What fees should be paid when buying a house? - Various costs for you to understand

When buying a new house, you might worry about the overall fees & costs that need to be paid through the whole transaction. Since it is not a lump sum payment and involves a lot of money in the long run, by equipping yourself with sufficient knowledge on the fees or deposits will give you the confidence to proceed in a smooth property buying progress. 

Check the set out for your better understanding:

Here comes the bomb; What are all these fees? 

Briefly, there exist two sets of the cost you need to know which is the upfront cost and the running cost. By heading over to this article, it can give you a quick overview of the involved fees. This will potentially help you to know the surface before you decided to dig deeper into the property buying progress.

1. Upfront Cost

The upfront cost is the initial amount that you need to pay before completion of your property purchase. Simply said, it is the initial payment usually comes with a cash advance. 

1.1 Downpayment

Downpayment is an upfront deposit. For properties in Malaysia, the bank will usually offer you up to 90% of the property price which means you need to pay the rest of 10% cash from your pocket.

For instance, if you are planning to buy a condominium in Petaling Jaya for approximately RM600,000, you need to pay a minimum of RM60,000 downpayment.

When is downpayment take place? Briefly, here's the overview idea:

Once you are interested in a property, first off, you need to pay around 2-3% in advance for booking. After that, you need to complete the Sales and Purchase Agreement (SPA) and the remaining balance for the full downpayment is needed once SPA is signed.

1.2 Miscellaneous fees and charges 

If you think to buy a home just revolves around downpayment & loan, get ready for the other entry cost that should be factored into your budget. You need to add extra cash for the miscellaneous fees which include:

a) Sales and Purchase Agreement (SPA) Fees

SPA is a legal contract to qualify both parties; the buyer to purchase, and the seller to sell. Remember when you book a property and further with SPA signing? Yes, you need to pay for that. It depends on the actual property price according to this price tier:-

How to calculate? Here's a simple simulation:

Let's say you wanted to buy a property worth RM800,000, the amount you need to pay for SPA only covered up to second tier:

Calculation:
(500,000 × 1%) + (300,000 × 0.8%)
= 5,000 + 2,400
= RM 7,400

b) Stamp duty fees

You need to qualified all of the documents involved with stamp duty. And of course, more fees. Here's the price tier:

The calculation works the same above, but let us show you a simple simulation for a property worth RM800,000:

Next RM200,000 ⇒ 3% 

Calculation:
(100,000 × 1%) + (500,000 × 2%) + (200,000 × 3%)
= 1000 + 10,000 + 6,000
= RM 17,000

c) Loan legal fees

As you know, buying a house is a big deal & composed necessary paperwork throughout the process. You don't need to scratch your head preparing all of the documents because all you need is to let the authorized solicitor do the works.

The fees depend on the property price, varying from 0.5% up to 1%.

Let's take the same example of a RM800,000 property to do the calculation:

First RM500,000   ⇒ 1%
Next RM300,000 ⇒ 0.8%

Calculation:
(500,000 × 1%) + (300,000 × 0.8%)
= 5,000 + 2,400
= RM 7,400

Of course, the higher the property price, the more you are paying for the miscellaneous fees. These are the fees you need to first know before you decide to seal the deal. Getting a headache seeing all these numbers? Let's move on to the running cost before you choose to back out.

2. Running Cost

Congrats, you have proceeded on the actual purchase. But this is just the beginning. Now you can proceed to the running cost - the on-going amount that you need to commit regularly.

2.1 Monthly Installment 

Unless you are going to buy your house with cash, you need to request a mortgage from a bank or financial institution. You can regard monthly installment as the postpaid you pay for your phone monthly but the difference is, the mortgage has a fixed value. Long story short, the fixed value you pay to the bank is the amount you pay monthly for your house.

2.2 Maintenance Cost

This part is a bit tricky since it depends on the management bodies to decide the charges and use of funds. The fee usually covers the cost of grounds, building, sinking cost and related areas. If you love your house to be surrounded by facilities and services, paying for maintenance costs is worth the money since you can enjoy the maintenance-free living.

In essence, you must make an apple-to-apple comparison of the maintenance cost of different properties so you can know where your salary lays on every month. When you meet up with the salesperson, make sure to ask about the maintenance fee and sinking fund.

Disclaimer: The cost are based on industry averages. Actual figures may differ in accordance to government incentives and such. 

When it comes to money, you know it is crucial for you to detail out the calculations. Even more, in buying a house! You can refer to the above rough calculation on how the property price contributes to the downpayment, miscellaneous cost & monthly installment. With these brief ideas, you can finally do your checking on which property that fits within your budget. It will be easier for you to get the bird's-eye view of different properties. Math doesn't lie, so happy calculating!