Buying a property is an exciting adventure, and in Malaysia, where dreams of owning a home or making a smart investment come true, it's a significant journey. Yet, understanding how to handle the money part of this adventure is crucial.

In this article, we will guide you through some simple and effective strategies for financing your property in Malaysia. These tips are designed to help you confidently navigate the world of real estate, ensuring that your journey towards property ownership is not only fulfilling but financially savvy.

 

 

5 Smart Tips for Financing Your Property in Malaysia

 

Know Your Finances Inside Out

Before you jump into the world of property ownership, take a closer look at your money situation. Think about how much money you make every month and what you spend it on. In other word, you need to understand your income and expenses. This way, you can figure out how much you can comfortably afford for your property. 

You should give this a lot of thought and stick to buying ONLY what you can afford. A good rule is that your monthly home loan payments should be no more than 1/3 of what you earn each month. For instance, if you make RM6000 a month, try to keep your home loan payments under RM2000. 

This is a basic way to figure out your budget, but it doesn't cover all the important details. It's just the starting point to see what you can manage. To help you seeing a clear picture how much yoyu should pay, you can use our home loan calculator to input key information such as loan amount, interest rate and loan year.

 

Explore Loan Options Wisely

Malaysia has different ways for people to borrow money to buy a home. Some are like regular home loans, some are supported by the government, and there are also special ones. As for example:

• Skim Perumahan Rakyat Malaysia (PR1MA)
• Skim Perumahan Mampu Milik Swasta (MyHome)
• Rumah Mampu Milik Rumawip
• Rumah Selangorku 2023
• Prоgrаm Pеrumаhаn Rаkуаt (PPR)
• eRumah Johor

Do remember, banks in Malaysia offer different housing loan packages, but they generally fall into three categories: term, semi-flexi, and flexi loan.

• Term loan
  • A term loan is a kind of loan where you pay a fixed amount every month until it's all paid off. Even if you pay extra money, it doesn't reduce your interest right away and just counts for future payments.
• Semi-flexi loan
  • With a semi-flexible loan, if you pay more than your regular monthly amount, the extra money automatically goes to reduce the main loan amount. This means you pay less interest.
• Flexi loan
  • With a flexi loan, your home loan is connected to a current account. The monthly installment is taken out automatically from this account. Any extra money you put into the current account helps reduce the main loan amount, and that means you pay less interest.

 

Boost Your Credit Score

Have you heard about a credit score? It's like a report card that shows how good you are at managing money. Having a good credit rating is essential when applying for that home loan. Lenders or bank use this score to decide if they can trust you to pay back the money they lend you.

Thus, loan approval is based on this. The higher your credit rating, the better your chances are for approval. Not only that, it will give you some leverage when talking to the banks that can help you get lower interest rates on your loan. 

"How can I see my credit score?"

In Malaysia, there are several credit agencies that give reports on how well you manage your money. It's good to know that each agency has its own way of figuring out your credit. Usually, banks might look at reports from more than one agency.

The main credit agencies in Malaysia are:

• CTOS
• eCCRIS
• Credit Bureau Malaysia

 

Save Up for a Down Payment

Saving up a good amount for a down payment is smart. A bigger down payment means you borrow less money, and that can save you a lot on interest. Let's say you want to buy a RM500,000 property. If you can put down 20%, which is RM100,000, you only need to borrow RM400,000. This could save you thousands in interest over time.

But, it's really important to do some research and talk to a legal advisor or a property agent. They can help you understand the initial fees and break down those costs so you can plan your budget better.

 

Plan for Additional Costs

Buying a home is not just about the price you see. There are some extra costs, like legal fees and stamp duty charges you’ll need to account for.

• Legal fees for the loan agreement: 1% for first RM500,000 of the loan, 0.8% for the next RM500,000, and 0.5% – 0.7% for subsequent amounts.
• Stamp duty for the loan agreement: 0.5% of the loan amount.
• Legal disbursement fee for the Facilities Agreement (FA): Typically a few hundred Ringgit.
• The bank’s processing fee for the loan: RM50 to RM200

According to the Malaysian Institute of Estate Agents, these hidden costs of owning a home in Malaysia can be around 3% to 5% of the home's price. So, it's like adding a little extra money to your budget to make sure you're ready for everything.

 

So, that's it! We've talked about some easy ways to make sure you can buy a house in Malaysia without any worries. Remember, it's not just about finding a home; it's about being smart with your money. Think of these tips as your guide to a happy and smart journey into owning a home. As you step into the world of Malaysian real estate, remember you're not just getting a house; you're making a great move for your future. The keys to your dream home are right there, so go ahead and enjoy your house-hunting adventure at PropertyGenie!