Purchasing a property requires a large investment; thus, several factors must be addressed, whether for first-time buyers or repeat buyers. When it comes to buying a home, it is critical for buyers to plan ahead of time and be informed of the costs and procedures involved. Once the buyer has determined how much they can afford in monthly payments, they will need to know about the upfront costs for legal documentation, the Memorandum of Transfer (MOT), and lawyer fees.
The procedures are as below:
The downpayment for a property is normally set at a minimum of 10%, although it may vary depending on how much the bank is willing to loan the property buyer.
For instance, if the bank is prepared to issue a 90% loan, the buyer will only need to pay 10% downpayment; however, if the bank is only willing to provide an 80% loan, the buyer will need to pay 20% downpayment.
Purchasers who have never used their EPF Account II money previously may choose to withdraw some of the funds to help pay for the development, but this can only be done once they have received their Sale & Purchase agreement (SPA).
2. Sales and Purchases Agreement fees
This leads us to the Sales and Purchase Agreement (also known as SPA, SNP or S&P).
The SPA document is the most important for a property buyer because it contains the property's blueprint. The preparation of this document will be charged according to particular price tiers, with the price tier based on the price of the property.
3. Loan Agreement legal fees
The property buyer will then be responsible for paying the Legal Fees, commonly known as Lawyer Fees. These fees are based on a pricing tier that follows the price of the property and are charged for the time and expertise of the lawyers in producing the legal documents.
There will also be a Stamp Duty fee on these documents because they must be filed to the governing body. Stamp Duty will be 5% of the loan amount. The client must also pay a 6% government tax on the fees, as well as disbursement fees ranging from RM1,000 to RM1,500.
4. Stamp duty on Memorandum of Transfer (MOT)
The Memorandum of Transfer (MOT) fees are the final fees that buyers must pay when the development is completed. These fees are used to transfer property ownership to the rightful owner.
Because the properties must still go through several safety assessments, they are normally only given to the owners about 6 months after completion. MOT fees will also be charged depending on a price tier that corresponds to the purchase price of the property.
These fees will be subject to a 6% government tax as well as Disbursement Fees ranging between RM1,000 and RM1,500.
To summarise, the procedure and estimated costs and time stated above are only general guidelines for property purchases that will vary from case to case (for example, if the Property has a restriction of interest (RII) that will require more procedures to transfer the Property to the new owner, the Purchaser will incur additional costs).