First-time Buying A Home?

If you are buying a house for the first time, the whole process of signing the Sale and Purchase agreement, dealing with solicitors, legal fees and stamp duty can be confusing. Here is a guide to some of the costs involved in buying a home.

How Much Can You Afford?
 
  A good rule to follow is, your monthly loan instalments and current commitments (example: car loan, personal loan) should not exceed one-third of your monthly salary.
  Use our loan calculator to estimate how much you can borrow, how much you will have to pay, and for how many years.
  Don't be tempted to over-commit yourself financially. You will have emergencies or if interest rates rise, you may have problems making payments.


Fixed or Conventional Rates
 

  A fixed interest rate home loan promises fixed instalments throughout the loan tenure. It offers stability against fluctuating financing costs and ease of planning your monthly financial commitments.
  A conventional loan with variable interest rates may suit those who want to take advantage of features such as overdraft facilities and so on.


Down Payment
 

  You generally have to pay a booking or earnest fee of 2%-3% of the purchase price. This is non-refundable.
  The bank usually finances up to 90% of the price of the property. You must have at least 10% in cash for the down payment.
  Don't forget that you can withdraw a limited amount from your EPF (Account 2) for your down payment.


Sale and Purchase Agreement
 

  Upon signing the Sales and Purchase agreement, you pay another 7%-8% of the purchase price, bringing the total down payment to 10% of the purchase price.
  After that, you 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 generally appoints a lawyer to draw up the Sale and Purchase agreement. The bank will deal with the developer to make progressive payments on your behalf.
  If you are buying a completed property...
You need to engage a lawyer to advise and act on your behalf when signing the Sale and Purchase Agreement and making payments, until the transaction is completed.


Insurance
 

You have to purchase Mortgage Reducing Term Assurance or MRTA, which ensures your home will be paid for in full should anything happen to you.
  The one-off premium payment is generally computed on the age of the borrower(s), loan amount, tenure and interest rate.
  It can be paid in cash up front or included in your loan to minimise the initial cash outlay required.

Fire/House Owners Insurance policy is compulsory to protect your property against damage. Should a mishap occur, your insurance payments may be used to minimise losses.
  The premium is payable annually.


Stamp duty and legal fees
 

  Be prepared to pay stamp duties and legal fees for your Sale and Purchase Agreement and Loan Agreement.
  For a limited period, most banks are offering to absorb all legal fees including stamp duty pertaining to the Loan Agreement for financing purchase of completed properties. The Bank is also offering to absorb all legal fees except stamp duty pertaining to the Loan Agreement for financing purchase of properties under construction.


Monthly instalments
 

  Ensure you pay on time to avoid late payment charges.
  If you miss several payments, you risk losing your home.


Finally, when you get the keys to your home you will have to pay...

  Monthly service charges (if you own an apartment)
  Deposits for utilities -- TNB, JBA, Indah Water and telephone
  Assessment (twice a year)
  Quit rent (annually)


Now you're ready to take the big leap and become the proud owner of your very own home!