Owning a house is better than rent. However, the procedures of buying a house can make the first-time homebuyers freak out. Its process can be complicated and might come out some unexpected problem. But, if you have educate yourself enough before buying a house or even applying for a housing loan from the bank.
Step By Step Guidelines To Buy Your First Property Click To TweetIf you are reading this article, we’re sure you are first-time homebuyer and want to see what are the procedures and costs would take during home purchase. Here, WMA Property Blog show you the step by step guidelines to buy your very first property with no any mistakes.
Step ①: Figure out your budget
Before even make inquiry of the housing loan from bank, the very first step you must do is figure out your budget and understand which house type that you are able to afford. As financial experts said,the monthly loan installments shall exceed one-third of your total net income.
With a good credit record, the bank will usually offer the financing up to 90% of the required amount for your first property and the monthly loan installment may even come up to half of your net income. Therefore, you have to keep up your credit record and correct the related bank if there are any wrong information in your credit record. (Click the link to read how to check your credit score)
Step ②: Engage with a right property agent
Pick a right property agent and let him/her know your requirements such as preferred locations, house type, estimated budget and etc. (Click the link to read how to pick the right property agent)
Step ③: Property visitation
Regardless of which type of property that you preferred, you must visit the said property personally. Once you spot something that trigger your interest, call the property agent to arrange the date for a viewing.
During property visitation, it is always wise to check the neighborhood and neighbors around the property and the most importantly, do a house inspection to check whether they are any structural cracks or leaking roof from missing roof tiles and so forth. (Click the link to read the ultimate inspection guide).
Apart from that, you should set up a questions’ list to ask the property agent accordingly. (Click the link to read must-ask questions when purchasing a property)
Step ④: Research the price
It is advisable to visit other properties before choosing one. After gather all the information and property prices, its time to do your own research of the property that you are likely to buy. Figure out the current property selling price, it can be done by checking the recent house transacted within the area.
If possible, speak to the owners of the transacted house. This is also a good time to know the neighborhood security or nasty neighbors and so forth.
Step ⑤: Applying a loan and hire a lawyer
Once you figure out the property selling price and you’re about to buying it to satisfy your excitement. You can then start to make inquiry of housing loan with multiple banks. Figure out which type of housing loan is suit to your repayment profile. (Click the link to read type of property loans in Malaysia). While waiting for the home loan approval, obtain a pre-approved letter on home loan to know the estimated amount that you can borrow.
Besides, you have to hire a lawyer to draft and sign the Sales and Purchase Agreement (S&P Agreement) and Loan Agreement. (Click the link to read the process of S&P Agreement)
Step ⑥: Sign the Letter Option to Purchase
This is a letter from seller to buyer. The buyer will need to pay a 2% deposit of the property purchase price (its decide by seller) upon signing this letter. You can either pay check or cash to the seller. Besides, should you have a property agent, the agent will drafts this letter for you. If you don’t, get a solicitor to drafts this letter for you.
After you have signed this letter, the S&P Agreement must be signed within 14 days. Within this period, the buyer usually will apply bank loan. Should the bank rejected buyer’s loan application, then the buyer can void this letter and get back the 2% deposit. (Click the link to read more about the process of S&P Agreement)
Step ⑦: Sign the S&P Agreement
After the letter option to purchase is signed, within 14 days, you will need to pay the remaining 8% to the seller’s solicitor upon signing this agreement. In some cases that the buyer reject to sign this agreement, the seller can take the deposit and looking for other buyer.
Before signing the S&P Agreement, it is wise to check if the clauses in the agreement are correctly stated. (Click the link to read more about the process of S&P Agreement)
Step ⑧: Sign the Loan Agreement
Your lawyer will also draft out the loan agreement to be signed by both you and your selected bank. Although the terms of the loan agreement are in favor of the bank, you as the buyer, will still have to pay for its agreement. Besides, the bank will ask you to take out an insurance policy, to make sure the loan is paid if there is any unfortunate circumstance occur. (Click here to read more about the types of home loan insurance)
Step ⑨: Pay the relevant costs
Pay your lawyer the stamp duty and other charges such as registration fees, search fees, service tax and other expenses. You must paid-off the costs within 3 months from the date of S&P Agreement, otherwise, you will have to pay for late payment charges.
Once the title has been put in your name, ask your lawyer to give you a copy of the title in your name.
Step ⑩: Deliver of vacant possession and keys
Lawyers on both parties will set a closing day, when all payments have been made and within the deadline that set out in S&P Agreement. Once the balance of the purchase price has been paid, the seller have to deliver the vacant property together with keys to the buyer within the number of days set in the S&P Agreement.
Last but not least, upon handover of vacant property and keys, you have to make sure you get the statements or receipts from the property agent/ owner for all the utilities such as phone bills, electricity bills, water bills and sewage bills that proving all outstanding bills have been paid up to the handover date.
Congratulations! You’re now officially become homeowner and you’re good to proceed with the house renovation and decoration work.
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