Handy guide to house buying
ARE you a first-time house buyer?
Buying a house can be quite a hassle as it requires a downpayment and getting the right-margin financing.
A downpayment is a vital part of your house purchasing but there are also other things to consider like legal fees, stamp duty and even furnishing.
To know more about downpayment and how to get started, check out PropertyGuru. com.my’s handy guide.
WHAT IS A DOWNPAYMENT?
A downpayment is a mandatory lump-sum payment made upfront for the purchase of property whether it’s purchased from a developer or direct from a seller. Buyers are required to pay a minimum 10 per cent downpayment on a house purchase. That means if a house costs RM400,000, you will be required to pay RM40,000 in upfront deposit. The remaining amount can be paid using a home loan or similar loan.
IS A DOWNPAYMENT AMOUNT FIXED?
The minimum downpayment is 10 per cent of the transaction price. It is not possible to pay a downpayment less than that figure. We talk about “minimum” rates when it comes to a downpayment because there is no specified upper limit. Some house buyers choose to pay more upfront in order to reduce their overall loan and thus reduce monthly payment amount and total home loan repayment schedule.
WHAT IS AN EARNEST DEPOSIT?
The first part of a downpayment is usually paid as part of an earnest deposit. In most cases, that’s a non-refundable two per cent payment to show you are “earnest” about purchasing the property. The earnest deposit is paid as part of a Letter of Offer or Offer to Purchase.
The terms of this agreement often stipulate that the two per cent payment cannot be refunded in the event that an agreed deal is not completed. It’s important to make sure this payment goes through a reputable real estate agency or neutral third party, and never pay this direct to an individual.
WHEN DO YOU PAY THE DOWNPAYMENT?
Your Letter of Offer or Offer to Purchase will usually define the timeframe in which you must complete your Sale and Purchase Agreement (SPA). Once that SPA is confirmed, the full downpayment must be made. The total value of the downpayment must meet the minimum 10 per cent payment amount as noted above. However, the earnest deposit you may have previously paid can count towards that. So, if you’ve paid two per cent earnest deposit, the remaining eight per cent balance will be due at the signing of the SPA.
DOWNPAYMENT ASSISTANCE
There are a number of downpayment assistance schemes:
MyDeposit: The MyDeposit scheme, or First Home Deposit Funding Scheme, provides a one-off contribution to downpayments of up to 10 per cent of the sale price, with a maximum payment of RM30,000. Applications are closed at the time of writing, but may open again in the future.
Fund for Affordable Homes: Bank Negara Malaysia’s Fund for Affordable Homes aims to support low-income groups take a step onto the housing ladder. This RM1 billion fund includes downpayment support alongside concessionary rates for loans.
My First Home: My First Home Scheme is administered by Bank Negara and is designed to assist eligible young adults below the age of 35 to buy their first home without paying a deposit.
BSN Youth Housing Scheme: The government-supported BSN Youth Housing Scheme is designed to help first-time buyers between 21 and 45 years of age finance the purchase of completed or under-construction sub-sale properties.
Rumah Selangorku 2.0 (Selangor Only): A newly launched version of Selangor’s affordable housing scheme, Rumah Selangorku, is set to include downpayment support for purchasers of affordable homes within the state.
The article first appeared here - https://www.propertyguru.com.my/resources/buy-property-guide/what-to-expect-whenmaking-first-downpayment-11913