For all Malaysians who are actively considering buying a home by taking a loan (subsale properties), below are some factors to consider.
Assess maximum loan ability
1. Realise your net income. For salaried workers most companies would already deduct the contributions for income tax, Socso and EPF. For the self employed, EPF and Socso contributions are optional and it’s usually advisable to budget 20% of you income minus business expenditure for income tax. Check out www1.malaysiasalary.com A helpful site for net salary calculations.
2. Calculate your debt. This includes any form of personal loans and car loans + 5% of your average monthly credit card total. Calculate using this formula:
Net income x 70% minus debt
Mr A earns a gross monthly income of RM7000 with a nett income of RM5677. With a car loan of RM900 and monthly credit card bills amounting to RM3000. His Debt Service Ratio will be:
RM5677(0.7) – RM900 – RM3000(0.05) = RM2924
With a 35 year bank loan tenure and at the current BLR of 6.6 (-2.4),
Mr A will be able to take a maximum loan amount of RM643,000
Mr A may start looking at houses around the range of RM700,000.
Prepare the required documents
Preparing the necessary documents early will aid you in getting a letter offer for loan faclities in the shortest time possible. Click here for a list of necessary documents.
One other important element to getting your loan approved is your credit rating. If you are unsure if you have any outstanding debts, take a day off to drop into Bank Negara and check your CCRIS records. Sometimes the outstanding debt could be something as simple as an overlooked telephone or internet bill.
Know the upfront cost
On the day you finally decide “This is the house I want” you will be required to pay 2-3% as a booking fee/ earnest deposit. Following this, 14 days later, you’ll be required to pay the balance 7-8%. Consider the upfront cost as 14% of the house price. 10% for the downpayment and 4% for legal fees and stamp duty. Click here for calculations on stamp duty & legal fees.