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Navigating the Costs of Subsale Property: A Comprehensive Guide for Malaysian Homebuyers

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Knowing the cost of subsale property in Malaysia can be important, especially when it comes to understanding and managing the associated costs. Whether you’re a first-time buyer or an experienced investor, it’s crucial to have a clear picture of the financial commitments involved in securing your dream home. This guide aims to demystify the expenses you’ll encounter, from the initial down payment to legal fees, stamp duties, and beyond. We’ll walk you through each cost element, including down payments, legal fees, stamp duties, real estate agent commissions, mortgage insurance, valuation fees, and bank processing fees, providing you with a detailed roadmap to ensure you’re well-prepared financially for this significant investment. With this comprehensive overview, you’ll be equipped to navigate the financial landscape of buying a subsale property in Malaysia, making your property acquisition journey smoother and more informed.

Understanding the cost of Subsale Property Purchase

ItemCost
Down payment10% of the agreed purchase price
Legal Fees

Sale and Purchase Agreement (SPA); Loan Agreement

  • First RM500,000: 1.25% (subject to a minimum of RM500)
  • For the next RM7,000,000: 1%
  • Excess of RM7,500.000: Subject to negotiation on the excess but shall not exceed 1% of such excess
Stamp Duty for:
1) Memorandum of Transfer (MOT)
2) Sale and Purchase Agreement (SPA)
3) Loan Agreement
1) 1% – 4% of the purchase price
2) 0.5% – 1% of the purchase price
3) 0.5% – 1% of the purchase price
Real estate agent fees/commissionMaximum of 3% of the property’s sale price, usually paid by the seller
Mortgage insurance (MLTA/MRTA)The premium depends on the type you choose, whether you want a plan that only takes care of the home loan or one that has an additional cash payout at the end
Valuation feeFrom 0.25% to 0.04% of the sub-sale property’s value
Bank’s processing feesUsually it’s a few hundred ringgit for the processing of loan applications

Breaking Down the Down Payment: What to Expect

When purchasing a property, whether from a developer or a seller, a down payment is a crucial upfront payment. This payment typically represents at least 10% of the property’s purchase price. For instance, if you’re buying a house priced at RM400,000, a minimum down payment of RM40,000 is expected. The rest of the property cost, usually 90%, can be financed through a home loan or similar financial arrangements. It’s important to note that while 10% is the minimum, there’s no upper limit set for a down payment, offering flexibility based on the buyer’s capacity.

The process of making a down payment often begins with an earnest deposit, which is a smaller fraction of the entire down payment, generally about 2%. This earnest deposit, part of the Letter of Offer or Offer to Purchase, is a non-refundable commitment showing serious intent to purchase. It’s essential that this payment is made through a reputable agency or a neutral third party. The remaining part of the down payment is due at the signing of the Sale and Purchase Agreement (SPA). In the broader context, down payments are not exclusive to property transactions and can apply to other significant purchases. The full down payment amount, inclusive of any earnest deposit already paid, must meet the minimum 10% of the property price by the SPA signing. Saving for this down payment is often challenging, especially for first-time buyers, but various assistance schemes like the Housing Credit Guarantee Scheme (HCGS) and Rumah Selangorku (RSKU) are available to ease this financial burden.

Legal Fees Uncovered: Navigating SPA and Loan Agreement Costs

To see the full list of legal fees for each properties ranging from affordable properties to high end properties, look at this article.

You can also use a legal fee calculator to estimate your estimated legal fees for your interested property.

Stamp Duty Essentials: Calculating Your Obligations

Stamp duty is a key fee associated with the legal documentation involved in purchasing a house, including the instrument of transfer and the loan agreement. It may seem complex, but it’s quite straightforward once broken down. Stamp duty falls into two categories: Fixed Duties, which are set fees for items like individual policies or copies, and Ad Valorem Duties, which vary based on the transaction value represented by the legal documents, such as property transfers or loan agreements.

In malaysia, the list of item that involves stamp duty are:
  • Instrument of Transfer
  • Loan Agreement
  • Deed of Assignment (DOA)
  • Sale and Purchase Agreement (SPA)

The cost of stamp duty for both instrument of Transfer, also known as memorandum of transfer (MOT), goes as follow:

Property pricePercentage
First RM100,000 of the property price1%
From RM100,001 to RM500,0002%
From RM500,001 to RM1 million3%
Everything above RM1 million4%

Sale and Purchase Agreement (SPA):

  • Typically, the stamp duty for the SPA is a nominal fixed amount, often RM10 per copy.

Loan Agreement:

  • For the loan agreement, stamp duty is typically a flat rate of 0.5% of the total loan amount.

Deed of Assignment (DOA):

  • The stamp duty for the DOA, if applicable, usually depends on the terms of the agreement and can be a fixed amount or a percentage of the property value or loan amount.

Real Estate Agent Fees: Who Pays and How Much?

Maximum of 3% of the property’s sale price, usually paid by the seller. 

Though it might seem hefty, find out the importance of having a property agent to help you throughout your property purchasing journey.

Choosing the Right Mortgage Insurance: MLTA vs. MRTA

There are MLTA and MRTA. Basically, it covers your outstanding loan if you are unable to do so in an event of death or total permanent disability

The difference between the 2 is that, MRTA is cheaper than MLTA. 

The pros of MLTA would be if you have additional money after settling the outstanding loan, your family members would receive it. For example, you loan for RM300,000, and you buy MLTA that covers RM400,000, so in an unexpected event ever happens, if you have a loan of RM200,000, the insurance will pay off the outstanding loan, and the remaining RM200,000 will be credited to your family members. Basically, you are buying a life insurance.

MRTA will only insure the amount of outstanding loan, but no additional money for your family members.

Valuation Fees: Assessing the Value of Your Investment

From 0.25% to 0.04% of the sub-sale property’s value

Bank Processing Fees: The Final Touch in Your Loan Application

Usually it’s a few hundred ringgit for the processing of loan applications

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