HOUSE HUNTING FOR DUMMIES
Dream House
I am now in my warming-up mode to get a place. The bad news is, I will still be moving in with my parents and stick insect sister (S.I.S) . Good news is, SIS is going to share the loan payment, and to do all my laundry and cleaning in the house (since she mention I can’t take proper care of myself. Hey – I lived alone for four whole years and my housemates never complained!)
Recently, a good friend, YCF bought a townhouse in Cheras. Being a prudent and meticulous person as she is well known for, after consultation with her company lawyers, she came out with useful pointers to be considered before buying a house. Being the usual busy body, I myself decided to find out on how to save in terms of interests and insurance for the house.
(1) Freehold or leasehold
A friend who just bought a leasehold house, regretted buying it. He bought it with an intention to stay in this house due to the short distance to his work place. However, less than 6 months down the road, he had a better offer elsewhere and now facing problem selling it off.
(2) Commercial or Residential development
If it is a commercial land, the developer has the right to develop it further into commercial area. Preferably to get a land for residential purpose.
(3) Non Bumi/Bumi Lots
Sometimes, the non-bumi and bumi lot can be interchangeable should the master title has not been obtained. So, avid believers of feng shui, may opt for better feng shui located house.
(4) Housing Development Act, 1966 (HDA, 1966)
Those housing projects governed under HDA, 1966 will be subjected to Schedule H of the said act. (Please see under “borang-borang dan perlesenan”). One of the ruling, for instance, initial down payment for a house is fixed at 10%. If it is not governed under HDA, then the developer has the right to set their own rulings, for instance, charging 5% down payment instead of the normal 10%.
The Sale and Purchase Agreement under HDA is standard and therefore, less time required to go through the S&P thoroughly.
(5) MRTA
It is NOT compulsory to buy MRTA. MRTA kicks in when the house owner kick the bucket and this would indirectly help to finance the house for free.
We may opt for investment linked insurance or term life insurance as a substitute for MRTA.
The argument is that, when we buy a second house, we will need to buy another MRTA. We might as well buy an insurance product, in the long run, we could have protection and some returns from the policy, rather than burning off some unnecessary money on MRTA with no returns.
(6) Loan
It is advisable to take a FIXED INTEREST RATE housing loans. With the BLR + interest, the amount of interest would fluctuate due to inflation and the increase in interest rate would eat into the time value of your money.
However, you will need to come up with at least 15% to 20% initial down payment should you want to obtain a fixed interest rate loans.
* Kindly note that this is merely an opinion from an individual house buyer. The blogger holds no responsibilities in the event of a mismanagement/misuse of these information.
Recently, a good friend, YCF bought a townhouse in Cheras. Being a prudent and meticulous person as she is well known for, after consultation with her company lawyers, she came out with useful pointers to be considered before buying a house. Being the usual busy body, I myself decided to find out on how to save in terms of interests and insurance for the house.
(1) Freehold or leasehold
A friend who just bought a leasehold house, regretted buying it. He bought it with an intention to stay in this house due to the short distance to his work place. However, less than 6 months down the road, he had a better offer elsewhere and now facing problem selling it off.
(2) Commercial or Residential development
If it is a commercial land, the developer has the right to develop it further into commercial area. Preferably to get a land for residential purpose.
(3) Non Bumi/Bumi Lots
Sometimes, the non-bumi and bumi lot can be interchangeable should the master title has not been obtained. So, avid believers of feng shui, may opt for better feng shui located house.
(4) Housing Development Act, 1966 (HDA, 1966)
Those housing projects governed under HDA, 1966 will be subjected to Schedule H of the said act. (Please see under “borang-borang dan perlesenan”). One of the ruling, for instance, initial down payment for a house is fixed at 10%. If it is not governed under HDA, then the developer has the right to set their own rulings, for instance, charging 5% down payment instead of the normal 10%.
The Sale and Purchase Agreement under HDA is standard and therefore, less time required to go through the S&P thoroughly.
(5) MRTA
It is NOT compulsory to buy MRTA. MRTA kicks in when the house owner kick the bucket and this would indirectly help to finance the house for free.
We may opt for investment linked insurance or term life insurance as a substitute for MRTA.
The argument is that, when we buy a second house, we will need to buy another MRTA. We might as well buy an insurance product, in the long run, we could have protection and some returns from the policy, rather than burning off some unnecessary money on MRTA with no returns.
(6) Loan
It is advisable to take a FIXED INTEREST RATE housing loans. With the BLR + interest, the amount of interest would fluctuate due to inflation and the increase in interest rate would eat into the time value of your money.
However, you will need to come up with at least 15% to 20% initial down payment should you want to obtain a fixed interest rate loans.
* Kindly note that this is merely an opinion from an individual house buyer. The blogger holds no responsibilities in the event of a mismanagement/misuse of these information.
Comments
hey, how about point
7. Apts/Condo Or Landed Property?
ryuu | 03.13.05 – 2:09 pm | #
I second that fixed interest thing and the MRTA thing.
Resurrected | 03.13.05 – 5:25 pm | #
Ryuu: A toyota. I guess it will never go wrong. As for Apartments/Condos/landed, obviously, if you have the money, you would go for landed – no maintenance fees, no crazy neighbours, no squabbling on car parks, etc.
Gina | Homepage | 03.15.05 – 12:22 am | #
If you have good cash flow, you should not go for fixed interest rate. Get the option with early settlement and redrawable option. That way you can do a principle reduction. Opportunity cost, that is the key word.
sziang@yahoo.com | 03.15.05 – 12:51 pm | #
Most of my accountants and auditors friends seemed to think fixed rate is the best.
Gina | Homepage | 03.15.05 – 10:34 pm | #
why toyota? toyota expensive leh..
ryuu | 03.17.05 – 1:38 am | #