When comes to the purchase of a completed property, you’ll need to aware of the cost occur. Completed property or Subsale properties are among the best investment right now. If you look hard enough, you might find a good deal in this market.
Despite the attractive return, buying a subsale property require lots of cash compare to under construction property. So, what are the cost involve in the purchase of a completed property?
1. Downpayment Of Property
A purchaser will need at least 10% of the property purchase price as a deposit to the Seller. The first 3% will be collected during property booking and the balance 7% is during the signing of Sale and Purchase Agreement (SPA).
For example,
SPA Price : RM300,000
10% Deposit : RM300,000 x 10% = RM30,000
2. Cost In Preparation of Sale and Purchase Agreement (SPA)
When a Purchaser buying a house from a Seller, a SPA will be executed as a contract of buying and selling. The SPA will be stated the conditions and terms of buying and selling. Once both parties agreed, then they will sign a SPA to seal the deal.
You’ll need a lawyer to prepare the SPA. The SPA lawyer will charge lawyer fees on preparing the SPA. The SPA lawyer fees will include the following items:-
a. Professional Legal Fees with SST
– The new charges of Professional Legal Fees will be based on the following scale:-
– The lawyer fees charges will be charged based on the above scale with GST.
b. Property Stamp Duty
2019 STAMP DUTY SCALE (From 1st January 2019-30th June 2019)
Stamp duty Fee 1% : For First RM100,000
Stamp duty Fee 2% : RM100,001 To RM500,000
Stamp duty Fee 3% : RM500,001 and above
2019 STAMP DUTY SCALE (From 1st July 2019)
Stamp duty Fee 1% : For First RM100,000
Stamp duty Fee 2% : RM100,001 To RM500,000
Stamp duty Fee 3% : RM500,001 and RM1,000,000
Stamp duty Fee 4% : RM1,000,001 and RM2,500,000
For example, If property price is RM1mio. The stamp duty will be:-
RM100,000 x 1%=RM1000.00
RM400,000 x 2% = RM8000.00
RM500,000 x 3% = RM15,000.00
Total Stamp duty to be paid : RM24,000
There are also 100% rebate on stamp duty for the first RM300,000 for first-time home buyers if your property price is less than RM300,000.
Criteria For First-Time House Buyer Stamp Duty Waiver:
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Must be first-time house buyer. Never buy a house before and never inherited any property.
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The Property Price must be less than RM300,000, if purchased between 1st January 2019 to 31st December 2020.
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The Property Price must be less than RM500,000, if purchased between 1st July 2019 to 31st December 2020.
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Stamp duty exemption is capped at RM300,000 on the property market value and loan amount.
c. Disbursement Fees
The disbursement fees will be included adjudication fees,land search,state registration fees on Transfer, winding up and bankruptcy search, traveling and photocopy, etc. The cost will be ranging of RM2000-2500.
d. SST, 6%
The SST will be charged on the professional fees section only.
The general rule of thumb, a purchaser might need to prepare about 3%-4% of the SPA Price for Lawyer Fees in Preparation of SPA, included everything.
3. Loan Documentation Lawyer Fees
If a Purchaser required to apply for a home loan, which lots of us will, then you’ll need to pay the lawyer fees to the bank lawyer.
Bank’s lawyer will charge a significant amount of lawyer fees as below:-
a. Professional Legal Fees with SST
– The new charges of Professional Legal Fees will be based on the following scale:-
– The lawyer fees charges will be charged based on the above scale with SST.
– Other than that, a lawyer will also charged 10% from principal amount fees for every sub-documents with a minimum charge of RM300.00 each or maximum fees of RM1200.00.
Note:
Normally, most banks will allow a borrower to finance their Loan Documentation Lawyer Fees with the loan to lessen the financial burden of the borrower.
b. Loan Document Stamp duty
The stamp duty for loan will be 0.50% from loan amount. For example, RM300,000 x 0.50% = RM1500.
There are also 100% rebate on loan stamp duty for the first RM300,000 for first-time home buyers if your property price is less than RM300,000.
Note : RM300,001 to RM500,000 purchase price stamp duty exemption only applicable after 1st July 2019.
c. Disbursement Fees
The disbursement fees will be included the purchase of documents, registration fees, land search fees, bankcruptcy search, private caveat, traveling, and photocopy, etc. The cost will be ranging of RM1800-RM2000.
The general rule of thumb a purchaser might need to prepare about 2%-3% of the Loan Amount for Lawyer Fees in Preparation of Loan Documentation included everything.
4. Valuation Fee
For all the completed property, a submission of valuation report from professional valuer firm is required before disbursement. The valuation fee cost will be in the range of 0.30% (estimation) from the property value.
5. Bank Processing Fee
Certain banks will charge one-time processing fees. Most banks do not charge processing fees, however, if the borrower opts for Full Flexi Home Loan Product, the banks will require RM200 one-time fees.
Bank processing fees will be charged with GST. In the range of RM50-RM220.00
6. Another cost to consider :-
a. Renovation Cost: Can easily ranging from RM20k to RM50k.
b. Furniture & fittings Cost: Buying a new furniture and appliances for the new house might cost you too.
c. Moving Cost: To rent transport for house moving.
Summary:
1. Downpayment Of Property, 10% x SPA Price
2. Cost In Preparation of Sale and Purchase Agreement (SPA), 3%-4% of SPA Price
3. Loan Documentation Lawyer Fees, 2%-3% of Loan Amount
4. Valuation Fee, estimation 0.30% x property value
5. Bank Processing Fee, RM50-RM200
6. Another cost to consider :-
a. Renovation Cost: Can easily ranging from RM20k to RM50k.
b. Furniture & fittings Cost: Buying a new furniture and appliances for the new house might cost you too.
c. Moving Cost: To rent transport for house moving.
For Example,
Property Price RM500,000.00
The following calculation is based on estimation only.
1. Downpayment Of Property, 10% x RM500,000= RM50,000
2. Cost In Preparation of Sale and Purchase Agreement (SPA), 4% x RM500,000= RM20,000
3. Loan Documentation Lawyer Fees, 3% x RM450,000 = RM13,500.00
4. Valuation Fee, estimation 0.30% x RM500,000 = RM1500
5. Bank Processing Fee, RM200
6. Other cost to be consider :-
a. Renovation Cost : RM30k
b. Furniture & fittings Cost : RM20k
c. Moving Cost: RM2k
Total cost : RM137,200.00 @ 27% from SPA Price
However, if we take out ‘other cost to be considered’. The total cost will be RM85,200 @ 17.04% from SPA Price.
Hope this article will guide you through owning your dream house.
Good luck!
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