Tips on purchasing house at Malaysia

1) Purpose of buying the house
Some people buy it as part of their investment. They will rent the house to the potential tenant and may sell it in the future. Some people will purchase it and to stay at the house for long term and most likely until they retired. Depending on the purpose of purchasing the property, the type and the location of the house may differ significantly.

 2) Eligibility of the housing loan
 Most people are unable to afford to purchase a property by cash. Hence most of them will turn to the banks to apply for housing loan. The banks will look at several factors prior approving your loans. Those include;
 a) CCRIS (Central Credit Reference Information System)
- this is a centralised database in Malaysia which can be accessed by all of the financial institution - the database will display all of your credit status (loan amout, outstanding payment etc) for the past 12 months. Note that any record more than 12 months will be deleted from the system. Hence, you need to make sure to have good financial record 12 months prior to apply for loan. - if you have poor CCRIS record which means that you are at high risk of defaulting a loan, it will significantly affect your loan approval status

 In the past, you need to go to branches of Central Bank of Malaysia (BNM) to print out your CCRIS record. Now, you can view your CCRIS record online (Requires you to go to BNM branch once to get the pin number) (https://eccris.bnm.gov.my/)

b) Debt Service Ratio (DSR)
This is a ratio used to calculate the percentage of your income that can be used to pay the monthly installments. Rough calculation: Sum of all your commitments (house loan, car loan, personal loan etc) divided by your total income multiplied by 100 Each bank have different way of calculating your DSR and have different guidelines on the level of acceptable DSR Bank A may accept up to 60% of DSR and Bank B may be up to 70%. Hence, it is imperative to go to several banks to check on your eligibility criteria for housing loan

c) Margin of finance (loan to value ratio, LTV)
This means that how much the bank will give you the loan. Most banks can give loan up to 90% of the property price for the first house and the percentage will get lower as you purchase second or third house. Hence, if your loan is only 90% of the price, you need to prepare cash for the remaining 10%.