Buying a property could be the single largest investment/expense one could make in their life for many. Whether you’re a first-time homeowner or an investor, here are some tips we have learned as real estate agents over the years from smart buyers and sellers which we would like to share:

1.Prepare for good credit rating

While others may advocate the importance of knowing the purpose of purchase, location, budget and etc as their first and foremost criteria in buying a property, we are of the opinion that establishing one’s credit rating should take priority as we have seen many frustrated buyers getting their loan application rejected for poor credit reasons after settling for their dream property. This is akin to ‘putting your house in order’ first. Bankers are only keen to lend to buyers with good credit rating as this will minimise the purchaser’s risk from defaulting in their repayment. Therefore, one has to plan early (about a year) before embarking into the journey of property buying. The bankers will be looking at the following when assessing your application: -

• Repayment history – your repayment attitude in loan repayment including credit cards. Banks will also reject applicants who do not have any record of repayment history. Therefore, for those who are in this category, it is advisable to create one repayment history by taking up a credit card to initiate good repayment history.
• Salary to loan ratio – it is fine to have existing loan including study loan provided the balance of your income after deducting your present and future loan repayment meets the bank’s ratio
• Be employed - Be in an employment for not less than 6 months when you make an application. Do not resign from your current employment if you have intention to buy a property within the next one year
• Business establishment – if you are self-employed, ensure that you have been in the same business of not less than 1-2 years. Documentary proof are required.
• EPF contribution – ensure that your employer contribute in accordance to the statutory ratio between employer and employee. Banks will use your EPF contribution statement to verify your income in the monthly income statement.
• CCRIS – Central Credit Reference Information System. Ensure that your CCRIS report has been updated especially for those who have history of loan including paid and current loans. If you have paid off your existing loan please ensure the bank update your record with BNM(Bank Negara Malaysia).

Once you have established for yourself with a good credit rating you are one step closer to purchasing your dream property. Henceforth, you can move into other criteria of buying your property such as:

• Purpose of purchase
• Budget; including down-payment & monthly repayment
• Location
• Type of property
• Tenure of property
• Sub-sale properties or new development
• Financing package – interest rate, loan tenure

2. Property inspection

During the course of your property inspection also make it a point to inspect the neighbourhood whether you like to stay in such a neighbourhood. Also, look out for negative factors that will affect the value of the property such as junction facing property, cemetery, places of worship etc.

3. Cost of buying a property

Besides the purchase price, the other miscellaneous cost of purchase would include: -

• Cost related to Sale & Purchase Agreement and Stamp Duty.

i. Legal Fee

*Consideration or adjudicated value (whichever is higher)

** Amount secured or financed

Applicable to sale and transfer, charges, debentures and other security or financing documents.

ii. Stamp Duty

• Costs related to Loan Agreement (Legal Fees and Stamp Duty)

i. Legal Fee

The structure for legal fee on loan agreement is similar to the Sale & Purchase legal fee structure (refer to Table 3i)

ii. Stamp Duty

• Valuation Fee

The service of a valuer is usually required if you acquire from the sub-sale market or completed property from developer.

Subject to a minimum fee of Rm400 per property

• Real Estate Agent

The real estate agent fee is applicable when the service of an estate agent is engaged either by the buyer or seller.

4. Withdrawal from EPF

You could withdraw from the Account 2 of your Employee Provident Fund (EPF) if you have not done so for part payment towards your property subject to the following:

• Housing Loan

• Self-Financing

5. What should be in the Sale & Purchase Agreement

The Sale & Purchase Agreement is a legal document signed between the Purchaser and Vendor stating the terms and conditions of the transaction which may include the following:

• The detail of the property being purchased.
• The selling price.
• Vendor’s detail.
• Purchaser’s detail
• Mode of payment.
• Inventory list (if sale include furniture and fittings).
• The obligations of the Vendor.
• The obligations of the Purchaser.
• Forfeiture clause.
• Specific performance clause.