10 Of Your Home Buying Questions Answered
5. How do I value my house?
For sub-sale (a pre-owned home), you need to do a house valuation to determine the market value of the property.
Former owners may set a price according to the market, but it is always good to have second, third or as many opinions as possible (Careful though, too many will confuse you so stick to reliable sources, or just check the classified sections on online and offline media or talk to a few property agents to get an idea).
Valuations are usually done by the banks to gauge the loan amount to offer but you can also do it on your own to determine if the selling price is according to the market value. However, only get the valuation done by an accredited agency for better accuracy. Keep in mind that sometimes your valuation price may not be accurate at all.
6. Can I get cash from my home?
Your home is your asset as the value of the property will most like go up. However, how good is the home if you can’t get cash out of it when you need it?
Be it for your child’s college education or to purchase your second property, you can consider these few ways to free up your home equity, or refinance your home (refer to #2).
7. Why would the bank reject my housing loan application?
There are various factors banks look into when approving a housing loan application. The factors range from the property’s location, borrower’s income, lack of a credit facilities record (it pays to have a credit card that you pay punctually), bad CCRIS reports, or the debt service ratio (DSR) may be over the maximum limit. Therefore, it is important to keep a clear record by making your existing loan payments on time.
8. How do I safeguard myself if the BLR increases?
Most property loans available in Malaysia are based on the prevailing Base Lending Rate (BLR), which is set at 6.6%. This is one of the lowest rates we’ve seen since 2009. However, with the new framework set to take effect in January 2, 2015, most are uncertain about the rates.
Update: On July 10, 2014, BNM announced an increase in the Overnight Policy Rate (OPR) by 0.25%, resulting an increase in the BLR to 6.85% by most major banks.
To safeguard oneself from the volatility of BLR, one can consider a fixed rate home loan such as the one offered by AIA.
9. Should I get a mortgage life insurance?
As the main breadwinner of a household, buying a home for your dependents is just half of the battle. You must ensure that your loved ones are protected as well, in the event you are no longer able to pay the mortgage of your house.
This is where mortgage life insurance comes into picture. You can either get a Mortgage Reducing Term Assurance (MRTA) or a Mortgage Level Term Assurance (MLTA) to safeguard your home in the event of death or total permanent disability (TPD). Find out which one suits your needs in our MRTA versus MLTA comparison.
10. Should I get a basic term home loan or a flexi home loan?
The difference between a conventional home loan and a flexi one lies in the amount you can pay every month. If you are a fixed salaried worker, it makes more sense to go for a basic term loan, as you pay a set amount every month for the full tenure. The drawback is, you won’t be able to save on interest charges in the event you decide to pay a lump sum or more every month.
Unlike flexi loan, you can make advance payment to lower your loan interest and withdraw the additional payments you’ve made whenever you like, without the need for complicated procedures. However, usually flexi loans come with a fixed monthly fees (usually RM10 per month) to maintain the current account.
Determine the type of loan that is suitable to your income by comparing the basic term, semi-flexi and full-flexi home loan.
As a first time home buyer, you will have many questions about buying your first home but these 10 are likely to pop into your head first. With these answered you should have more confidence on getting your first home.
If you have more questions on home buying, do leave a comment below!