What’s next after SnP? Well the situation varies depending on whether or not the property you have bought is under construction or is already completed. In this article I will only cover property that is under development. For fully completed properties, usually upon signing SnP, the previous owner will hand over the keys to the unit to you once the property is fully paid up in cash or by the bank.

For property under construction, (provided you are taking a bank loan), the developer will write in to your bank at certain intervals to request for a drawdown of the Loan amount. Below is a table of the allowed schedular drawdowns as stated in your generic SnP agreements.

Note that the above schedule only applies to Landed properties under construction. To counter check the developer, a third party architect is hired to audit the work that has been done on your property. Upon obtaining the required certification from the architects, the developer will send a letter to the bank, your Loan Lawyer and yourself requesting for the drawdowns as per the table above.

Lastly, Read more »

Hiring lawyers comes with a cost :). As such, to assist new home buyers who have just purchase, or those who are planning to buy their first dream home in Malaysia, I’ll be listing a list of Legal Fees to be aware of.

Lesson 2 - Lawyer Fees 

The fee structure listed below is applicable on to home buyers who fits the following criteria

1. Bought/Purchase a home which is still under developer master title
2. Obtained a loan facility from any Bank

For homebuyers who fulfilled the above criteria, do note that you would have to be prepared to fund the following lawyer Fees.

• Lesson 2.1 - Sales and Purchase Agreement (SnP)

SnP is an agreement between you (the homebuyer) and the developer. It serves to protect the interest of both paarties in the event of a dispute and the clauses in the document is safeguarded and dictated by Malaysian Law.

During the SnP, the developer may impose on the buyer several other “Agreements” for eg The Deed of Mutual Covenant. In brief the Deed Of Mutual Covenant is used to protect the rights of each and every individual household within the gated community as well as the right for the developer to run the maintenance and upkeeping of the facilities within the said property within a certain period of time upon completion.

Legal fees for SnP is dependent on the Purchase price of your Dream home. Basically you should be able to estimate your lawyer fees based on the following

1. First RM100000 - 1%
2. Next RM100000 - RM4.9 million - 0.5%
3. RM4.9million - RM10million - 0.25%
4. Above RM10million - Negotiable.

SO typically for a property costing RM300000, do expect to fork out at least RM2000 in professional fees alone for SnP.

There are several other Miscellanous fees attached tot he whole SnP billl as well for eg Travelling, Stamping, Photocopying, Miscelllanous (yupz there’s a space for Miscellanous) and Searches (Bankcruptcy, Title). These miscellanous fees could easily add another RM300-400 in your final bill. Read more »

In short, this is the proposed schedule of activities, based on our experience:

1. Search for a good property at a good location

2. Choose a good unit, taking into consideration the feng shui, the direction the house is facing, the surrounding things to take note of, etc. I’ll cover that in another post.

3. Put down a booking fee for the unit.

4. Shop for a good home loan. Go to or call up banks. The trick is to call the banks and get the banker to go to your house for a presentation. During the presentation, ask everything you need to know, including the penalties and perks.

5.  Choose either flexible or conventional plan. Difference is the interest rate and the flexibility. More details should be covered in another post. Personally, we prefer flexible loans, because we factor in the possibility of us earning much more in the future and are able to pay off our housing loan much faster.

6. Once you have found a good home loan deal, get the banker to generate an offer letter. The offer letter will be ready in a few days time. Sign it, in order to lock in the offer. If not, the offer will lapse after the limited period. Check with the banker because the expiry date would be different for different banks.

7. Once you have decided on which bank to take the home loan from, find out the bank’s panel of lawyers. Check if any of the lawyers is also on the panel of lawyers doing up the Sales and Purchase Agreement.

The objective is to have one lawyer handling both the loan documentation and the Sales and Purchase Agreement. Why? So that you can save on lawyer fees, which could range from hundreds to thousands, based on discounts given. Another advantage is that they can get the documentation up faster too, minimizing delays in payments etc, without having to deal with another party.

As for the shopping for home loans from banks, I would leave it to another post.

8. Once you have found the lawyer to do both loan and Sales and Purchase Agreement documentations, set a date to sign the documentations. Could be done on the same day or different days. If it is done on the same day, then it saves you time and hassle.

9.  Sign the documents, pay a deposit for the lawyer fees and wait for the lawyers to get back to you with the stamped documents. Once all the documents are in place, then only you pay the lawyer in full.

10. After that, it is time to anticipate the first draw down,  which also means, time to start paying the home mortgage. Usually the developer draws money from the bank in stages, according to a schedule given in the Sales and Purchase Agreement. Will put up a sample schedule in another post.

11. So, based on the schedule, you can plan your finances properly, in order to minimise the amount of interest you have to pay. Oh, btw, this only applies to flexible loans.

Simple isn’t it? If you practice this often enough, it will become like a second nature to you. Buying a house/property will be like buying rice. Ahh.. how good!

So what after the signing of the Sales and Purchase Agreement? Time to find ways to finance it, right?

No! Utterly wrong! Though there’s no hard and fast rules, but this is one mistake you could make, based on our experience. And this is THE mistake we almost committed.

Why?

Because by the time you have signed the Sales and Purchase Agreement, the clock has started ticking. You have limited time (how much, partner please help me to fill in) to get the method of financing in order.

And if you do not manage to secure a loan from any banks and when the first drawdown, meaning the developer is asking for money, you are liable to pay the interest of usually (how much again partner… hehee).

Usually, if you have a clean financial record and have a good relationship with all banks, the likelihood of you not being able to secure a loan is rather low.

Let me share with you the mistake we made.

After putting down the booking fee for the house, we went shopping for home loans, which is a correct thing to do. But the uncertainty we had was that we did not know when is the signing of the Sales and Purchase Agreement, as the developer was yet to receive their developer’s licence.

It was about 5 months wait, before we received a call asking us to sign the Sales and Purchase Agreement in 2 weeks’ time.

What went wrong was that, during the 5 months, after the initial hype of looking for a home loan and finally narrowing down to two banks, we did not sign any offer letter, despite one bank having generated one for us. We did not know that the offer letter will lapse if we do not sign it and thus making the offer invalid.

And so, after the lapse, we still continued to wait for news on the Sales and Purchase Agreement signing.

What we should have done was that, during that period of time, continue to monitor the banks for better offer on home loans and promotions given out. At the same time, find out the panel lawyers for both the banks and the developer. This information will come in handy when you need to decide on which lawyer to take.

Even though the uncertainty of a date for the signing of SnP was a challenge, we should have still decided on the bank we want to take home loan from, and then to generate the offer letter and sign it, meaning locking in the competitive interest rates. This way, makes it easier for you to decide on the lawyers.

Choose a lawyer who can handle both the SnP and the loan documentation, meaning the lawyer can represent both the developer and the bank. There’s always the option of using an outside lawyer, which could be to your advantage as well. More analysis on this in the coming posts.

So, our advise, based on our own experience (disclaimer: use this with your own discretion. Owner of the blog is not responsible to any loss incurred from using this advice.) to be on the safe side, to start shopping for home loans from all banks from the day you put down the booking fee.

Better still, secure an offer letter from the bank, a letter which states how much is the interest rate the bank is willing to offer to you, based on the buying price and the type of property.

But, be aware that if you do not sign the offer letter, it will lapse after a few days to 2 weeks, depending on banks. And once it lapses, you would have to submit an application for loan all over again through the banker.

And the banker would have to get approval from the headquarters again. The disadvantage to this is that you have to endure the paper work and getting documents in order again - hassle and inconvenience.

But again, do take note also that the rates on home loans are very competitive. The rates offered by a bank can vary within months, maybe even weeks! One advantage of securing a deal after the signing of Sales and Purchase Agreement is that you might get better rates for your home loan.

And yet again, there’s the risk of time running out. So you have to weigh the pros and cons.

Look out for the nutshell steps to what you should do when you buy a new house in the next post.

Four thick sets of paper with lengthy words and about over 100 signatures later, the house is legally ours.

Yup, you are right, the thick sets of papers are the copies of the sales and purchase agreement (SnP) for the house. One set is for the purchaser, one copy for the developer, one copy for the lawyer and another for the bank.

If you are wondering why the need for so many signatures, I’ve included the signatures of the initials on every page of the agreement to signify that you have looked at the page.

According to the lawyer firm, the agreement document is the standard SnP agreement drafted by the Malaysia’s Local Housing Ministry and is customized according to the property purchased and buyer. On top of the page, is the title Schedule G.

The agreement started with all the legal terms, the usual jargons lawyers love to bore you with, so that you will get so confused reading them that you give up and just sign on the dotted line.

After that, is the plan of the whole housing development with the lot numbers, followed by the house layout, architectural designs from the four views - front, back, sides, the dimensions, measurements, the details of purchasers, the details of the house such as address and name of development and details of the developer.

The whole set ended with space for our precious signatures.

 On top of that, we have to sign another four sets of slightly less thick sets of paper for the deed of convenant - the mutual agreement on the common facilities offered as it is a gated community with security features.

Basically, what the deed is all about is that you agree not to be a nuisance to all the other owners or tenants of the houses within the gated community, so as to have a condusive living environment. I shall not bore you with all the naggy terms like no aggressive and noisy behaviour and no littering within the compound.

But, really, I feel that all that the management of the gated community is interested in, is the six months in advanced payments for the maintenance and security service provided to the residents - the guard house, the CCTVs and the high wall with security features.

Make purchasers sign this deed so that they have no problems collecting the fees in the future. Somemore, there’s this clause in there saying that the management reserves the right to change the monthly fees as they like. What a ’save-your-ass’ clause. Somehow, my partner said all the owners can change the management if we are not happy, provided that everyone agrees.

We were at the law firm for a few hours, looking through the agreement and also asking questions. The law jargons did bore me and after reading a few pages, my attention span wavered. Arghhh…. Well… if there’s anything we do not agree to, it is too late now….

Anyway, when I finally took the pen and started signing away, it felt like a signature-signing exercise - practising to perfect my signature. There was a slight sense of jubilation and a sense of achievement after the task has been completed. However, those feelings didn’t last long, at least for me.

Feelings of insecurity on how to finance the house, together with a tinge of regret, replaced the earlier feeling. Maybe I’ll dwelve more into why we were feeling like this, in the next post….

In about a week’s time, we will be signing our Sales and Purchase (SnP) Agreement for the house. The appointment with the lawyer is set, the agreement papers are ready. Just waiting for us to put our beautiful and precious signatures to the paper. And to seal the deal.

Let’s keep our fingers crossed for the bank offer letters to be ready at about the same time too, to lessen hassle.

Jittery, unsure, nervous, exhilarated. Can’t deny am feeling all that. So many what ifs questions popped up. And also the thought of finally owning our own piece of land also drove my senses wild.

Is this the same for all first time buyers of houses and properties? Would be curious how others feel too. Feel free to share your experiences in the comments. I believe other first-timers will be curious to know too!

Let’s hope everything goes on smoothly!

Now that we have shown our sincerity in buying the house by putting an earnest deposit (roughly 2-3% of the market value of the house) its time to call in the lawyers to seal the deal.

Lawyers

Either you love them or you hate. Then again they play a critical role in the transaction by ensuring that the rights of both parties ie you and the developer are protected.

There are a lot of lawyers in the market these days, both good and bad are available for hire. Certain developers do tend to make the buying process easier by providing a panel of lawyers for you to pick and choose.

My advice, get to know as much as you can from the lawyers in term of understanding your rights, the lawyers role and responsibility in the property purchasing process, and last but not least, the cost!!

However, don’t just be blinded by the cost, go for lawyers who are able to provide you with excellent service. Cause end of the day, its the service that counts.

 SnP (Sales and Purchase Agreement)

A legally binding agreement which is made between the buyer (you) and the seller (developer, owner etc). The agreement will document your purchase price, lot no, date (most important), your name, developers name and etc.

The document also spell out all the necessary terms and conditions as approved by Malaysian law. Honestly I havent seen one yet as I have yet to sign my SnP. However i was told that all Snp agreements are taken off a template that has been approved by the government.

 Taxes

A great man once said, “There’s 2 things thats certain in life, death and taxes”. Yupz, you have to pay taxes in order to buy a house. Thats the Malaysian Law and the taxes are called Stamp Duty.

In order to buy a house, you would have to pay a Stamp duty Tax on the SnP. This is actually the cost of transferring the land title of your house over to your name. Here’s how it is calculated

On the first $100,000 - 1%

On the next $100,000 to $ 4,900,000 - 0.7%

Note though that this is only payable to your lawyers in order to get the land title transferred to your name. In certain cases, you may save on this stampduty all together, but i am not gonna covered it here

The second tax that a buyer needs to pay is for the bank loan documents. Almost allnew and first time home buyers would have to pay for this unless of course, you’re buying you rnew home with cash.

The rates are as follows

0.5% of total loan amount.

This tax is payable upon signing the bank loan agreement.

 Hmmm other than that, there are a few more annual taxes that you’ll have to pay your local land authorities once you occupy your new home. We’ll cover that as we experience it.

Thats all for now… oh yah…never never pay your earnest deposit directly to the developer or the owner of the house that you plan to buy. Always go through a lawyer