If you plan to buy a house in the not to distant future, you’re extremely fortunate as the majority of Malaysians these days actually struggle to own a home. Buying a house is a large investment, and it requires careful financial planning.
It’s always a good idea to only buy a house if you can afford to pay the monthly loan repayments, as well as the maintenance bills. Here are the main financial aspects you’ll have to cover upon buying a house:
1. Down Payments
The normal minimum down payment for any property is 10% of that property’s selling price. However, some people are able to put down only 5% as the banks agree to increase their margin of finance ( that is, their housing loan) to cover 95% of the cost of the house. The more down payment you put down, the less your loan will be. This down payment will have to be paid upfront during the house buying process.
2. Legal Fees
To be clear, when you buy a house, you’ll have to deal with two sets of lawyers. One will be managing your Sales and Purchase Agreement between you and the property vendor, while the second lawyer will be managing the housing loan agreement between you and the bank. This means you’ll have to pay them separately.
Legal fees will also cover things like Stamping duty, disbursement fee, 6% GST and reimbursements for land search and other tasks. Each of the legal fees will be about 2.0-2.3% of the value of the property. This means you should budget about 5% of the value of the house for your legal fees.
3. House Valuation
While the bank is processing your loan, they need to perform the valuation of your home and this will be done by an independent property valuation firm which you’ll have to pay by yourself apart from the legal fees. The fees depends on the size of your property, and will be about RM 1.10 to RM1.30 per square feet. Therefore an apartment that’s about 950sqft will have a valuation fee of about RM1000.
4. Home Renovations
Whether you’re moving into a subsale house or a brand new one, you’ll need to do at least the basic renovations. The minimum fixtures you’ll have to add in will include curtain railings, lights and ceiling fans, as well as safety grills if the home is landed.
You’ll definitely also find little things around the house that are fixer uppers, like peeling walls, leaky pipes, broken tiles and such. Set aside at least RM 1500 to RM 2000 for these small repairs. Major renovations can cost anywhere from RM 5,000 to RM 50,000 and usually this involves installing kitchen cabinets and renovating the toilets, or redoing the flooring. Major renovations can be done gradually even after you’ve acquired the house.
5. Moving In Costs
When you move in, you’ll have to contact Tenaga Nasional and water bodies like Syabas to connect these utilities. Once you start an account with them, you need to pay a deposit. Tenaga Nasional for example, charges RM700 plus as deposit while water companies will charge less than RM100.
In addition to that, you’ll have to ensure that you pay other bills like Indah Water and taxes like quit rent. If you’re buying an apartment, you’ll have to budget to pay your maintenance fee for the month too, which can range anywhere from RM 100 to RM 500. Let’s not forget that you’ll have to hire a moving van and movers if you need to as well.
Buying a home will require some serious financial commitments and planning, so saving up is the best option so far. If you need any renovators, movers, plumbers, electricians or anyone to help you in your new home, just contact professionals here at Kaodim!
written by Michelle Chee