Tips on buying a home in Malaysia: Loan and insurance

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Buying a home can be one of the largest and the most valuable investments you will make during your life. Thus, considerations and financial planning should be done thoroughly and carefully before taking the next step. If owning a home is part of your financial goals, you need to assess your ability based on savings and income. You can use this mortgage calculator to calculate the monthly installments, the total amount payable and the amount of interest for any loan package.

 

How to finance your house purchase

Many people obtain housing loans from banking institutions that offer a variety of loan packages to meet the unique needs of potential homeowners. Make sure you compare interest rates, features of the loan, fees and charges, and the quality of banking services before making a decision. Also make sure you have all necessary documents ready prior to submitting your loan application.

 

Common home loan packages

You can choose either a term loan, overdraft facility or a combination of both depending on your financial situation.

 

Margin of financing

Depending on the current value of the home market, financing margin can be as high as 95% of the price of the house. Financing margin may be affected by the following factors:

  • Type property
  • Property Location
  • Age of borrower
  • Borrower’s income

 

Home loan terms and features

Typically, the loan tenure can range up to 30 years or until the borrower reaches the age of 65 years, whichever is earlier.
Features of home loan package vary between banking institutions. So do not make decisions based on one particular feature alone. Do take into consideration features such as the flexible repayment terms or staggered repayment scheme. Choose the features you are most comfortable with and appropriate with your repayment ability.

 

Homeowner’s insurance

Insurance coverage is one important aspect when you buy a home because of insurance gives you financial protections for you and your loved ones. Consider the following insurance policies:

  • Homeowner’s / Fire Insurance
  • Mortgage Reducing Term Assurance (MRTA)

When applying for a mortgage loan, you need to know both your rights and responsibilities as borrowers and the bank’s rights and duties as a lender.  Remember you will be dealing with the bank for a long period of time, so make sure you get the facts before committing.

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