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15 Rules Of Howard Chew

1) Are you ready?

Forget about home buying criteria and jargons, like location, leasehold, freehold, single storey, apartment, condominium, KLIBOR, DIBS and so on. The one most important home buying tip for home buyer is to decide whether you can afford the house and whether you are ready.

The general rule of thumb is to calculate your affordability by checking if your total housing debt to income ratio does not exceed 33 %. Another simple, conservative yardstick is your mortgage debt alone should be less than 28% of your monthly income.

2) Don't underestimate the importance of location

Before you engage a real estate agent, decide on the location you want to buy, down to the residential area. Here’s how you decide. If you are planning to buy for your own occupation, choose a location that is near your work place with convenient access to transportation and communication infrastructures.

Next, narrow down your options by setting a budget. In Malaysia, first time home buyers usually qualify for a 90% margin of finance mortgage loan, but you will still need at least 20% to 30% of the property price in cash for down payment (10%) and at least 10% for legal fees, stamp duty and other loan document charges.

3) Find A Good Real Estate Agent & Agency

Never underestimate the power of a good real estate agent. The right agent can work wonders for you and take a lot of the stress off your shoulders. What property agents offer is the professional expertise and contacts that you may not have. They make your work much easier and can also potentially sell/rent out your property quicker much quicker than you can.

If you’re house hunting a good agent can help you find ideal properties based on your stated needs and they’ll also help with the negotiation process so you can get a favorable price. As for renting out your property, they can help you with the searching and screening process for potential tenants. It’s always good to have a healthy relationship with your agent in order to ensure that the both of you can benefit from each others’ patronage.

4) List up your desire areas factors

You need to list down what are the amenities & facilities that you need towards your daily life. For example, if you rely on public transport in your daily life, nearby public transportation hub should be one of the main important amenities for you while you might be needed nearby school amenities if you have children that are still schooling. In addition, finding the best neighbourhood that suits you and also to identify the living cost of the area may be good factors to consider in order for you to have a sustainable life living in your new home.

5) Online property portal match

There are many online property portals in Malaysia that can help you to find out which properties are matched with your home criteria. Based on this portal, you can filter out your criteria according to your specific location, price, and type of house. In this case, the results will help you to determine which current property development suits you well.

6) Choose a property based on your finances

As buying a house is a huge financial decision, a potential buyer must consider all aspects – emotional ride, the added responsibility and the finances involved – before deciding on a property. A good place to start is to know the monthly repayment you can comfortably afford and what houses and location fit your price range.

7) Understand Property Types And The Risks Of Your Investment

Are you looking for a condominium, apartment, terrace house, semi-detached, bungalow, or SOHO? Do you want to purchase a unit in an older – but potentially cheaper – complex, or perhaps a sub-sale unit before it's completed?

Deciding on your property type is one thing, but then you have to weigh all the pros and cons, and the average property prices, which vary significantly.

8) Start small and aim big later

Buying a house is your first step to building your financial net worth. However, before you look for one, it is worth doing some research on the type of property and location that match your financial capability. It is a long term commitment; it makes sense to start small as a first-time buyer before moving to bigger and more luxurious properties. With interest rates speculated to increase in the coming years, it is always good to look for fixed interest rate loan to avoid any financial turmoil that may result in a spike in your monthly repayment.

9) Check your CCRIS & CTOS report

A CCRIS report is an important element of having a potential loan approved. That makes it an essential part of the early steps towards owning your own home. CCRIS is basically a centralised database which offers a picture of your financial health.

TIP: One plus point is that the CCRIS only shows information from the latest 12 months. Hence, if you have a less than stellar report at the moment, you could strive to improve and ‘correct’ it in the coming 12 months in order to increase your chances of obtaining a home loan.

10) Choices of land title

Mainly, there are 3 types of land title in Malaysia which is Freehold, Leasehold and Malay / Bumiputra Reserve. , generally freehold is considered the better option over leasehold. Freehold land is simply land which is dispensed to an owner for an indefinite time, while leasehold titles come with a limited tenure - usually not exceeding 99 years.

The differences are as below:

Freehold: Property is held in perpetuity and can be easily transferred the property from one to another without any state & government consent.

Leasehold: There is the fixed period of usually 30, 60 and 99 years. These type of property would come with restrictions under the law for the extension of the lease.

Malay/Bumiputra Reserve: Malay/Bumi Reserved Land can only be owned and transacted among Malay/Bumis.

11) Getting The Capital

Property is expensive and in most cases you will probably need a loan to make a purchase. Your best bet would likely be a bank loan. Note that in Malaysia, banks will fund at most 90% for your first two properties and only 70% for properties from then on.

Whatever loan you end up with, you will need to budget for a downpayment, legal fees and other administrative charges you might end up bearing. But the newest trend was 0 downpayment needed & loan fees will also be adsorbed by developer, what you need to pay is only a booking fee.

If you choose not to buy a new property, you will also have to consider renovation costs.

12) Always View property showroom and sales gallery

After narrow down your house option, you can start doing a survey by viewing all your favorite property showroom and sales gallery. This is because, it is important for you to have a close look at the property location, home features, and facilities.

13) Understand the Developers (If you are looking for a new property)

Get to know the developers in the area where you want to buy and research them online. Look out for where they are mentioned on forums and see what people are saying. Don’t let it put you off completely but let these forums inform you of the issues you need to be alive to.

Visit the developer’s other sites: How do they look? Do the new residents speak highly of their homes and the developer?

14) The best time to buy your first home

For those looking to buy a home for own stay, it may be a good time to buy as sellers are more flexible with their asking prices while developers are offering attractive packages with freebies & other incetives.

Also, the new Stamp Duty Malaysia 2019 exemption for first-time house buyers that purchasing residential properties prices up to RM500,000 , stamp duty exempted up to RM300,000 on sale and purchase agreements as well as loan agreements for a period of two years until December 2020.

15) Buying Property As A Foreigner

It isn’t actually hard delving into property investment in Malaysia if you’re not local, so long as you meet certain criteria. Compared to the super-high prices in Hong Kong and Singapore, Malaysian real estate can seem like a bargain.

Foreigners, while allowed to own 100 percent of a purchased property, have limits on what they can purchase. Property not available for foreign buyers include low and medium cost residential units, properties valued below RM1 million (in most states), as well as properties built either on Malay Reserved land and also real estate deemed as distributed to Bumiputera interests.

Apart from those limitations, foreign buyers may purchase any kind of real estate whether residential, commercial, industrial or retail.

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