Buying a home can be one of the most stressful events in one’s life – especially if it is your first time. Where should you start? Can you really afford your dream home? What about all the legalities and the hidden costs everyone talks about?
Yes, it is an extremely stressful time. We understand, and we are here to help with these 10 most asked questions by our readers and fans. These questions are most likely running through your mind as you scroll through hundreds of property listings anyway.
Don’t freak out, read on!
1. How would I be eligible for housing loan?
Housing loan eligibility depends a lot on your monthly income and your existing loan commitments. It can be a personal loan, the dreaded but inseparable credit cards, or various other bank loans including softer ones like ASB.
The banks will run a check on your CCRIS report to view all your active loans and your payment status. Thus, it is extremely important to ensure all your loans and credit cards are up to date. Then, the banks will decide how much you are eligible for and your risk as a borrower.
To find out how much you need to pay based on the price of a home, you may use this home loan calculator by iMoney Malaysia.
2. Should I refinance my home?
Many home owners do just that to get some extra cash — though it is very normal, you have friends, relatives and neighbours doing that, don’t do it for the wrong reason!
Here are three things you need to know about refinancing your property, according to HSBC Malaysia:
- You take advantage of your property’s rising value to obtain a larger financing amount.
- Your refinanced loan pays off your current housing loan.
- You are free to use the balance as you wish.
However, only do it if there is a valid reason why you need the money.
3. How do I save up for the down payment?
This depends entirely on yourself. Down payments usually make up 10% of the asking price, depending on your margin of finance (the total loan amount you are eligible for).
Don’t forget, this 10% can be withdrawn from the Account 2 of your Employee Provident Fund (EPF)! And with EPF’s introduction of the EPF Account 3, you can also consider withdrawing from your Account 3 to help with any costs incurred during the homebuying process.
4. How can I get 100% housing loan?
If you are unable to save up 10% of the down payment, you can still consider buying a home through various government subsidised schemes, such as:
My First Home Scheme or Skim Rumah Pertamaku (SRP) – If your monthly income is RM5,000 and below, you have the option of getting 100% financing for a residential property.
And in Budget 2025, the government has also made it clear that they are committed to providing more avenues for first time house buyers with further initiatives and programmes.
However, it’s also important to note that you can choose to pay the down payment using money from your EPF Account 2, which allows for withdrawal for homebuying purposes.
For this reason, it is imperative that you do your own research, and try to find the best home loan rates in Malaysia.
5. How do I value my house?
For sub-sale (a pre-owned home), you need to do a house valuation to determine the market value of the property.
Former owners may set a price according to the market, but it is always good to have second, third or as many opinions as possible (Careful though, too many will confuse you so stick to reliable sources, or just check the classified sections on online and offline media or talk to a few property agents to get an idea).
Valuations are usually done by the banks to gauge the loan amount to offer but you can also do it on your own to determine if the selling price is according to the market value. However, only get the valuation done by an accredited agency for better accuracy. Keep in mind that sometimes your valuation price may not be accurate at all.
6. Can I get cash from my home?
Your home is your asset as the value of the property will most like go up. However, how good is the home if you can’t get cash out of it when you need it?
Be it for your child’s college education or to purchase your second property, you can consider these few ways to free up your home equity, or refinance your home.
7. Why would the bank reject my housing loan application?
There are various factors banks look into when approving a housing loan application. The factors range from the property’s location, borrower’s income, lack of a credit facilities record (it pays to have a credit card that you pay punctually), bad CCRIS reports, or the debt service ratio (DSR) may be over the maximum limit. Therefore, it is important to keep a clear record by making your existing loan payments on time.
8. How do I safeguard myself if the OPR increases?
Most property loans available in Malaysia are based on the Overnight Policy Rate (OPR), which is currently set at 3%. If you want to understand more about OPR and how it affects your loan, you can read about it here.
To safeguard oneself from the volatility of OPR, one can consider a fixed rate home loan.
9. Should I get a mortgage life insurance?
As the main breadwinner of a household, buying a home for your dependents is just half of the battle. You must ensure that your loved ones are protected as well, in the event you are no longer able to pay the mortgage of your house.
This is where mortgage life insurance comes into picture. You can either get a Mortgage Reducing Term Assurance (MRTA) or a Mortgage Level Term Assurance (MLTA) to safeguard your home in the event of death or total permanent disability (TPD). Find out which one suits your needs in our MRTA versus MLTA comparison.
10. Should I get a basic term home loan or a flexi home loan?
The difference between a conventional home loan and a flexi one lies in the amount you can pay every month. If you are a fixed salaried worker, it makes more sense to go for a basic term loan, as you pay a set amount every month for the full tenure. The drawback is, you won’t be able to save on interest charges in the event you decide to pay a lump sum or more every month.
Unlike flexi loan, you can make advance payment to lower your loan interest and withdraw the additional payments you’ve made whenever you like, without the need for complicated procedures. However, usually flexi loans come with a fixed monthly fees (usually RM10 per month) to maintain the current account.
Determine the type of loan that is suitable to your income by comparing the basic term, semi-flexi and full-flexi home loan.
As a first time home buyer, you will have many questions about buying your first home but these 10 are likely to pop into your head first. With these answered you should have more confidence on getting your first home.
This article is a joint effort by iMoney, a leading provider of mortgage loan solutions, and IQI global.
Interested in purchasing your very first dream home? Here at IQI, we provide services in purchasing the perfect home, with the right budget. Please leave your details below, and our professional team will assist you.
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