Buying a house is one of the most exciting experiences of your life. There are so many things to think about that sometimes the financial aspects get a little tedious and decisions can easily be made without considering all of the facts.
This section on buying a house is set out to help you through the financial complexities by highlighting some of the facts you may need to consider.
The total amount that you can borrow is determined by the four factors as stated below:
1. Value of the property you intend to buy.
2. The funds available for the payment of Initial Purchase Cost.
3. Your income and existing financial commitments.
4. Your monthly loan instalments and other commitments (example: car loan, personal loan etc.) should not exceed one-third of your monthly salary.
• Your Down Payment
- Generally, you have to pay a booking fee of 2% - 3% of the purchase price and this is usually non-refundable.
- Normally, the bank will finance up to 90% of the property price. You will need to pay the balance of at least 10% for the down payment.
• Sales and Purchase Agreement
- You will need to pay another 7% - 8% of the purchase price when signing the Sales and Purchase Agreement, bringing the total down payment to 10% of the purchase price.
- Thereafter, you will usually have 3 + 1 month (i.e. 3 months to pay up the balance or secure financing and a 1-month extension which is subject to 10% per annum interest on the balance due).
- If you are buying a property under construction, the developer will appoint a lawyer to draw up the Sales and Purchase Agreement. Your financing bank will then deal with the developer directly.
- If you are buying a completed property, you will need to appoint a lawyer to advice and act on your behalf when signing the Sales and Purchase agreement.
• Insurance for your new house
- Fire Insurance policy is compulsory and required by the financing bank to protect your property against damage due to fire. Click on General
Insurance for more details.
- House Owners’ Insurance policy though optional but is very common nowadays amongst homeowners to protect their property or assets against burglary and so on. Click on General Insurance for more details.
• Monthly installments
- Make sure you settle your monthly installment on time to avoid late payment charges.
• Other expenses
- Other expenses for house renovation and home furnishing should take into consideration.
• If you are buying an apartment/ condominium, you will have to pay for the following:
- Monthly service charges or management fee.
- Deposit for utilities (ie: TNB, JBA, Indah Water, telephone charges etc.)
- Assessment (twice a year)
- Quit rent (yearly)