Being able to afford a home that solely belongs to you is a dream come true for many. A home is a personal space that shelters us from the world, but unfortunately, owning a home is often a luxury that comes with trade-offs that are heavy on the pocket.
However, instead of resigning to what may seem like a miserable fate, let’s go through some concepts that you can leverage on, in order to help ease the burdens and reduce the costs of owning a home in Malaysia!
After all these years of painstakingly saving up for a house, you’ve finally managed to see some light at the end of the tunnel. However, you’d be disappointed to find out that owning a house isn’t as straightforward as paying a one-time fee. You ought to take into consideration the costs of extra charges such as the stamp duty, legal fees and government tax fees – but more on that later.
All in all, these extra fees add up slowly but surely to your expenses, but thankfully, most banks in Malaysia offer loans whereby approximately 90% of your property’s price is covered within. This gives you the option to pay for 10% of your property’s price upfront, and gradually pay the remaining 90% in the form of bank loans. Assuming you’ve got your eyes set on a RM500,000 terrace, you technically only need to fork out RM50,000 as a down payment to secure the purchase!
Now that you’ve ensured the safety of your finances, it’s time to factor in the 90% loan you’ve taken from the bank. Loans usually require monthly payments, and depending on the duration of the loan, the amount payable for your monthly instalment will vary.
As a general rule of thumb, the longer you take to finish paying for a loan, the more expensive the loan will be. This is due the nature of interest rates, which tend to build up higher the longer you sit on it. To be safe, ensure that the amount payable for your monthly instalments are healthy for your monthly income. The worst thing you could do is to pay for something you can barely afford!
Credit: IQI Global
Housing schemes are programs aimed at helping homeowners secure a place to call home. In Malaysia, there are a handful of housing schemes and they each have different sets of criteria and requirements. Here are some of the more well-known schemes available to Malaysians:
My First Home
For first-time homebuyers who are Malaysian citizens, with a maximum monthly income of RM5,000. Provides up to 110% financing.
For homebuyers who are Malaysian citizens aged 21 and above, with a minimum monthly household income of RM2,500 and a maximum monthly household income of RM15,000. Applicants cannot own more than one property. Provides a Rent-to-Own scheme and exemption from stamp duty.
BSN Youth Housing Scheme
For first-time homebuyers who are married Malaysian citizens aged between 25 to 40 years old, with a household income below RM10,000. Provides a 105% financing, 50% stamp duty exemption and financial assistance of RM200 per month for 24 months.
Cost Breakdown of Upfront Fees
Down Payment – 10% of property purchase price
Real Estate Agent Fees – 3% of property purchase price
Stamp Duty (MOT) – 1% to 4% of property purchase price
Stamp Duty (SPA) – 0.5% to 1% of property purchase price
Stamp Duty (Loan Agreement) – 0.5% to 1% of property purchase price
Mortgage Insurance (MRTA/MLTA) – Undetermined and subject to change
With these costs in mind, assuming that the property purchase price of the house you’ve set your eyes on costs RM500,000 – these miscellaneous fees would add up to be approximately RM95,000.
It’s always a wise choice to scout for homes that are affordable and within your financial capabilities. A beautiful piece of property is definitely tempting, but let’s not enable emotions to take hold of a life-changing decision as that often ends up in ruins!