The Complete Guide To Purchasing A New Development - Property - Buy Property Guide - PropertyGuru Malaysia

5/21/2018 The Complete Guide to Purchasing a New Development/Property | Buy Property Guide | PropertyGuru Malaysia
Buy Property Guide
The Complete Guide To Purchasing A

New Development/Property
Posted on Jun 30, 2017
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Property investment is a lucrative market and great retirement plan if well planned and executed. Property investment
is however not as simple as purchasing a property in a good area and hoping that the price will appreciate.
PropertyGuru has hence produced a complete set of guides to purchasing a property, preparing the necessary
documents and how to get around the banks. Buyers will be able to learn from here what are the documents involved in
purchasing a property, with guides to planning your budget and understanding Sales & Purchase document, Stamp
Duty, Memorandum of Transfer (MOT), Valuation Fees and Real Estate Agent’s Fees, identifying potential properties,
preparing your loan documents for buying new development and signing of the documents.
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Planning Budgets & Costs of Loan Document
The most important thing to rst determine is the budget. While purchasing a new property may be easier due to the
possible discounts provided by the developer, the purchaser will still need to know how much they can afford monthly,
and the upfront amount that they will need to purchase the property.
Finding out how much you can afford to pay for a property is as simple as following the steps in the PropertyGuru
guide.
Once the property buyer determines how much they can afford for their monthly repayment, they will need to know
about the upfront costs that they have to come up with, such as for the legal documents, Memorandum of Transfer
(MOT) and the lawyer fees.
i. Downpayment
The downpayment for a property is usually xed at a minimum of 10%, and depending on how much the bank is willing
to loan the property purchaser, the downpayment may vary. For example, if the bank is willing to provide a loan of 90%,
then the purchaser will only need to pay a 10% downpayment - but if the bank is willing to provide a loan of only 80%
then the property buyer will need to give a 20% downpayment.
For purchasers who have never utilised the funds in their EPF Account II before, they may opt to withdraw some of the
funds to partially pay for the development, but this can only be done after they obtain their Sales & Purchase (S&P)
agreement.
ii. Sale and Purchase Agreement Fees (SNP/S&P)
This brings us to the Sales & Purchase Agreement (S&P). The S&P document is the most important one that the
property buyer will have, as it will encompass the blueprint of the property. The creation of this document will be
charged according to speci c price tiers, which the price tier will be based on the price of the property.
iii. Loan Agreement Legal Fees
Following that, the property buyer will also need to pay the Legal Fees which is otherwise known as the Lawyer Fees.
These fees are charged for the time and expertise of the lawyers in creating the legal documents, and these fees are
also charged based on a price tier that follows the price of the property.
And because these documents need to be submitted to the governing body as well, there will be a Stamp Duty charge
on it. The Stamp Duty will be 5% of the total loan amount.
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Also chargeable to the client is the 6% government tax on the fees, and disbursement charges of between RM1,000 -
RM1,500.
iv. Stamp Duty on Memorandum of Transfer (MOT)
The nal fees that purchasers will need to pay upon completion of the development is the Memorandum of Transfer
(MOT) fees. These fees are to transfer the ownership of the property to the rightful owner. The properties will usually
only begin to be transferred to the owners approximately 6 months after its completion, as it will still need to go through
the various safety checks.
The MOT fees will also be charged based on a price tier that follows the the property purchase price.
These fees will be charged the 6% government tax, and Disbursement Fees of between RM1,000 and RM1,500.
Advantages of Purchasing New Developments
New developments are usually preferred by buyers will less capital, as they will be entitled to the various freebies
usually offered by the developer. Depending on the developer, some of the usual freebies offered are as below:
- Free Legal Fees

- Free Stamp Duty
- Rebate
- Free downpayment
Additional Costs
There are however other costs that need to be anticipated when purchasing a property, as per below:
Mortgage Reducing Term Assurance (MRTA) / Mortgage Level Term Assurance (MLTA)
Fire insurance
Loan Instalment
Interest
Utilities deposit (Electricity and water)
Repair or renovation costs
Maintenance fees
Read more about what are the additional costs to expect from buying a new property with The complete guide to
purchasing a new, subsale or commercial property in Malaysia.
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Property Buying Criteria
Once a buyer knows his budget, the next thing that they will need to do is nd a property that is suitable to their
requirements - whether they wish to buy for investment or for own stay. Below are a set of criteria that they should look
into when purchasing a property.
- Location: While location is an important factor, there is a difference to purchasing for own stay or for investment. For
example, if a property for investment should have its own target audience. Will they be students, families, or perhaps
even bachelors? Should be located next to a public transportation system? If purchasing for own stay however, buyers
may want to be located in a more secluded area away from the hustle and bustle.
- Education institutions: This is another criteria that will be important to buyers with the intent of purchasing for their
own stay, depending on whether they have school going children. If purchasing for investment, a buyer may want to
take note of the institutions of higher education in the area if they are targeting the student rental market.
- Safety: This should be an area of prime concern for property buyers, regardless of whether they are buying for own
stay or for investment, especially with the increasing crime numbers.
- Proximity to workplace and amenities: Property buyers who are interested in purchasing a property for their own stay
will want a property that is close to there place of work. This will eliminate the hassle of long commutes daily. A
property investor will however want to purchase a property that is close to high density workplaces such as the Kuala
Lumpur city centre. This will ensure a steady ow of renters.
- Accessibility: Being located close to highways and major access roads are pointless if there are geographical barriers
in the way. For example, if you can easily see the New Klang Valley Expressway (NKVE) from your home, but it takes 20
minutes just to get to it daily due to the lack of accessibility, being located close to the highway would be pointless.
- Size: Size matters when it comes to purchasing a property, whether it is a family, growing family or bachelor
purchasing it. A property investor will also want to take this into account when considering their target market.
- Facilities: Depending on the buyer, facilities will play a major role in the purchase of a development. A family buying
for own stay may want the facility of a swimming pool and nursery for their toddlers, while a student may not be
interested as they will just need to room to sleep in - and the more affordable the room, the better.
Read more about how to pick the best new property for own stay or investment with Finding the best property for
investment in Malaysia - New, Subsale or Commercial.
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Things to Note
Upon compiling a list of properties that you are interested in, make appointments with the agents to view the
properties. Below is a list of questions that you will want to ask the agents when visiting the property.
Is the property freehold or leasehold?

If it is a strata titled property, how much are the maintenance fees?
How many parking lots does your unit come with?
What is this area like? Your agent will likely know much more about the area than you do unless you grew up in
the area.
Are there any upcoming changes in the neighbourhood? This is especially important if there are empty plots of
land nearby.
Buyers who are in the market for investment properties will want to ask the below questions.
What is the estimated rental in the area?

Are there any rental restrictions?
Mortgage Loan Documents
Upon deciding on your preferred property of purchase, the property buyer should then begin searching for the best loan
option. The way to do this is by applying to several banks, and see which one gives the best rates and options. The
simplest way to nd the bank that offers the lowest interest rates is via the PropertyGuru Loan Comparison application.
Upon selecting the bank that offers the best interest rates, the next step to take would be to prepare the required
documents.
To view the complete list of required documents if you are buying the property as an individual, company, foreigner
working in the country or perhaps even a Malaysian working abroad, visit the Loan Documents page.
1.0 Getting Familiar with Property Terms
Upon selecting their preferred bank, property buyers will then need to begin the document signing process. Below are
some of the terms that they will encounter in the Letter of Offer, detailing the speci cs of the loan.
Type of Loan
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There are typically a few different types of mortgage loans for property buyers to choose from, depending on the
requirements of the property purchaser. The typical ones are the Standard Home Loans, and the Flexi Home Loans.
there are also the Home/Personal Loan Package which typically carry higher interest rates, and the Islamic Home
Loans which utilises a slightly different method of calculation.
Standard Home Loan
The Standard Home Loan is the most common type of loan in the market. This loan’s interest rates are xed from the
day the property purchaser takes the loan, regardless of any market changes or change of Overnight Policy Rates
(OPR). The advantage of this loan is that the loaner will have the safety of mind knowing that even if the market
uctuates their interest rates will remain the same.
Flexi Home Loan
The Flexi Home Loan is an alternative to the Standard Home Loan. Property purchasers with extra cash ow usually
prefer to take this loan, as their interest rates are lower the more money they put into the account. The advantage is
that not only does the loaner enjoy changes in the rates if there are market changes, they also enjoy lower interest rates
the more money they put into the account - while enjoying the exibility to take the money out at any time.
Islamic Home Loan
The Islamic Home Loan is tailor-made to the Muslim community. While similar to the Standard Home Loan, this loan
utilises the Base Finance Rate (BFR) to determine how much the bank will earn from the loan.
Amount of Loan
This will be one of the biggest point of interest for the property buyer, as this part of the Offer Letter will dictate how
much the bank is willing to loan to the property buyer. Depending on how much the bank is willing to loan to the
property buyer, the balance will need to be paid to the developer as downpayment.
Purpose of Loan
Also stated in the Letter of Offer will be the purpose of the loan. The section will indicate that this loan is for the
property property purchase.
Description of Property Feedback

Slightly similar to the Sales & Purchase agreement, the Letter of Offer will have a description of the property in question
that the property buyer wishes to purchase.
Duration
This is another important section in the Letter of Offer, as it will indicate how long the property buyer has to repay the
loan. The longer the duration the lower the repayment per month and vice versa.
Processing/Set up Fee
If the loan is accepted by the property buyer, there will be a processing fee which is otherwise known as the set up fee
to create the necessary documents.
Monthly Service Charge
Fo the bank’s monthly series of collecting the loan, there will also be a monthly service charge. The charges for these
are usually on the lower side of less than RM20.
Prevailing Interest and Repayment
In lieu of late repayment there will be additional interest to be paid. The rates will be stated in the Letter of Offer.
Instalments
With a combination of the loan duration and total loan amount the monthly instalment will be calculated.
Security Documents
Security documents are required for mortgage loans. Depending on the property buyer’s nancial status, below are
some of the documents that the banks may require.
Charge Annexure
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Facility Agreement
Charge instrument in Form 16A
Power of Attorney
Deed of Assignment
Facility Agreement
Assignment of rental proceeds
Guarantors
Charge over the Fixed Deposit
Prepayments
Prepayments cover the additional payments that a property purchaser may make when in the course of serving their
loan. This part of the Letter of Offer details how the extra repayments may bene t the borrower, whether there will be a
change in the interest rates, or whether there will be a bene t in settling the loan repayment early.
MRTA/MLTA
The Mortgage Reducing Term Assurance (MRTA) and Mortgage Level Term Assurance (MLTA) are the two most
common property insurance in the market that will help the property loaner to pay off their property in case of death or
total permanent disablement.
Our comprehensive guide of Preparing Mortgage Loan Documents will get you up to speed with the loan application
process and you might want to know about what are the loan documents that are needed for locals and foreigners.
Signing the Documents
Once the property buyer selects their preferred bank for the mortgage loan, the banks will and lawyers will begin
preparing the documents. Below is the list of documents that need to be signed by the property purchaser.
Signing the Letter of Offer
The rst document that will need to be signed is naturally the Letter of Offer, indicating the property buyer wishes to
accept the loan. And upon signing the Letter of Offer, the property buyer will need to pay approximately 2% to 3% of the
loan. These monies will be held by a neutral part, usually a stakeholder’s account or to an unbiased agent. If paid to an
agent, the agent will be known as an escrow agent - a grantee.
The remaining amount of the 10% downpayment will only need to be aid after signing the Sales & Purchase (S&P)
agreement.
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Signing of the Sales & Purchase Agreement
After signing the Letter of Offer, the property purchaser will then need to sign the Sales & Purchase (S&P) agreement.
Property buyers will usually have a period of between 2 or 3 weeks to sign the agreement. After the time is exceeded,
the property buyer will need to ask the banks for an extension on the Letter of Offer.
Within the 2 or 3 weeks, allocated, not only will the Sales & Purchase agreement be prepared, relevant title searches will
also be conducted. After the S&P documents are completed, both purchaser and seller will need to sign the documents.
In the case of new development, a lawyer representative from the developer’s side will bear witness to the signing of
the documents. It is during this point of time where the remaining downpayment will need to be paid.
Delays at the period are usually caused by funds that are locked abroad, or in Fixed Deposit funds. Property buyers are
here usually advised to liquify their funds before had to avoid delays.
The most important items that need to be veri ed within the S&P are as below
Names
IC numbers
Property premises
Ensure that all additional details - such as parking lots - are stated in the S&P
Ensure that all details promised by the sales agent such as additional air-conditioning units, renovations and
furnishings are stated in the S&P
Signing the Loan Agreement
One of the nal documents that needs to be signed by the property buyer is the Loan Agreement. This agreement is
between the bank and the property purchaser. All the terms and conditions of the loan will be held within the Loan
Agreement. It should be noted that the terms are all usually skewed towards protective the banks’ interests. The cost of
creating this document will however be borne by the property buyer.
If the property of purchase is a multi-storey or multiunit development, a Deed of Covenant may also need to be signed.
This deed will detail the rights of the owners, and the dos and don’ts of the multiunit/multi-storey development.
Raring of pets in the unit

Units cannot be used for commercial activities
Speci cation of management fees
Appointment of building manager
Matters pertaining to the maintenance of renovation of the building
Memorandum of Transfer (MOT)
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The nal document will only need to be signed upon approximately 6 months after the completion of the development,
as the safety checks will need to be carried out rst. This document will transfer the ownership of the property from the
developer to the property buyer.
Vacant Possession and Keys
Upon completion of the development, the property buyer will not be able to move in until the proper safety checks have
been conducted and the development receives its Certi cate of Completion and Compliance (CCC). Thereafter, the
property buyer will be called over for the key handover session.
After approximately 6 months, the property buyer will need to pay the Memorandum of Transfer (MOT) fees to transfer
the ownership of the development to their name.
Read more about the process of signing the letter of offer, Sales & Purchase agreement, loan agreement and
memorandum of transfer. and as well as what to expect upon signing off the aforementioned documents with our
comprehensive guide of The property buying process for subsale, commercial and new developments.
Complete your knowledge with knowing
The differences between freehold, leasehold and bumi lot.

Loan documents needed to be prepared by Malaysians and foreigners working in Malaysia or oversea.
Payment schedule for newly developed property projects in Malaysia.
Thus concludes the guide to purchasing a new property. However, if you are looking to buy a property that is pre-owned,
you might the guide of The Complete Guide to Purchasing a Property in the Subsale Market especially useful to your
property buying journey.
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5/21/2018 The Complete Guide to Purchasing a New Development/Property | Buy Property Guide | PropertyGuru Malaysia

Buy Property Guide

The Complete Guide To Purchasing A

Planning Budgets & Costs of Loan Document

ii. Sale and Purchase Agreement Fees (SNP/S&P)

iii. Loan Agreement Legal Fees

iv. Stamp Duty on Memorandum of Transfer (MOT)

Advantages of Purchasing New Developments

- Free Legal Fees

Property Buying Criteria

Is the property freehold or leasehold?

What is the estimated rental in the area?

Mortgage Loan Documents

1.0 Getting Familiar with Property Terms

Standard Home Loan

Flexi Home Loan

Islamic Home Loan

Description of Property Feedback

Monthly Service Charge

Prevailing Interest and Repayment

Signing the Documents

Signing the Letter of Offer

Signing of the Sales & Purchase Agreement

Signing the Loan Agreement

Raring of pets in the unit

Memorandum of Transfer (MOT)

Vacant Possession and Keys

Complete your knowledge with knowing

The differences between freehold, leasehold and bumi lot.

Related Buy Property Guide

Loan Terms You Need To Know A Comprehensive Guide To The

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