Not everyone plans to buy a house in the near future. You might not plan to do so either and that could be the case in the next few years. But that does not mean you don’t need to know anything about how to go with this.
Know the basics and start early
You would need to choose the location and type of property you intend to buy but before you do anything, make sure you know what a downpayment is and how it affects everything you do. You need to start planning this if you plan to own your house in the future. This is bound to happen at some point and it is not the same as other forms of savings like planning your retirement and such. A downpayment is essential as it is the first payment you make to own your house. So, if you are 21 years old now, you need to start saving up enough for about 10 years before you have enough to pay for this.
What you need to know
The basic principle is simple. The more you have to give in downpayment means the lesser you need to repay for the loan both in terms of total and the monthly repayment amount. How much you give in downpayment will directly determine your loan amount and how much you are eligible to borrow. This means it directly affects which property you can buy. When you buy property in Malaysia, it is common that you need to pay 10% of the price of the property as downpayment. However, you can pay more if you can afford it.
This is like a deposit and you need to do this in a one-time payment so that you secure the property for yourself. After that, an arrangement will be made for you and the bank to fulfill the full payment (plus interest).
- Earnest deposit – In some cases, you might pay an earnest deposit and this is not the same as a downpayment. This is a payment you make to show that you are interested in the property and it is not regarded as a downpayment. You normally make this payment to the agent or the property owner.
- Downpayment amount – As mentioned, you are encouraged to put down more as downpayment so that you will take a lower loan amount or for a shorter term. For the first 2 residential properties, you would most likely get a 90% loan.
- Assistance – It would make a lot of sense if you can pay for your own downpayment but there are available schemes out there that can help you get the amount you need. This includes the MyDeposit or First Home Deposit Scheme, the Bank Negara’s Fund for Affordable Homes, the Skim Rumah Pertamaku or My First Home Scheme and many others.