Having helped Singapore mortgage customers to take up housing loans for coming 10 years as well as personally completing a couple of local property transactions, I was lulled into thinking that buying a property anywhere is a simple, straightforward process. Oh boy, am I wrong. Here are the things that I learnt when buying a Malaysia property.
Your choice of conveyancing lawyer is of utmost importance as the Malaysia property sales and purchase process is extremely tedious. That impression is firmly imprinted in my mind as no Singapore conveyancing lawyer has ever asked me for help in chasing the bank or the seller. Plus I did not have to help my own conveyancing lawyer to calculate the completion date.
Perhaps the cry for help truly stems from the complexity of a Malaysia property transaction. Unlike Singapore property transactions where completion of the transaction falls on one single day, in Malaysia, the mortgage lender has to first disburse part of the buyer's loan to fully clear the seller's loan, followed by the buyer paying the balance in cash, then for the seller to take a couple of weeks to finish their paperwork before the seller completes his or her end of the bargain.
Conveyancing legal charges is fixed in Malaysia (around four times the price of a normal Singapore lawyer), but some lawyers may offer to give you a hush-hush discount. Do not go for the cheaper lawyers at the expense of competency. Imagine having to put in writing every little thing with your lawyer and at the end of the day, your lawyer still messes up. You do not want to be in a situation where you have to protect yourself against your lawyer when your lawyer should be the one protecting you. And in Malaysia, the buyer actually pays the legal fees before the work is done, leaving buyers no leverage against these wayward lawyers. Suing your own conveyancing lawyer is going to be a waste of time and resources so pick your lawyer wisely.
Under Construction or Just Completed Projects
A buyer has to bear in mind when it comes to properties that are under construction, the significantly higher risk of a developer taking a protracted period or worst case, never completing the property development.
The Malaysia housing development regulations tend to be less stringent, which may lead to an actual completed unit deviating from the floor plan at the time of purchase. The reputation of the developer is of utmost importance when it comes to purchasing uncompleted properties.
For properties that are recently completed, make sure that the Certificate of Fitness (CF) has been obtained. While the Malaysia government is relaxed about the CF, a development without CF cannot be insured for fire and the owner also cannot sell the property until CF has been obtained.
The key factors to considering a home loan are interest rates, loan amount and loan tenure. Banks operating in Malaysia can offer higher loan amounts in ringgit and longer loan tenures. You may also want to consider Malaysia banks operating in Singapore, which can offer Singapore dollar home loans at significantly lower interest rates, but of a lower loan quantum and tenure.
Pay particular attention to the loan amount if you are to take up a SGD loan. In my Letter of Offer, Page 1 states an absolute loan amount of S$1,095,000. Page 2 states a loan of 70% of the purchase price or valuation, whichever is lower. 70% of the price in ringgit is RM 2,514,400. However, based on an exchange rate of S$1.00 : RM2.55, RM 2,514,400 works out to be S$986,039. The difference in these two figures is more than S$100,000. If in doubt, clarify from the bank and put it down in writing. Personally, I clarified with my banker and she confirmed verbally that it was the higher number but subsequently reneged on her word. Trying to reason with the bank when such cases happen may also be fruitless so putting things down in writing is paramount. In my case, the bank's position was that there was no ambiguity in the Letter of Offer. Enough said.
The numerous Singapore property cooling measures is an impetus for local property investors to park their money overseas. As long as we bear the above in mind, buying a property in Malaysia can still be a straightforward process.