Buying property – Renovation

Besides the usual down payment, stamp duty and the lawyer’s fee, home buyer must also realize that there will be other extra charges as well. If you are buying a new or unfurnished properties, chances are you have to prepare at least another RM30,000 for renovation and furnishing purposes.

If you bought it for self-stay , you will need those electrical appliances and furnitures.
If you bought it to rent to others, the renters will only rent it if it has basic furnishing and renovation. They wouldn't want to sleep on the floor or pay to furnishes other's house right?

Adding the stamp duties and other fees like GST( 6% of 500k house means an extra 30k to pay!!), that extra amount could easily come to RM50,000 or higher. New buyers might feel surprised with the fees and could be upset on how to fork out that extra bit of money. You will need those money in full hard cash because no banks would loan for your renovations. Thus, it is important for you to read more and prepare for it before deciding on the property type that you can afford.

There is no need to pay a large amount of money just to renovate your house into a royal palace though, as it probably would not be taken into account by the buyers in future in case if you want to sell it off. *They will not be as valuable as the amount you paid for the renovation*

Getting a renovated/furnished house can be a great choice if you do not want to spend for renovations.

Although it may sound scary now, but buying a property is crucial to adding our net worth and having a safe place for our families. If you have the capability to buy properties, try to proceed with buying at least one as the value of houses will appreciate in the long term. If you made the decision, congratulations as you are now part of the minority which is ahead of 90% of your same generation peers. The only advice here would be to not over estimate your affordability and you will be fine!

If you do not want to pay for legal fees and GST, check out the packages offered here!
Take a look at [ Urban Suites ] & [ Golden Triangle 2]

Happy investing !

W.

Buying property – Lawyers fee & stamp duty

After paying the downpayment for the property, will there be any other fees we need to pay firsthand? The answer is yes, and it is going to be quite an amount. The lawyer’s fee. The fee that you are going to pay depends on the price of the property that you are buying. Factor this in as it could cost near to 5 - 10k (including other fees, which I will talk about in my next post.).

Below are Legal fees & Stamp Duty calculation tables ( Source from www.elawyer.com )

* Do note that those rates are constant and usually are the same for all firms. How do we choose which lawyer firms to appoint then? The difference would be the process fee stated by the firms. And most importantly, some lawyers tend to delay your signing & processing duration, which can lead to one month delay and that is risky for loan procedure as the banks could misunderstand that you are having problems with your financial status.  Which is why, once you found a good lawyer firm, be good friend and stick with it for your next property purchasing!


Back to the topic, this is how you can calculate the extra fees incurred, besides the purchasing price.

As an example, if you are buying a RM500,000 property,
First RM150,000 x 1% = RM1,500
Remaining RM350,000 x 0.7% = RM2,450
Total: RM3,950 for Legal Fees

First RM100,000 x 1% = RM1,000
Remaining RM400,000 x 2% = RM 8,000
Total : RM9,000 for Stamp Duty

Add them up = RM3950 + RM9000 = RM 12950 !

That is 13K extra that you need to consider in ! 
A large amount indeed for us commoners.
It often shocks people as they forgot to think about this. If you are unable to fork out this amount then the whole purchasing & signing agreement can be cancelled so be careful of it.

Good news is, the property market is soft now therefore quite a lot developers are sweetening their sales with free legal fees and others. 
Take a look at [ Urban Suites ] & [ Golden Triangle 2]

Happy investing!

W.

Tips to get loan approved... with better chances.

Having your loan rejected after paying for the deposit of the houses will definitely let you have a headache. Not to mention the sophisticated process of refunding and cancelling the houses that you eyed upon. Unless you are a cash buyer, we all rely heavily on the loan approval for our house purchasing.

Some might be confused why their loan is rejected , or only approved with a low margin % of loan. Here are the tips to help you increase your chances of getting the loan approved. (Not guaranteed though but better chances!)

1) Your Affordability
The banks will definitely require you to submit all the documents such as your payslip and monthly commitments as they will use it to evaluate your ability to return the loans. Check your own affordability with your current salary range before you decide to buy the house. You can also look for financial planners to get a better idea of your current financial status.



2) Don't change your job... too often
Believe me, the banks can search for almost everything on your records. If you happen to jump around companies and could not stay on the same place for more than a year, they will be more reluctant to approve your loan. Reason? You might not be able to find a job on time to repay the mortgages.


3) Have a clean credit record
DO NOT BE LATE to pay off your credit card debts or student loans. They will stain your CCRIS record which can be checked by all banking institutions. If you get blacklisted, even after you pay the debts, it needs one whole year to clean your records off the desk.

You can easily get your CCRIS report from Bank Negara Malaysia or online through CCRIS website.


4) Show them your treasure box
Show them copies of your savings, be it from stock investments or fixed deposits. The more the merrier. Income from your side hustles can also be used in this case. This will put confidence to the banks to approve your loan as you have a lower chances of defaulting on the loan.


5) Get your pre-approved loan offer first
It allow the buyers learn the maximum they can borrow and therefore have an idea of their price range before picking any properties. However, all buyers should be careful to estimate their own comfort level with a housing payment rather than immediately aiming for the top of their spending ability.

Also, it gives you a better standing to negotiate on the property prices as you had already proved that you obtained the loan approval and will be able to buy the house anytime you want.

Having the loan rejected after finding your love-house will give you a lot of heartache. Try to have a consultation with the banking institutions first before you start the home-buying process. Gather up the paperwork or recent bank statements to check with them whether the chances of loan approval are high. 

Happy investing and good luck with the applications!

W.

Are the property affordable for your salary range?

A lot of first time buyers and young adults could be confused that whether their salary could sustain the purchasing of a property in Penang. Some of them worry that the bank would not approve their application for loans while some overestimate their ability to pay the mortgage, which cause them to buy a property out of their affordability level and might lead to bankruptcy later on when they are not able to repay the mortgage on time.

You would not want this to happen as the bank might take back the house and you will lose the money and time you spent on that house.

In fact, there is a simple way for you to check whether you can afford the house or not.

First, list down all your monthly commitments now. (Car loans, Credit card debts, Student loans, Insurance payments, house loans.)

Assuming that you have a monthly salary of RM5000, times that amount by 70% ( 30% will be contributed as your daily allowance on foods,fuels,tols and others.)

RM5000 x 0.7 = RM 3500 are available for use

Checking back your commitments, if you have to pay say RM2500 every month for the student loans,credit cards, insurances or car loans.

Which means the leftover money would be RM3500 - RM2500 = RM1000 per month.

Gross estimation for 30years repayment mortgage would be :

100k of house require ~RM500 per month mortgage

200k house require ~RM1000 per month mortgage

300k house require ~RM1500 per month and so on.

Since you have RM1000 per month for leftover money, it means you can afford to buy a 200k house.

This is commonly the way that banks use to calculate the amount you can fork out each month for loan repayment. 

It is very risky for you to buy any property out of your affordability as it could tremendously affect your cash flows. Banks would also be more reluctant to approve your loan for that property as you have a higher chances of not being able to pay the mortgage on time.

Do the homework well and stay happy investing together!

W.

Am I Eligible for Affordable Housing?

For those who wanted to look for cheaper houses and are first time buyers, there is no pain in trying this scheme offered by the government.

[ Perbadanan PR1MA Malaysia was established under the PR1MA Act 2012 to plan, develop, construct and maintain high-quality housing with lifestyle concepts for middle-income households in key urban centres.

Priced between RM100, 000 to RM400,000, PR1MA homes come in various types and sizes within an integrated community; sensibly designed to suit different household needs. PR1MA is earmarked for development in key strategic urban areas nationwide and is open to all eligible Malaysians. ]

Just go through the balloting process and hope for the best.
Some may think that usually those kind of program would only offer for locations in some "kampung" or "ulu-ulu" place where the property prices can hardly rise. 

Truth is, most of the PR1MA houses are actually part of the selling houses by developers. 
Developers can build 3 blocks of building and allocate one block specially for PR1MA houses.
Can you imagine your neighbour opposite the blocks bought the same type of house with you but maybe few hundred thousands pricier than what you paid for?

Here are some basic requirements to become homeowner PR1MA:
- must be a Malaysian citizen;
- single or married, aged 21 and above;
- individual or combined household income (husband and wife) between RM2, 500 to RM7, 500; and
- possesses no more than 1 property (either applicant or the spouse), if any.

Furthermore, the banks have also cooperated with government to ease the homebuyers in loan-financing issue. They introduced a new loan scheme specially for those having difficulties of paying their houses.

PR1MA Skim Pembiayaan Fleksibel (SPEF) 

 An exclusive scheme for PR1MA homebuyers only. 

The difference between this scheme and conventional bank loan scheme is that homebuyers are eligible to obtain higher end-financing amount with lower monthly instalments through "Stepped-up" financing, where monthly installments are reduced to a lower amount for the first 5 years and will increase to a higher amount for the consecutive years until expiration of the loan.

First 5 years: Interest only

Subsequent years: Interest and principal

Not to mention that it also allows you to pay the mortgage using your EPF second account.

Application for PR1MA houses in different locations have their own application date.

You can check them [Here]

W.