Buying a house can be one of the most rewarding financial decisions to make in life, yet it may be complicated and stressful especially when it comes to expenses to pay for along the process. It does take a lot more commitment than you could expect. The amount of money involved to buy a property could simply take away your savings if you do not plan wisely. It may even force you to incur long-term debts along the journey.
Many would think that buying a property is all about settling the downpayment and securing a loan to be paid via monthly installments. In reality, there are other costs that you need to take care of apart from downpayment. Here is the list of other costs that you need to know:
With all these additional costs, you are bloated with more cash to spend. To help you understand better, we have included an example of the amount that you need to bear when buying a house:
In this case, we have illustrated a total calculation of how all these additional costs can affect your cash flow when buying a house. Let's say you buy a home worth RM300,000. You need to pay a 10% down payment which costs you RM30,000. With legal fees, stamp duty, and loan agreement fees and insurance (MRTA/MLTA) involved, you need to add up an additional cost of RM12,050.
Legal fees, Stamp Duty, and Insurance are factors that you need to consider. Insurance protection is the mandatory requirement imposed by the Bank as part of the condition to offer your housing loan. This insurance is referred to as Mortgage Reducing Term Assurance (MRTA) or Mortgage Level Term Assurance (MLTA), you should know that it usually costs 4% of the total value of your house. Many have resorted to putting these fees to be covered under the housing loan which unfortunately will lead you to a much bigger amount to be paid with all the interest over the tenure of your mortgage. The amount can be eye staggering; may cost up to double up or more of the original amount over the years of tenure under your housing loan.
Apart from paying the fees stated above, furnishing and renovating your newly acquired property can cost you even more cash and savings. Bear in mind, these payments are often in form of cash. Some home buyers find it hard to pay the amount in a lump sum, so they decided to take a personal loan to cover these expenses.
In summary, without proper cash flow planning, many property buyers ended up with huge long-term debts by taking up these loans and facilities.
Despite all of the extra expenses that can be a challenge when purchasing a property, there are still ways to assist you. With jomSETTLE™, you can lower your annual payment for the next 35 years by first settling one of these payments; MRTA/MLTA insurance/Legal Fees/Renovation Fees with your credit card. This way, you can avoid paying a high-interest rate and reduce the amount of debt you have to pay off in the long run.
jomSETTLE™ is the only fintech platform in Malaysia that helps you manage your payment obligations while still have control over your cash flow. It enables you to make all property transactions via credit cards, even when your recipient does not accept one or has a credit card terminal. You can make your property transactions on stamp duty, down payment, deposit, legal fees, renovation fees, and even rent with credit card payment. Our goal is to help you gain access to positive cash flow while securing your dream properties.
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