We have all hear that house rent costs will add up to actually buying a house in the long run. It’s simple math but there are so many things to consider before taking the plunge and committing to a 30 year house loan. Here are some 101 details you may need to consider before buying a house….
If you are going to buy a house, remember the 10% down payment rule!
This is when things get complicated, majority of the time there is a nice small place located at awesome areas which may seem super affordable but don’t be fooled, there are more cost involved in buying an already completed property than a new development.
The 90% loan applies to everyone and regardless if it’s old or new, you can only get a maximum of 90% loan based on the price of the property.
New developments have first dibs discount but you gotta wait a couple of years. Existing properties however don’t have any discounts what so ever. So even if you find a sweet deal in Subang Jaya for say Rm500,000, be prepared to cough out 10% of the valued property in cold hard cash.
DON’T FORGET ABOUT SPA ….and the Stamp Duty, and Disbursement Fee comes about 3%-4% of the Purchase Price
Bet you thought spa was going to be something relaxing, well unfortunately when you buy any property you are required to have a sales and purchase agreement.
~Haiyaaa want to buy house and give the owner money also got to pay money to make agreement.
YUP! It is a necessary document to protect both you and the seller, pretty much an agreement on the payment terms, the assets details and all the things needed in case anything happens in future which requires referring back to the promised settlement.
You’ll need a lawyer to prepare the SPA and no you can’t simply do it on your own. Estimated to cost will be in the range of 3-4% of the purchase price.
Let’s also not forget, loan documentation Lawyer Fee, Stamp Duty and Disbursement Fee comes to 2.50% to 3.0% of loan amount..
Remember the 90% loan which home buyers will need to approved before purchasing a house, well there’s also extra payments to that. Since, this will involve another agreement, the cost of preparing this agreement is about 2.50% to 3.0% of loan.
P/S : Most banks will allow a borrower to finance their Loan Documentation Lawyer Fees with the loan to lessen the financial burden of the borrower.
There is also a thing called Valuation Fee !
When people tell you, some things in life are priceless, they were obviously not home buyers cause when you are going to buy a house. You have to get a formal valuation, which will be submitted to the bank to approve the requested loan amount.
The valuation fee is about 0.30% of the property value.
Last but certainly not least…Bank processing fees.
It may set you back about Rm100 to Rm200 depending on your loan package.
So how much does all of it really add up to, let’s do some quick math!
- 10% Deposit : RM600,000 x 10% = RM60,000
- SPA Lawyer Fee, Stamp Duty and Disbursement Fee : RM500,000 x 4% = RM24,000
- Loan documentation Lawyer Fee, Stamp Duty and Disbursement Fee : 3% x RM450,000 = RM18,000
- Valuation Fee: RM600,000 x 0.30% = RM1800
- Bank processing Fee : RM200
Total : RM60,000+RM24,000+RM18,000+RM1800+RM200 = RM104,000.
WAHHHH CAN BUY TWO MYVI WITH THAT!
That is just a few things you need to know before buying a house. We suggest renting a house first until you are really ready to commit to be responsible for paying for a house. It literally is a 30 year commitment, it’s gonna be sticking around longer than most Hollywood couples.
There is always choices and advantages to renting a house and paying for rent is going to be way cheaper than actually paying a full housing loan.
Still not ready to take a leap of faith to purchase a home? Don’t worry you can still afford to rent a condo, rent a house or even rent a room. House rent will definitely be easier to manage in comparison to taking a loan for one because you will already know your budget and if the budget changes over time, you can just find another home to rent which suits you better.
If you are looking to rent a home but your having a hard time finding the perfect place to rent, why not check out SPEEDHOME! You will be able to search for thousands of house listings on the platform and once you found a desired house to rent, you can contact the landlord directly via the app to schedule a viewing appointment.
Simple and direct, you won’t have the headache of wondering if the landlord is going to be a con-man either because SPEEDHOME does all the filtering of landlords even before the property goes on the list!
So, the summary of it is, to start saving if you are really looking to get a house, if not you are going to panic to get all your finances in order. Either ways rent or buy, is an individual journey. If you still need help in considering whether to buy or to rent, maybe knowing about the pro and cons of both will help you make that decision.