Like everyone else, you bought a house. So welcome to the club!
Once a house owner, you realized that there is a lot of hidden cost of buying a house in Malaysia that no one talks about.
It is like a silenced topic that no one wants to mention. Everyone keeps asking you to buy this house and that house, but no one tells you about the hidden cost of buying a house in Malaysia that might occur.
You are angry. But, nothing you can do about it.
Today, in this article, we’re going to talk about it – the Hidden cost of buying a house in Malaysia.
What Are The Upfront Costs Of Buying A Home In Malaysia?
Entry Costs of Buying a Property
# 1: Paying For Loan Agreement Legal Fees
When you buy a house, you’re required to sign an agreement between Seller and Purchaser; this agreement is called the Sale and Purchase Agreement.
If you take a bank loan from a bank, you’re required to sign an agreement with the bank, and it calls Loan Agreement.
A bank lawyer will prepare the loan agreement, and lawyer fees will be incurred. The Loan agreement lawyer fee is included disbursement and stamp duty fees.
The estimation cost is about 2-3% of the loan amount. However, some banks may allow this cost to be financed with the loan.
# 2: Valuation Fee
When a borrower took a bank loan from the bank, the submission of a valuation report is required, especially for a completed property.
This valuation fee estimation cost is about 0.50% from the loan amount.
Mortgage Reducing Term Assurance ( MRTA ) is sold by the bank to cover the borrower in the event of Death and Total Permanent Disability (TPD).
But, most people bought the Mortgage Reducing Term Assurance ( MRTA ) is because the bank offers better interest rates if you purchase the Mortgage Reducing Term Assurance ( MRTA ).
An insurance agent sells Mortgage Level Term Assurance ( MLTA).
If you come across a banker sold to you, Mortgage Level Term Assurance ( MLTA), which they shouldn’t be in the first place ( they can get fired for this), but if you do came across, then the banker must be partnered with an insurance agent.
You can turn it down nicely, or if they insist you to buy, you can report their action to their superior or Bank Negara.
Mortgage Level Term Assurance ( MLTA) also covers Death and Total Permanent Disability (TPD).
However, Mortgage Level Term Assurance ( MLTA) is a more superior and expensive product compared to MRTA. Mortgage Level Term Assurance ( MLTA) comes with saving, and a level sum insured.
If you buy MLTA with a coverage of RM300,000, it will cover you for RM300,000 until the end of your tenure. Unlike MRTA, where the sum insured will be reduced year by year until it becomes zero.
# 4: Maintenance And Utility Deposit
When you buy a house from a developer, an under-construction property. You may have waited for 3 or 4 years for the property to complete.
Once it completed, you’re so happy. And can’t wait to collect the house key. Then one day, you received a letter from the developer to obtain the house key.
In the letter, it also requires you to bring in a few thousand ringgit for the deposit of maintenance and utility bills. Ugh!
Yes, some developers might tell you this in the early stage. Some may not.
But, all of us have to pay for this. So, keep some cash for the collection of keys!
# 5: Fire Insurance
Fire insurance is a once a year thing.
If the property still under a master’s title, usually the developer or maintenance office will buy a master fire insurance and divided equally to all units.
If the property is under an individual title, you can get your fire insurance or a bank will get it for you. Either way is fine.
The cost of Fire insurance will depend on the property value.
# 6: Assessment Tax and Quit Rent
The last hidden cost of buying a house in Malaysia is Assessment Tax or in Malay called Cukai Pintu.
Assessment Tax is charged twice a year. The tax will be calculated based on the property market value.
You need to pay Assessment Tax to your Municipal Council.
For the Quite Rent or Cukai Tanah, it is a once a year thing. You need to pay the Quite Rent to the Land Office or Pejabat Tanah. Once a year, a statement will be sent to you, and you will know which Land office is your property parked to.
Same like Assessment Tax, Quit Rent is also calculated based on the property market value.
#7: Cost For Perfection Of Transfer ( POT ) & Perfection Of Charge
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