Buy A House Part 1

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Are You Financially Ready To Buy A House In Malaysia?

For aspiring Malaysian home owners, here are 3 things to determine if you’re financially ready to undertake this life-changing endeavour:

1. Do you have enough for the upfront costs?

Most banks offer home loans of up to 90% of the property’s price (margin of financing) for your first 2 residential properties. So you’ll need to prepare a 10% down payment to cover the rest of the price.

2. Do you have extra cash for miscellaneous fees and charges?

Buying a home takes more than just the deposit and the loan. It also involves a list of other charges that include:

Stamp duty for the transfer of ownership title (also known as a memorandum of transfer or MOT) Stamp duty Fee 1% : For First RM100,000 Stamp duty Fee 2% : next RM 400,000 Stamp duty Fee 3% : next RM 500,000 Stamp duty Fee 4% : on subsequent amount
Sale & Purchase Agreement (SPA) legal fees For The First RM500,000.00 – 1.0% (Subject to a minimum fee of RM500.00) For The Next RM500,000.00 – 0.80% For The Next RM2,000,000.00 – 0.70% For The Next RM2,000,000.00 – 0.60% For The Next RM2,500,000.00 – 0.50%
Stamping for SPA Less than RM100
SPA legal disbursement fee Ranging between RM 1000 – RM 1500
Loan agreement legal fees For The First RM500,000.00 – 1.0% (Subject to a minimum fee of RM500.00) For The Next RM500,000.00 – 0.80% For The Next RM2,000,000.00 – 0.70% For The Next RM2,000,000.00 – 0.60% For The Next RM2,500,000.00 – 0.50%
Stamp duty for loan agreement 0.5% of loan amount
Loan Facility Agreement legal disbursement fee Ranging between RM 1000 – RM 1500
Valuation Fees for Completed Properties First 100,000 – 0.25% Residue up to RM 2 Mil – 0.20%
Government tax on legal agreements 6% of total lawyer fees
Bank processing fee for loan RM50 to RM300

*Note: The percentages are based on recommended numbers and industry averages. Actual figures may differ.

Here’s what your major initial costs could look like:

Purchase price Down payment (10%) SPA legal fees Stamp duty on MOT Loan agreement legal fees Stamp duty for loan agreement Total
RM300k RM30,000 RM3,000 RM5,000 RM3,000 RM1,500 RM42,500
RM400k RM40,000 RM4,000 RM7,000 RM4,000 RM2,000 RM57,000
RM500k RM50,000 RM5,000 RM9,000 RM5,000 RM2,500 RM71,500
RM600k RM60,000 RM5,800 RM12,000 RM5,800 RM3,000 RM86,600
RM700k RM70,000 RM6,600 RM15,000 RM6,600 RM3,500 RM101,700

Home Ownership Campaign (HOC)

Home Ownership Campaign (HOC) 2019 is a Government initiative whereby Malaysian house-buyers will be exempted from stamp duties for purchase of residential units made between January to December 2019.

Subject to Stamp Duty (Exemption) (No. 2) Order 2019 gazetted vide P.U. (A) 81 on 19 March 2019 and Stamp Duty (Exemption) (No. 3) Order 2019 gazetted vide P.U. (A) 82 on 19 March 2019, stamp duty exemptions are given for residential properties which are sold during the period between 1 January 2019 to 31 December 2019.

The stamp duty exemption is applicable to the following in relation to the purchase of residential property by an individual Malaysian citizen:

Instruments of Transfer

House Price Stamp Duty
(1 January 2019 - 31 December 2019
First RM100,000 Exempted
RM100,001 - RM500,000 Exempted
RM500,001 - RM1,000,000 Exempted
RM1,000,001 - RM2,500,000 3%

Instruments on Securing Loans

House Price Stamp Duty
(1 January 2019 - 31 December 2019
Up to RM2,500,000 Exempted

3. Can you afford the monthly instalment?

Based on the current market rate of 4.5% p.a. interest for a standard home loan and a 10% down payment, here’s how much you pay in monthly instalments:

Monthly instalment (based on 4.5% interest rate, 35-year tenure)

Purchase price Down payment (10%) Monthly instalment
RM300,000 RM30,000 RM1,278
RM400,000 RM40,000 RM1,704
RM500,000 RM50,000 RM2,130
RM600,000 RM60,000 RM2,556
RM700,000 RM70,000 RM2,982

Most financial experts recommend that you allocate no more than one-third of your total income to pay off your home loan, this means you or your household should have an income of at least RM6,390 per month to afford an RM500,000 home.

Start off by using Hong Leong Bank’s home loan calculator, you can easily calculate your loan eligibility and your monthly repayment!

Taking the leap to become a home owner is a major financial milestone. Find out available schemes to help you own your home.

For more ways to DuitSmart and get in better financial shape, go to www.hlb.com.my/duitsmart

This article is brought to you by Hong Leong Bank in partnership with iMoney.my.

Disclaimer: This content is for informational purposes and use only. It does not constitute and is not intended as financial or investment advice. You are encouraged to consult with competent accounting, financial or investment professionals based on your specific circumstances and needs before making any financial or investment decisions. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information. Figures and pictures, where used, are for illustration and explanation purposes only.