How much cash do I need to buy a home?

Many first home buyers will think that they are able to obtain 100% full loan amount when they want to buy a HOME. However, things are not as wonderful as they think!

First of all, home buyers should know an important knowledge that "Bank will only provide up to 90% loan amount based on the value of the house".

Most home buyers are aware that when they want to buy a house, they would need to have at least 10% of the selling price of a house. For example, the selling price of a single storey terrace house is RM300,000, then I would need to have RM30,000 cash in order to pay for the down payment of 10%.

However, by only having 10% cash is not enough if you are not buying directly from The Developers. You would also need to consider about 1 more important thing which is the Legal and Stamping Fees for Sales and Purchase Agreement (SPA). For instance, a house of RM300,000 would require you to fork up another approximately RM10,000 for the stamping and preparation of SPA.

Not only these, you would also need to prepare a sum of money for Facilitation Document, which is also called as your Loan Document, which will cost a few thousand ringgits depending on the sum of money that you borrow from The Bank.

Therefore for a house of RM300,000, you would need to prepare at least RM45,000 to RM50,000 CASH in order for you to proceed to buy the house, so you can spot the gap between 10% down payment and the actual figure that you actually need to prepare.

Nowadays, properties in Prime Area are getting lesser, for example, properties in Penampang, Lintas, Luyang Foh Sang, Damai, Iramanis, Beverly, Lido are unlikely to be available as most of the owners stay in their own properties due to the convenience provided by the locations. Therefore, demands for these areas are extremely high and any availabilities of properties within these areas are much being concerned from time to time.

For prime area home buyers, it is almost impossible for them to buy a house within the value which is provided by the bank. For example, the asking price for a double-storey terrace house in Luyang area is RM600,000, however the bank only can provide value up to RM500,000. Therefore, the bank would only lend you RM450,000 MAX (RM500,000 x 90%). Thus you would need to prepare another RM100,000 cash + 10% down payment + legal and stamping fee for preparation of SPA + legal and documentation fee for loan document in order to proceed with the purchase.

This will be a good guide especially for First Home Buyers when they want to buy a home. If you happen to have any questions, please feel free to e-mail me at kwwah@hotmail.com

Thank you!