Buying your first home is an exciting milestone, but it’s essential to understand the associated costs to ensure a smooth and stress-free process. Here's a detailed breakdown of the fees and expenses you’ll need to prepare for when purchasing a property.

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1. Down Payment 

• Typically, the down payment is 10% of the property's purchase price.

• For third-time buyers, banks generally only offer 70% financing, meaning you’ll need to pay 30% of the purchase price upfront.

• First-time homebuyers may benefit from government initiatives that offer 100% financing.

 Pro Tip: Explore government housing programs for first-time buyers to save on upfront costs.

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2. Stamp Duty for Transfer of Ownership (MOT – Memorandum of Transfer) 

• Stamp duty is a tax imposed when transferring property ownership.

• The rates are based on the property price:

o 1% for the first RM100,000.

o 2% for RM101,000–RM500,000.

o 3% for RM501,000–RM1,000,000.

o 4% for RM1,000,001 and above.

• Example: For a property priced at RM500,000, the MOT fee will be RM9,000.

• First-time homebuyers may be eligible for a stamp duty waiver, significantly reducing costs.

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3. Legal Fees for the Sale and Purchase Agreement (SPA) 

• Legal fees for preparing the SPA are calculated as follows:

o 1.25% for the first RM500,000 of the purchase price.

o 1.00% for the next RM700,000 of the purchase price.

o Subject to a minimum fee of RM500.

• These fees cover the drafting, verification, and legal processing of the SPA.

 Pro Tip: Always work with a reputable lawyer to ensure smooth legal transactions.

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4. Legal Fees for the Loan Agreement 

• If you’re applying for a loan, legal fees for the loan agreement will also apply.

• The fee structure mirrors the SPA legal fees:

o 1.25% for the first RM500,000 of the loan amount.

o 1.00% for the next RM700,000.

• Proper documentation ensures that your loan agreement is legally binding and transparent.

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5. Stamp Duty for the Loan Agreement 

• Stamp duty for the loan agreement is calculated at 0.5% of the loan amount borrowed.

• Example: If you borrow RM400,000, the stamp duty would be RM2,000.

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6. Valuation Fees for Bank Loans 

• When applying for a home loan, banks require a professional valuation of the property.

• Valuation fees are determined based on the property’s price and ensure that the bank lends against an accurate market value.

• The rate of the Valuation fees will be:

o 0.25% of the first RM100,000 of the property’s market value

o 0.20% of the next RM2 million

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7. Real Estate Agent’s Commission 

• If you’ve engaged a real estate agent, their commission is typically capped at 3% of the property’s sale price.

• This fee is negotiable in some cases but is crucial for ensuring professional marketing and transaction handling.

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**Estimated Total Costs Before Getting the Keys**

From the experience, normally the fees for the cost above fee For properties priced between RM300,000 to RM1 million, expect to pay around 5% to 6% of the selling price in fees, excluding the down payment.

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Additional Costs After Getting the Keys 

Other Fees and cost that normally buyer will forget to include which sometime become a headache, so below is other fees you might need to have a look

Once the purchase is complete, budget for these additional costs:

• Renovation & Furniture Cost: Sometimes, some of the buyer will forgot about it when come to renovation, I normally will suggest buyer to prepare the fund about 20% of the Property price for normal renovation and furnishing.

• Property taxes: Includes quit rent (Cukai Tanah), parcel tax, and property assessment rates (Cukai Pintu).

• Mortgage Reducing Term Assurance (MRTA): Often bundled into your loan, this insurance clears your mortgage in the event of death or permanent disability.

• Utility deposits: Required for opening accounts with TNB (electricity) and PBA (water).

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**Planning Ahead for a Stress-Free Purchase**

Understanding these fees and planning your finances in advance can help avoid unexpected surprises. Buying your first home is a significant step, and being well-informed ensures a smoother experience.

Need guidance or personalized advice for your home-buying journey? If you’re in Penang, I’d be delighted to help you navigate the process and secure your dream home! 

Looking to rent out or sell your Penang property? Contact me today!

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