Home Buying Closing Costs

Ask any home buyer what are their biggest worry when they bought the first home for the first time, more often than not, the answer you’ll hear is THE CLOSING COSTS FOR ON HOUSE. By that we don’t just mean finding the initial earnest deposit but the additonal costs incurred throughout the whole home buying process.

To help you, we’ve gather a list of mostly unavoidable to every house buyer but sometimes hidden and therefore unbudgeted-for costs you’re likely to encounter on the path to buying your dream home. Using this list will help you to estimate the closing costs you need to set aside to meet them.

Stamp Duty

Stamp duty chargeable on the Sale and Purchase Agreements is RM10 each. The stamp duty chargeable on the Memorandum of Transfer (MOT) is calculated based on the purchase price as follows :-

First RM100,000.00 @ 1.0%
Next RM400,000.00 @ 2.0%
Remainder above RM500,000.00 @ 3.0%

In addition please bare in mind you will need to pay the stamp duty on your Loan Agreement, the cost of which is based on 0.5% of the total loan mortgage.

Legal Fees

The legal process involved in buying or selling a property, called conveyancing, is complex. You will need to appoint a solicitor to prepare all the necessary legal contract to effect the legal transfer of the property.

The legal fees for preparation of the Sale and Purchase Agreement are calculated as a percentage of the purchase price using the following formula:

First RM150,000.00 @ 1.0%
Next RM850,000.00 @ 0.7%
Next RM4.0 Million @ 0.6%
Next RM6.0 Million @ 0.5%
Over RM10.0 Million @ min 0.25%

House Valuation Fee

If you’re arranging a mortgage, your lender will typically require that the property be valued. Some lenders may perform this free of charge but most will levy a fee.

The valuation fee is calculated as a percentage of the purchase price using the following formula:

First RM100,000 @ 1/4%
RM100,001 – RM2.0 Million @ 1/5%
RM2,000,001 – RM7.0 Million @ 1/6%
RM7,000,001 – RM15.0 Million @ 1/8%
RM15,000,001 – RM50.0 Million @ 1/10%
Over RM50.0 Million @ 1/25%

Building and Life Insurance Cover

After your mortgage is granted you will have to buy insurance cover on the building: your mortgage lender will insist on this to protect their investment and you will need it to protect your home against any damage.

Your mortgage lender will also insist you take out life cover to ensure that your mortgage will be repaid in the event of your early death. This type of insurance is called MRTA (Mortgage Reducing Term Assurance). MRTA costs are dependent on the age of the borrower and the amount of mortgage on the property. As a rule of thumb, the cost of MRTA is usually estimated at 3 to 5% of the total mortgage amount. (The older you are, the higher cost of MRTA you have to pay)

Utilities Deposits and Improvement Cost

Never forget you may need to apply necessary reconnection of water, electricity, gas and telephone as well as decorate or furnish your new home – inside and out! It makes more sense to take these additional expenses into account.

As you can see, there are considerable home closing costs to consider when deciding how much you can afford to spend on buying a new house. With careful financial planning beforehand you can prevent unforeseen and potentially embarrassing financial problems later in the home buying process.

So, wish you good luck on your home buying!!