Are you interested in applying for a home loan but you don’t know what housing loan documents in Malaysia to prepare? If you are a first-time homebuyer, the loan application process for purchasing a property may appear complicated.
However, despite what many people think, applying for a house loan can be a seamless process if you’ve prepared all the necessary documents. We’ve made your property purchasing journey even easier by compiling the essential housing loan documents you need for your loan application.
Property Titles In Malaysia
Before delving into the types of housing loan documents in Malaysia, you should first familiarise yourself with property terms, for example, freehold and leasehold.
1. Freehold Property
Freehold property is where the homebuyer owns both the land and the property in it. This is usually the case when purchasing a freehold bungalow, private home or condominium on a certain piece of land.
If a developer buys a freehold land, it would have the ownership in the form of a Master Title. It allows the developer to build landed houses and transfer the properties to the buyers upon the completion of the sale.
However, for condominiums or high-rise strata buildings, the buyer will only have ownership of a portion of the residential development, which is distributed in the form of a Strata Title. Moreover, the developer will retain ownership of the land.
2. Leasehold Property
On the other hand, a leasehold property is where the buyer owns the property but not the land. Once the leasehold period expires, the State will reclaim the land.
If the owner wants to retain the land, they will have to apply for a leasehold extension before the lease expires. If the State grants the renewal, they can extend their lease in exchange for a premium payable based on the market value of the land.
Leasehold properties have 30, 60, 99, to a maximum of 999 years of tenure. Unlike freehold titles, leasehold title owners must abide by stricter rules and regulations.
The buyer will be responsible for the maintenance and development of the land as per land legislation. However, the State authority can forfeit the lease if they find the buyer to be unfit to take care of the land.
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Housing Loan Document Malaysia: What You Need In A Property Transaction
1. Letter Of Offer
The Letter Of Offer (or the Letter of Intent to Purchase) is a housing loan document in Malaysia prepared by the appointed realtor that states the buyer’s intentions to purchase the property.
There are several important details to note in the document, such as the selling price of the property (including the fixtures and furnishings) and the date the Sales And Purchase Agreement (SPA) should be signed.
The letter of offer will also outline the initial conditions of the purchase to protect the buyer and the seller. An example would include the conditions to return the deposit if the sale does not go through.
2. Sales And Purchase Agreement (SPA)
The SPA is a legal housing loan document in Malaysia that contains details of the property transaction between the buyer and seller. This agreement finalises legally binding terms and conditions in the home buying process and safeguards the homebuyers’ and developers’ interests.
It protects the homebuyer by ensuring that the seller cannot change anything stated in the agreement to their benefit and vice versa. Buyers are also responsible for paying the stamp duty on the SPA.
3. Memorandum Of Transfer
The Memorandum of Transfer is a document that informs both parties that the transfer of ownership has legally been completed. Like the SPA, there is also a stamp duty charge.
However, buyers do not have to pay the stamp duty if they transfer the property to their house. Moreover, a 50% exemption will be given when a parent transfers the property to the child or vice versa.
4. The Facility Agreement
The Facility Agreement (or loan agreement) details the terms and conditions of the housing loan taken by the buyer. The bank’s lawyer prepares the agreement as it’s designed to protect the bank’s interest. In this situation, the buyer has to pay the facility agreement’s legal fees.
Read More: Refinancing Housing Loan Malaysia: All You Need to Know
Homeownership Costs In Malaysia
Managing your finances is a big part of being an independent homeowner. However, one crucial cost many new homeowners tend to neglect is the land taxes paid to the local authorities each year.
Here are the three types of land taxes homeowners should take note of:
Assessment Rates (Cukai Pintu/Taksiran)
- Property assessment rates are a land tax collected by local councils to develop and maintain the local infrastructure and services. Examples include:
- Cleaning and maintaining public parks
- Collecting municipal rubbish
- Construction and maintenance of public infrastructure
Quit Rent (Cukai Tanah)
- Quit rent is the land tax the respective state governments impose on homeowners. The state government’s land office assesses the land the home is built on and bill the owners annually.
- In June 2018, Selangor created the parcel rent tax for strata properties in Selangor to replace the quit rent tax. This change makes selling and transferring ownership of strata properties easier.
- This tax charges each parcel owner according to the total square footage of the building. Furthermore, the state government’s land office will handle the billing and collection of payments.
Read More: Term Loan vs Flexi Loan Malaysia: Know the Difference
How Bluebricks Can Help You
If you are interested in applying for a housing loan but do not know how to begin or know if you have all the necessary documents, we can help lift your worries.
Our experts will help you with your loan submission process; we will prepare a list of documents required for the loan, fill in the necessary documents and submit them to the bank for you.
Housing Loan Rejected Services
Bluebricks is one of the leading loan agencies in Malaysia in terms of loan approval rates. With our extensive knowledge and experience developed over 10 years of service, we help our customers obtain the deal that best meets their needs.
We can identify why your application was rejected and improve your chances of approval through proven strategies. Find out how our effective housing loan rejected services can enhance your loan application today!
Refinance Housing Loan Rejected Services
As a trusted loan consultant company, we offer refinance housing loan rejected services for you to refinance your loan with ease.
Our solutions will leave you with extra cash in hand to pay for other expenses or commitments like car loans, credit card bills and more.
Get in touch with our experts to discover how we can help solve your financial issues.
Housing Loan Document Malaysia – FAQs
For many homebuyers, purchasing a new home can seem like a long, drawn-out affair. That’s because it is.
In Malaysia, it takes around 3 months to buy a freehold property and 6 months for leasehold properties. The process begins with a property inspection and ends with paperwork signing.
Moreover, the buying process can get complicated. Therefore, knowing more about housing loan documents in Malaysia is best to speed up your property-buying journey.
1. How long does it take to verify housing loan documents in Malaysia?
If you prepared all the required documents correctly, it would only take one or two days for loan applicants to get a verbal answer as to whether the bank has approved it.
A bank officer will check on all the submitted documents to ensure everything is in order.
Upon ensuring all documents are in order, the bank will move on to acquiring confirmation from government authorities, such as:
- Central Credit Reference Information System (CCRIS)
- Income Tax Department (LHDN)
- Employees Provident Fund (EPF)
Upon receiving confirmation from all three parties, the bank will only then proceed with the loan approval.
2. Does my employment affect the housing loan documents I need to prepare?
Generally, you would need to prepare a copy of your IC or passport, salary slip, bank account and EPF statements, income tax receipt and property booking form.
However, this varies according to your type of employment, for example, if you have a fixed salary, are self-employed or are a freelancer.
3. How will I know if my housing loan documents are approved?
If your loan is approved, your loan officer or processor will call or email you.