Guide to Home Loans

A guide to some of the costs involved in buying a house

If you are buying a house for the first time, the whole process of signing the Sale and Purchase agreement, dealing with solicitors, legal fees and stamp duty can be confusing. Here is a guide to some of the costs involved in buying a home.

How much can you afford?

A good rule of thumb to follow is that your monthly loan instalments and current commitments (e.g. car loan, personal loan) should not exceed one-third of your monthly salary. Those who over-commit themselves financially may have difficulty making payments when emergencies crop up or if interest rates rise.

Handy tip: Use our conventional or Islamic loan calculators to estimate how much you can borrow, how much you will have to pay, and for how many years.

Fixed or conventional rates?

A fixed interest rate home loan promises fixed instalments throughout the loan tenure. It offers stability against fluctuating financing costs and ease of planning your monthly financial commitments.

A conventional loan with variable interest rates may suit those who want to take advantage of features such as overdraft facilities and so on.

Down payment

Generally, you will have to pay a booking or earnest fee of 2%-3% of the purchase price. This is non-refundable, so decide carefully before paying.

The bank usually finances up to 90% of the price of the property. You must have at least 10% in cash for the down payment. Also, don't forget that you can withdraw a limited amount from your EPF (Account 2) for your down payment.

Sale and Purchase agreement

Upon signing the Sale and Purchase agreement, you pay another 7%-8% of the purchase price, bringing the total down payment to 10% of the purchase price. After that, you usually have 3 months to pay up the balance or secure financing and a 1-month extension which is subject to 10% per annum interest on the balance due.

If you are buying a property under construction, the developer generally appoints a lawyer to draw up the Sale and Purchase agreement. The bank will deal with the developer to make progressive payments on your behalf.

If you are buying a completed property, you need to engage a lawyer to advise and act on your behalf when signing the Sale and Purchase Agreement and making payments, until the transaction is completed.

Insurance

As a home buyer, you will have to purchase Mortgage Reducing Term Assurance or MRTA, which ensures your home will be paid for in full should anything happen to you. The one-off premium payment is generally computed on the age of the borrower(s), loan amount, tenure and interest rate. It can be paid in cash up front or included in your loan to minimise the initial cash outlay required.

Additionally, a Fire/House Owners Insurance policy is compulsory to protect your property against damage. Should a mishap occur, your insurance payments may be used to minimise losses. The premium is payable annually.

Stamp duty and legal fees

Stamp duties and legal fees will need to be paid for your Sale and Purchase Agreement and Loan Agreement.

Monthly instalments

To avoid late payment charges, it is best to pay your home loan on time. If you miss several payments, you risk losing your home.

Other costs

Owning a place you can call home is a rewarding experience. After getting the keys to your home, however, there are still several other things you will have to pay:

• Monthly service charges (if you own an apartment)
• Deposits for utilities – TNB, JBA, Indah Water and telephone
• Assessment (twice a year)
• Quit rent (annually)

How to apply

Once you're ready to own a home, apply for a home loan online with us in just 3 simple steps:

1. Application

Decide which home loan is right for you. Click 'Apply now' and enter your personal details in the application form. If there is more than one applicant, you should submit their details too.

2. Processing

Print a copy of your application for your reference and then click "Submit" to send it to us.

3. Immediate response

If your application meets our initial requirements, your home loan will be pre-approved immediately. You will receive a Provisional Letter of Offer and application reference number.

If the bank is unable to process your application for any reason, our Sales Officer will contact you within 3 working days.

Go to your selected Maybank branch within the next 14 days with a printout of the Provisional Letter of Offer and relevant documents for verification by the bank.

Important! The Provisional Letter of Offer is subject to confirmation of your details and credit eligibility. It does not include Mortgage Reducing Term Assurance (MRTA) which is compulsory. This will be calculated when you visit our branch and you may opt to pay it in a single payment or capitalise the sum into your loan.

Checking your application online

You may check the progress of your loan application online any time from 4am to 9pm. Select Pre-approved Home Loan Enquiry and key in your reference number. We will keep you informed from the time you apply for a loan until the funds are fully disbursed.

Credit to : http://maybank2u.com