Before you rush into paying your down payment for that nice house, why not spend a little time running through these items first?
1. Find out more about the house.
Talk to the neighbours, surf the net or just ask around for a history into the area and what kind of news made it to the newspaper. That way you’ll be less likely to be surprised by strange things happening to you or the house that may have been caused by previous owners.
2. Check the amenities in the house.
2nd hand houses may come with problems that can range from a stuck toilet, leaking faucet or even a broken window. Make sure to inspect every room in the house and test all the amenities. Make sure there are no water damaged walls and ceilings.
3. Make sure the structure of the house is stable and in good condition.
This includes foundation, walls, floors, ceiling, roof and attic. Watch out for water penetration and structural damage like floor beams that have been cut or altered. Any irregularities like warping, bulging or cracks can be signs of much bigger problems hiding.
If all satisfactory, the next thing that should be of concern is; Financing and legal.
– Try to negotiate for a minimal booking fee… normally 1% to 3% is the norm. Make sure that in the booking receipt, it is stated that the booking fee is refundable in the event that you fail to secure a loan on time.
– The rule of thumb is, you need to pay off the remaining downpayment (normally 10% of selling price) in 14 days and sign off the SPA then. However this is also negotiable.
– If you’re withdrawing your EPF to purchase , remember to bring your signed SPA to apply.
– If you’re applying for a loan, the bank will run a few things to process your application. This includes getting a valuer to ensure the selling price is as per the market, legal processes, etc. (This can easily take 2-6 months) Most of the time, you will have to bear the cost of these processes. However, try to get a ZERO ENTRY loan so that the bank will absorb your:
Property valuation fee
All legal fees pertaining to loan agreement including scale legal fees, stamp duties, caveat, disbursement fees, search,
– Most of the time, you are expected to settle all loan approvals and final agreements in 3 + 1 months where the seller can choose to terminate the contract due to non-payment.
Fees you need to be prepared for as a buyer (May differ from case to case)
1. Lawyer fees for SPA (1% on the first RM100,000.00, 0.5% on the next RM4,900,000.00, 0.25% on the remainder).
2. Stamp duty for property transfer – At the moment any property below RM250,000 is entitled you to 50% exemption on stamp duty. (1% on the first RM100,000.00, 2% on the next RM400,000.00, 3% on the nest RM1,500,000.00 and 4% on the remainder)
3. Cukai Tanah and Cukai Pintu.
4. Restoration/ renovation (if required)
5. Permit for renovation (if required)
6. MRTA – Mortgage Reducing Term Assurance (Very important)
7. Utilities deposits
ps: Although not entirely truthful, it is quite common that under an agreement between buyer and the seller/agent, selling price of the property is stated at a slightly higher price so that a higher amount of loan can be applied. That way, you get a bit of extra cash to pay for unexpected expenses. HOWEVER, please do not abuse this. Any extreme hiking up of the price of a property may get you sued for fraud.