Tenure

By refinancing, you may opt for cash out or shorten your mortgage tenure. For example, you may have 23 years of mortgage left by paying RM800 every month. After refinancing, you may choose to continue pay RM800 every month, but the tenure is now shortened to 20years, which are really huge amount if you calculate that up, plus you will be debt-free 3years earlier by doing basically nothing but just refinancing with the banks.

Cash Out to buy another new property or investments.

 Though it sounds exciting cashing out from your property that has appreciated by 50%, do note that the cash out should be spent on assets, which will generate further income or appreciation.

If you are a seasoned investor and you know what to do with the extra money, cashing out is really a good choice as you can invests it on something else with higher returns or get another property with high appreciation. Be careful with the possible risk of losing that money on bad investments though. 

There are also homeowners who refinance with the purpose of child education, wedding funds, overseas trips, purchasing expensive goods such as furniture, fixtures, cars and so on.

Debt Consolidation

A mortgage loan is cheaper compared to interest rates offered by personal loans or credit card loans. 

Refinancing our mortgage loan to pay off the personal loans could potentially saves a large sum of money in terms of the interest rates. 

For example, if you have a credit card loan that charges you 15 to 18% interests ( which are probably highest among other possible loans ) , pay it off with the mortgage loans as they usually charges you much lesser interest rates ( usually around 5%)  

One thing to take note though, try not to have bad records with paying credit card loans as it will affect your approval rate for mortgage loans. 

Refinance or not?

Refinancing is actually pretty straightforward. If other bank offers you lower interest rates for the same amount of loan you get, by refinancing , you could save up to thousands. Cashing out or shortening the loan tenure is definitely helpful if you know what to do with the extra sum of money.

If you are renting this property out, you may be able to improve your rental cash flow position from a potentially negative to positive cash flow since the monthly installment is lower now.

Do correct me if there are any mistakes. Happy learning and investing together!

W.