GUIDE TO OWNING A HOME
1. How much is your budget?
2. The preferred location…
3. Choosing your dream home
4. Search for the most attractive housing loan package
1. How much is your budget?
You may have a dream home in mind but it must fit your budget. Bear in mind that the bigger you allocate for your desired property, the higher your commitment level in servicing the loan. Therefore, points that you need to consider:
* Work out a budget to determine how much you can afford.
* As a guide, your monthly commitments on monthly instalments for your house, car and other payments should not exceed 1/3 of your gross monthly household income.
Example:
Gross monthly household income = RM4,800
House/Car/Insurance/etc = total should not exceed RM1,600
* Your source of funding can come from:
i. savings
ii. withdrawal from Employees’ Provident Fund (EPF)
iii. loan facility from a financial institution
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2. The preferred location…
Buyers would usually know which location they would want to live and raise a family. The location is generally close to work, close to friends or family, or it could also be as a status symbol.
An appropriately good neighbourhood would have the basic things that most people require, to enjoy a more fulfilling lifestyle. They are:
* Low crime rates
* Appreciation in property value
* Good school districts
* Well-planned infrastructure
* Basic amenities
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3. Choosing your dream home
Below are some points you should have in your checklist before choosing your dream home. They are:
i.
A purchase price that is affordable to your budget and relative to the property
ii.
Buy a home that you can sell at a profit
iii.
What are the requirements that you need for your dream home? List them down
iv.
Call a real-estate agent who can advise you on your choice of location
v.
Visit properties that are on sale for comparisons. Do not make a rash decision as it will be a long-term commitment
vi.
Read through the classified advertisements in the papers for existing properties to make comparisons on specifications and market price
Some points that you should note before making your choice:
i. Sale and Purchase (S&P) Agreement
a. Property under construction
the developer would usually appoint a lawyer to draw-up the S&P Agreement. Thus, lawyer fees will be waived or has been included in the property purchase price.
b. Completed property
You would need to engage a lawyer from the start until transaction is completed. The lawyer should be able to advise and act on your behalf when signing the S&P agreement and making payments.
And, try to engage a licensed inspector to help you evaluate the condition of the property, give you sound advise on the environmental condition of the area, check for wood-damaging insects and other relevant issues.
ii. Insurance
There are many types of insurance for properties and the contents of the property. However, the most important insurance that you need to purchase is Mortgage Reducing Term Assurance (MRTA), which ensures your home will be paid for in full should anything happen to you. Therefore, your family is assured of a place to stay.
Developers would usually have their panel of insurers. Thus, your annual premium can be included in your loan amount.
iii. Stamp duty and Legal Fees
Be prepared to pay higher for your S&P and loan agreement. However, some banks do absorb this cost, as an added value to the housing loan packages. Therefore, make sure you look for a loan deal that suits you best.
iv. After handing of keys
Some extra amount you have to add to your budget after buying that dream property:
•
The monthly service charge (if you’re buying an apartment/condo unit)
•
Deposit for utilities (electricity, water and telephone line)
• Assessment (twice a year)
• Quit rent (annually)
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4. Search for the most attractive housing loan package
Just to ensure that you can get the most out of the information for that property you are eyeing, try to get familiar with mortgage terms and talk to some banks on their housing loan promotions. Be sure to also look into your personal credit so that you can be comfortable on an amount you are willing to spend on your dream property.
