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.

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.

High density condos?

What does high density / low density condo means? Does it affect the prices or your living conditions?  In a way, yes.

Low or high density is considered as a very subjective issues, some may feel that 600units in a block of building is highly-densed while some find it acceptable for them.

So why do some people care whether it is high density or low density? Why some prefer for low density while others go for high density? Below are the "cons" reasons for some of the home buyers

1) Safety issues
For high density : If the probability are 1 rude house owner out of 100units , a block with 600units will have 6 rude house owners. It could be more noisy quarrels , or people who dump their stuff at the hallway just for their convenience.

For low density : Lesser people around, could have a darker hallway and more dangerous when you walk
from your car to your home. Seems more eerie for those staying as a family. 

2) Car park issues
For high density : Almost every house has at least two cars now. Imagine a block with 700houses. Its either you have to park one of your car outside the compound, or take a few rounds turning up the condo's car park everyday.

For low density : Weird enough, same reason as above. Reasons are the developers might build lesser car park as there are lower amount of units in the block. Some could be open car park as well.


3) Selling/Buying issues
For high density : There are always some vacant units for sale so it is harder to fetch a good price for sale.

For low density : Even you liked that location of the block, its harder to find a vacant unit to buy.


4) Maintenance fees
For high density : More facilities are to be provided so there might be slightly higher fee to pay ( but some are lower as there are more people paying the fees)

For low density : Usually the problems are people that do not want to pay the maintenance fee. When its already low density and yet people doesn't want to pay, it will be harder to maintain the cost of the facilities in the condo ( lifts, lights, playground facilities etc. )


As we can see, it is often in contradiction with what people wants. You can say that high density condo is harder to sell for a good price later on, but did you know that means you can buy that unit with a cheaper deal now? Just remember what type of house are you looking for, then go for it.

P/s: High density condo are usually better in price appreciation as the location are usually better and more strategic so the developers will build more units for sale.

Happy investing and stay positive!

W.

Buying a property - Inspecting a condo

Buying property does not just merely buying from new projects. Sub-sale condos are also very common in Malaysia. People who wouldn't want to wait for the new projects can opt for those fully renovated/furnished houses. Most of the time, it is also a risk for buying sub-sale properties as it could have leaking roof, corrupted walls or infested with termites. It could cost us more to repair them compared to buying a new unit.  If we are really considering a secondary condo unit, what should be some of the considerations? Here are 12 inspection tips shared by charles from kopiandproperty.com.my

1) External paint. If the external paint for the condo is totally worn out, I would think thrice. Reason being, repainting the whole condo takes a huge chunk of the reserves from the management fund and not all condos may be able to absorb that or they may resort to a cheap paint job instead which meant repainting is needed just a few years later. A good paint job lasts easily 8-10 years if not more.

2) Facilities. Check the conditions of all the common facilities. Normal wear and tear is expected but if we see the sign ‘ROSAK’ in every single facility that we inspect, I think we have our answers. There’s no need to view the property.

3) Environment. Walk around. Do we feel comfortable? Is the guard house in bad condition without even a proper fan or ventilation system? Are the guards looking old and frail? Are there rubbishes in the compound? Are there way too many foreigners walking here and there? Do note that we have to stay there for a long time. If we do not feel comfortable even from the beginning, how are we going to stay there for years?

4) The corridor leading to the house. Is it dark, without proper lighting? Is the unit at the end of a very long and dark corridor? Yes, in our mind now must be a horror movie setting. If we think perhaps it’s just that floor, then try a few more floors. If just that particular floor, perhaps it’s temporary. If it’s dark all the time, are we sure we want our wife or kids to walk home by themselves through the dark corridor everyday?

5) First impression of the unit. Ceilings should be at minimum 9.5 feet for a proper condo. Anything lower, even if the project is known as a condo, I would only think of it as an apartment and will only pay an apartment price for it.

6) Flooring. Are there signs of cracks? Is it too old fashioned? This is not a deal-breaker. When we find cracks, ask for a discount. Whether we decide to change the tiles or not is another matter altogether.

7) Leaking signs on ceiling. Check for any leaking signs on all ceilings. These can be fixed but it will not be easy. Yes, I have personally fixed 2 different condo units for which the ceiling was showing water leakage signs. Somehow, I managed to talk nicely to the two different owners upstairs.

8) Built in cabinets / closets. Are they in good condition? If it’s in bad condition, better ask for discount as we need to redo them. Even when it’s in a good condition, decide if we like the design or not. Preference is a subjective matter.

9) View from the balcony, if there is one. If the balcony is facing the wall of another block, it is likely to affect our emotions in the long run. If it’s facing a bald hill, there may be potential safety hazard when it rains heavily.

10) Drying area. Unless you are buying a drying machine, ask where will you be drying your clothes. It’s best if there’s sunshine. If there are none, perhaps drying machine is a better choice than to have clothes which smell. It does not matter that the sun shines into the living room. That can be solved with a good curtain.

11) Room layout / arrangement. Is the master-room too small? Are there way too many unnecessary corners? Can we shower comfortably where size is concerned? Is the layout to our liking? Remember, we would be using it every single day.

12) Cooking arrangement. For those intending to cook, can we cook freely without making our home oily, smelly, and dirty? Are there separate wet and dry kitchen areas?

When we buy units from new projects, it could be risky as well since we could not view the unit before buying ( just pray for the developer to be good and responsible ). For secondary market we have the advantage of viewing the unit first before buying. Any unsatisfied points and we can move on to the next unit. We paid for it, we should get whatever the value we paid for. 

Happy learning and investing together!

W.

Buying a property - Considerations

Everyone have their own reason on picking the properties that they wish to buy. The same block of property might be close to work for you, but far for others. Determine the considerations well before deciding on which location to buy. For me, I will look for properties near to my parent's house. I would rather travel a longer distance everyday to work so that I can enjoy the great foods by my mum. So, what are the general considerations to make before buying a property then? Do remember that those are just part of it and you may have more considerations to make!

1)  Convenience.  
Buying a property that is cheap but far away from the facilities needed are actually quite problematic. Imagine you have to travel 1 hour everyday to work, driving 30 minutes just to find a convenience store and buy some drinks, no foods nearby when you are hungry. By convenience, it would actually meant a location which has the most of all that you need within 15 minutes. Foods,schools,hospitals,supermarkets, government workplace (my place has the immigration office and KWSP nearby), banks will also be an added advantage when you try to sell the property later on. The convenience of getting to your workplace shall be a last consideration as you might be changing jobs later on, buying a new property whenever you change a new job is kinda..... well you know what I meant.

2) Neighbourhood. 

Landed or not, drive around that area first and survey before you buy the property. Usually Malaysians will label certain area as "Malay Kampung"  , " Cina tempat" or "Indian area" ( not to be a racist , its just that certain ethnics love to stay together, they feel closer) so check well or else you might be awkward joining in their group ( but of course they can be lovely neighbours too! )

If you can see some suspicious motorcyclists moving around or the housing area is too creepy (broken streetlamps, bad shape of playgrounds, no police patrols the area) then don't consider the house. It is important as you might have to live here with your families for the next 30 years. Protect your family members. Cheaper does not mean everything. 

*A good reminder from kopiandproperty.com , check the drains! make sure its not clogged or the area will be full of mosquitoes! (aedes might be included!)

3) Connectivity. 

Buying a house in some "ulu-ulu" places will be a headache. Butterworth is really a good place to stay in. Move out of the area and you'll be on the expressway 5 minutes away from the Penang Bridge. That is really convenience to go and forth between island and mainland. For now, you can even look for property with future MRT/LRT/Monorail routes nearby as their prices would definitely appreciate further. To see what I mean, you can search online for the prices of property next to a public transport station. They usually have a premium of 10-20% higher than common houses.

4) Condition of the property
If the seller is giving you the price tag, check out whether the house is worth the price. Are the house new? renovated? or unfurnished?  Does it have problems of water leakage before? Are the external paints peeling out? Do you have to renovate it again once you bought it?

Although sometimes the property is not worth price , but there is no need to argue with the seller over it. Just do the calculation for him/her. Painting the wall, changing the window panels, old fans, floortiles , kitchen sinks can easily reach out to RM20K and above. Ask for a discount politely. 

5) Property price.  
If you are not sure whether the seller is giving you a market price, premium price or discounted price, ask for a professional help. Look for registered property valuer and determine whether the property is worth the price. Of course they will take a certain fees but it will definitely worth it if you are buying a 500k worth house with a price of 450k right? The professional can also tell more easily whether the seller are in desperate need of financial aid so that you can pick up the "durian runtuh"

Find professional valuers at iproperty.com.my

6) Developments nearby

If you are buying a seaview condos for the beautiful sunset, you don;t want a high-rise building to block your view after 2 years right? You paid a premium for the sunsets! Ask the real estate agent whether there are any other land developments nearby. Ask what will be built around here if its a vacant land. 

But thinking at the brightside, if it doesnt affect you much, the development of nearby area would possibly bring up the prices of your property as well. As the area develop, more people will move in , causing house demand to rise. This is also a good consideration to make before buying a house. Move in an area before it becomes fully developed and price is on the climax. Imagine buying a house around KLCC now. It can easily cost more than double for the same type of property in Penang mainland. 

There are a lot more considerations to make when everyone is buying their own properties. If you are a first-time buyers, it is of utmost importance for you to know all of those before you buy one. If your first buy is not good, you might be scared to get your second house in the future. And that is bad if you want to increase your net worth and investing well for financial freedom. Continue to read this blog and let us learn to invest together!

W.

Buying property – How Much Am I Able To Borrow

How much will you be able to loan from the banks? It is so important that it can decide what type of property you can buy. (Unless you are cash buyer then i nothing say lah). Know your maximum loan affordability first so that you will not waste your time for checking,choosing,signing and getting disappointment at the last moment as the bank does not approve your desired amount of loans. 

Salary does play a major role in deciding the amount of loan you are able to borrow as that will be how easily you can pay back the loan, but there are also more factors that could affect your eligibility for the loans!


Below are the factors listed in an article [How much you can borrow] from www.loanstreet.com.my

1. Your Debt Servicing Ratio (DSR) – DSR is a percentage of the debts you are servicing over the income you earn (DSR= commitment/income). Different banks will have different methods of determining your DSR despite it being based on the same information that you provide. To find out more on your DSR, you can read the article How Much You Can Borrow Based On Your DSR.

2. Risk Profile – Other than your credit records, banks would assess your creditworthiness based on many things which could include your job stability, spending habits and etc. The likelihood of defaulting which is your inability to pay off your debts or service it (pay interest) is an important factor when you’re borrowing a mortgage loan.

3. Value Of The Property – Properties that are on the market can be overpriced and so banks need property valuators to confirm that the property you are applying a loan for is worth the money that you are paying for. This is done because in the event of your default, the banks would still be able to recoup the amount you borrowed by reselling it back into the market.

4. The Maximum Loan-to-Value (LTV) Ratio Or Margin Of Finance You Can Access. – Commonly, 90% LTV ratio can be anticipated on a Malaysian residential mortgage loan. But if you hold more than two existing housing loans then the LTV ratio on the following housing loan is lower and is capped at 70%. Meanwhile, LTV ratios are even lower for foreigners as these are restrictions to those that have less attachments to Malaysia.

5. Age – Loan repayments period is usually up to 35 years from the first day of your loan or until you’ve reached 65/70 years of age (depending on the bank), whichever occurs first. A younger person (e.g. 21-25 years old) might have a higher chance of getting the house loan approved compared to somebody in their 60s.

6. Number Of Dependants – The number of dependants affects your eligibility because they will be spending portions of your income. It will also affect your capabilities to pay off your housing loans. If you’re a husband that has a housewife and five children dependent solely on your salary it may raise a concern with banks.

7. Your Joint Applicant(s) – The housing loan which is supposed to be borne by you and your joint applicant(s), thus banks will access them to judge your joint creditworthiness before approving the loan. Your relationship with the co-applicant may also matter, it is less likely for parents and children or spouses to have disputes compared to other type of relationships such as siblings or friends.

8. Nature Of Business Or Profession – This information will help banks determine whether your have a stable income. People with full time, fixed salary paying jobs are considered as more stable. As opposed to those who own their own business, which is considered less stable as there is no job security and as their income is not fixed.

9. Past Relationships With Banks – Applicants who are loyal customers of the bank they are applying to may have an added advantage. But if you’re not, it’s not a concern as long as you do not have significant conflicts with any of the banks (e.g. CTOS or blacklisted from banks).


Although those factors decides the loan amount that you can borrow, it usually does not include the payment for documentation fees such as S&P agreement signing or stamp duties. Do remember to consider the extra amount of cash you need to prepare when purchasing a house.
If you are not sure of the estimated amount , look here :
[ Buying Property - Legal fees & stamp duties ]
[ Buying Property - Renovation ]

Happy investing and stay informed!

W.

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.

Approval of Penang Transportation Master Plan

Months ago, Penang executive council gave the green light to the ambitious Penang Transport Master Plan (PTMP) project’s delivery partner SRS Consortium Sdn Bhd to work on mitigating the traffic congestion by 2030. The total proposed cost is around RM46 billion and covers the cost of the railway and highway which also included three major roads and an undersea tunnel project.

Just few days ago, Penang government announced that a sum of RM17 billion from an estimated total cost of RM46 billion for the Penang Transport Master Plan (PTMP) project has been approved.

Penang Chief Minister, Lim Guan Eng says that “The TMP is an ambitious ‘big-bang’ approach towards facing the biggest challenge of both traffic congestion and public transport by adopting the approach of “moving people, not vehicles”.


How does PTMP change the property landscape in Penang?
Without any doubts, the highlight of the PTMP will be the LRT and monorails in Penang. As part of the state government’s effort to overcome traffic congestion, the LRT and monorail projects in Penang is approved. Penangites will now be able enjoy better public transport with this approval.

The railway scheme covers both the island and mainland, with one LRT and two monorail lines on the island, one LRT line across the sea linking both sides of Penang, and a bus rapid transit (BRT) system.

Local government exco member Chow Kon Yeow said the priority for the railway scheme will be the light rail transit (LRT) line linking Komtar in the city centre of George Town and the Penang International Airport in Bayan Lepas. This project, he said, would be Phase One of the railway scheme and treated as a priority project. The Phase One construction of the LRT is expected to start in 2018 and take 6 years to complete.

To look at the planned map for the LRT routes, click here.

What does it has to do with us? Well, it means those property on the routes of LRT/Monorail will further appreciate as they provide more public transport benefits. One can even give up buying cars and go to work by LRT/Monorails like KL people.

Penang is very much similar to Hong Kong. The land of Hong Kong has appreciated so much that even parking a car cost HKD 25 per hour! Park there for a day work and you will need to fork out HKD 250 ( ~RM130! ) just for the parking fee! I certainly hope it would not happen to our beloved Penang. Invest well before the time comes.

Happy investing and look at the proposed map!

W.

Reasons to get your housing loan rejected

Continuing yesterday's "tips to get your loan approved more easily" , today we are going to look at the reasons why loan application gets rejected. Although there are news saying that it is about 50% of applications of house loans getting rejected , but statistics have shown that in 2016, the Association of Banks in Malaysia actually has a approval rate of 73% on housing loans. This is definitely a good news for every home-buyers. So what makes you get into the other 27% of the majority?

Those applicants that failed to get the loan approve are due to the reasons as below:

• Debt service ratio (DSR) – Knowing the ratio of your debt to income is important and key in getting your loan approved. This is a formula used by banks to evaluate your affordability level. ( Formula : [Total Commitment + New Application] / Net Income ).   This has become the most common rejection reason for housing loan applications.  Different banks have a different DSR cut-off or capping (eg: 60%, 70%, or some even up to 80%).

• Stained credit score – Central Credit Reference Information System ( CCRIS ) report shows the records of the applicants. If the credit score is lower than expected by the lender, high chances are the application will get rejected. It is crucial for you to repay all your other mortgages on time (car loans, student loans, credit card debts) as they will stain your clean record and stay there for at least a year if you ever delayed the payment. 

• Bankruptcy – Once you go into bankruptcy, the record is going to stay in your CTOS permanently. And the lenders will give a frown at your loan application. Most banks are highly alerted once they get to know your "blacklisted" status, even after you are no longer bankrupt.

• Incomplete required documents or submit wrong documents - This is actually the 2nd popular reasons for getting the application rejected. Please check the required documents well and prepare everything. 

• Income insufficiency or instability - If you have been changing jobs in the recent years, there are chances that it could affect your score for the housing loans as they deem you to be unstable enough to repay the mortgage on time.

• Apply loan within the period of employment less than 6 months - same reason as above.

When you are having a large amount of debts or monthly commitments on hand, it is advisable to plan your finance well before you proceed to purchasing a house. Write it down in a proper paperwork so that you can show it to the banks that you are doing a good job in managing and reducing the debts. It boosts their confidence to approve your loan applications.

If it helps, its worth it.Happy investing and stay happy!

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.

What phase is the property market in now?

Purchasing property can be a mischievous, but definitely rewarding, investment. The property market is influenced by supply and demand, approval rate of loan , and the health of the Malaysia economy, all of which are constantly fluctuating. Investor or home buyers, paying for a property , regardless of size or location, is a substantial investment, therefore it is important to understand the current trends affecting the market.

According from TheStar news, "The excess in supply of residential properties is expected to clear in three to four years, paving the way for a recovery in the property market, says housing industry experts.

The new National Information Property Centre (Napic) 2016 report shows that the incoming supply of residential properties has inflated to 94,124 units, compared to 82,837 units in 2015. 

Incoming supply refers to those properties undergoing construction work to be completed in three to four years. The incoming supply figure looks alarming at first glance. In actual fact, however, about half of the amount has been sold."

Read more at [Residential supply expected to recover in 3years.]

In the news, it is also mentioned that the number of unsold completed projects in Penang has doubled over the years adding on with the pressure of more new launched projects.
The residential supply has been overflowing and the demands are not that high due to the financial pressure for this few years ( especially the drop of Ringgit ). To the good news, the analysts did mention that if foreign funds does not move into the market, the pricing of the unsold houses will probably go into a correction in the next few years.

What would this mean?  

The supply of houses is too much compared to local demands, and the prices will reduce to ensure all the completed project units are being sold before launching more new projects. Definitely a good news for all of us, investors or not. The houses will become slightly more affordable and a good chance for you to step into the boat before it launches into the sky again.  

And what comes next after the price reduction? Appreciation! It is always a cycle, wait for the timing and invest with a good strategy!

The property market is now undeniably in a consolidation state where there are good opportunities there for people to invest. New projects with an advantageous location or connectivity and those delivered by reliable developers will continue to attract buyers as they tend to appreciate much in the long run.  

W.

Right strategy, Right Choice

“You can never go wrong investing in property as long as you know the strategy,” - Dato’ Sri Gavin Tee.

If we could not identify the correct strategy to kick-start our investment plans, it could cause us to take longer years to achieve the fruitful taste of compounding interests.

In terms of property, investors or home-buyers pick their choice of properties base on their needs and dreams. Be it terrace,flat,condo,bungalow or even a longhouse, what factors can they look for to prevent risk of getting a worthy house?

1) Look at the house developers
Do they have good reputations? Search for their company online. Check their record of qualities. Be alarmed if there are any past cases of delayed handling of key, leaking roofs after a few years, bad air flow designs and more. This is of utmost importance if we are a first time home buyer as we tend to expect a timely delivery of house key and move in. And we sure don't want to pay few hundred thousands and get a leaking roof a few years later. Do the homework first.

2) Location checking
There are some who bought the houses first and asks the agent afterward "why you did not told me about the graveyards nearby? why you did not notify that I could smell the filthy landfills up in the morning? " Do not expect developers and agents to explain everything to you. Start asking when you first looked at the house and they will answer everything you need to know.

Also, well-planned township in locations near to future MRT stations providing accessibility and connectivity with certain hot-spot areas will be a good choice. They attract long term buyer and tenant demand.

Take into account of the area's safety awareness level and facilities of the townships as well.

Especially if you expect the house to appreciate much in the future.

3) Price check on nearby buildings.

Given the current economic climate, it is a buyer’s market. They can look at different locations before deciding which to buy. Thus, developers become very competitive with their project packages and nett prices. As an investor or home-buyer, it is a precious moment to look for good buys in the market now and take advantage of the attractive packages, discounts and other incentives that are being offered. Definitely a must-do if you are looking for a sub-sale property as the market sentiment has already dropped to a quite negative point where people could let go their properties in a cheap price to meet the ends of their financial flow.


During tough times, buyers must focus more on the records and reputations of the developer to deliver the project on time with good satisfaction. It is crucial that they will also be able to follow up with the promises of amenities and facilities as well. A good management of the block will definitely increase the rate of price appreciation as time goes. Make sure that our money does not go to the wrong investment.

W.