12 Steps to Buying a New Home in Malaysia

Are you planning to buy a newly launched house in Malaysia? Here are 12 steps to buy a new house, including the latest government housing plans and offers, the latest housing loan information and house buying strategies, so that you can make a clear choice when buying a house.

1. Understand basic real estate knowledge

You may have received information about Malaysian real estate from your family and friends. But before buying a house, you should learn about the real estate market yourself. At the very least, you should master the basic knowledge of residential property in Malaysia, such as the various types of houses in Malaysia , the Sale and Purchase Agreement (SPA) that buyers should know , other costs of buying a house , and how to identify a good real estate developer .

2. Determining How Much House You Can Afford

To determine how much house you can afford, start by calculating your budget. Financial experts recommend that your total monthly payment should not exceed one-third of your household income. For instance, if you and your spouse have a combined income of RM9,000, your monthly payment should be no more than RM3,000. It’s also essential to maintain a good credit record and avoid defaulting on loans and debts like car loans and PTPTN. If you’re a wage earner, prepare three months of pay slips; if you’re self-employed, have six months of income proof ready. Additionally, you can use tools like LoanCare to check your home loan eligibility with 17 banks in Malaysia. Understanding these factors will help ensure a sustainable and manageable home purchase.

3. Decide Where You Want to Live

Once you know how much you can afford, start exploring neighborhoods that appeal to you. Options range from popular, family-friendly areas like SS2 in Petaling Jaya, Cheras, and Puchong to upscale, green neighborhoods like Desa ParkCity and Mont Kiara.

Visit your desired location to assess transportation convenience, infrastructure, and facilities. Conduct thorough research to ensure the area meets all your requirements.

Tip: Be cautious with newly launched properties. Don’t be swayed by flashy brochures and free gifts. Always research thoroughly and check the blacklist of housing developers before making a purchase.

4. Start Looking for Your Property

When you’re ready to buy, decide on the type of property: condominium, apartment, terrace house, semi-detached house, or bungalow.

Types of Houses in Malaysia

1. Landed Houses:
   • Corner, Intermediate, End Lots: Know the pros and cons of each.
2. Townhouses:
   • Understand what townhouses mean in Malaysia and their benefits.
3. High-Rise Buildings:
   • Condominiums vs. Serviced Apartments: Learn the key differences.
4. Dual Key Condos:
   • Popular in urban areas, offering shared and private living spaces.
5. Bungalows:
   • Once a status symbol, now more affordable in suburban areas.

Consider the Property Title

• Freehold vs. Leasehold: Determine which suits your needs.
• Strata, Master, Individual Titles: Understand the legal implications.
• Bumi Lot and Malay Reserve Land (MRL): Know the differences.

5. If necessary, ask a real estate agent for help!

6. Ensure You Have Enough Down Payment

First-time homebuyers typically pay 10% of the house price as a down payment and borrow the remaining 90% from a bank. For example, if the house costs RM400,000, the down payment would be RM40,000. While many banks offer 90% loans to first-time buyers, the final loan amount depends on the property type and your credit rating.

Tips for Buying a House:

• For newly launched projects, some developers offer 2% to 5% rebates.
• Some projects only require a 1% to 2% deposit, which will be part of the down payment.
• You can also use your Employee Provident Fund (EPF) savings to buy a house.

Planning your down payment effectively will help you secure your desired home.

10. Explore other housing options

Exploring housing options beyond traditional home ownership involves considering alternative ways to meet your housing needs. Here are some options to explore:

1. Renting:
   • Long-term Rentals: Leasing a property for an extended period, providing flexibility without long-term commitment.
   • Short-term Rentals: Using platforms like Airbnb for temporary stays or income through property hosting.
2. Co-living:
   • Sharing living spaces with others, often in urban areas, to reduce costs and foster community.
3. Shared Ownership:
   • Joint Ownership: Co-owning a property with family or friends to share costs and responsibilities.
   • Shared Equity: Partnering with a housing association or developer to purchase a share of a property, paying rent on the remainder.
4. Government Schemes:
   • Public Housing: Affordable housing provided by the government or local authorities.
   • Rent-to-Own Schemes: Programs facilitating gradual ownership through rent payments.
5. Alternative Housing Types:
   • Tiny Houses: Small, often portable homes that minimize living space and costs.
   • Prefabricated Homes: Factory-built homes assembled on-site, offering affordability and efficiency.
6. Investment Properties:
   • Purchasing properties for rental income or future resale, potentially leveraging mortgage financing and tax benefits.
7. Community Housing:
   • Cooperative Housing: Residents collectively own and manage properties, fostering community spirit and affordability.

Each option offers distinct advantages and considerations based on personal preferences, financial capabilities, and lifestyle goals. Exploring these alternatives can provide greater flexibility and affordability in meeting your housing needs beyond traditional home ownership.

11. Hire a lawyer to handle the house buying process

Although the developer is willing to pay the legal fees for the sales contract or loan agreement, it is best to entrust your own lawyer to handle this matter. A lawyer who represents both the buyer and the seller cannot remain truly neutral in the transaction. After signing the sales contract, you can apply for a bank loan from the bank.