IT was stated recently that to buy a RM500,000 property, the monthly instalment will be about RM2,280 for 30 years.
The legal entry costs, including 10% downpayment, sales and purchase agreement legal fees and stamp duty, loan document fees and loan document stamp duty total RM68,800.
A potential house buyer should also consider other factors before taking the plunge.
Firstly, at RM450,000 (90% loan for 30 years for a RM500,000 house) is roughly RM370,800 in interest alone providing the interest rate remains static for the next 30 years, which is virtually impossible.
Thus, after 30 years with rise of housing loan rates, the revised bank interest might be from RM400,000-RM450,000 which is roughly equivalent to a 100% loan payback.
Secondly, one should always think of inflation at 5%-10% yearly, this will add up to quite a considerable sum.
Thirdly, a young family must also take into account their children’s growing up expenses – school clothing, books, fees including tuition, transportation, etc.
Fourthly, the hike in utility bills, electricity and water, and more important, petrol, gas and toll will not remain static for the next 30 years!
What about your car loan, personal insurance, road tax, car insurance and medical and dental expenses for the whole family?
Are you guaranteed a permanent job for the next 30 years or that your salary will increase yearly to cope with inflation and all the hidden expenses which I’ve mentioned above?
You only have to look at the number of housing units available for bank auctions, proof of overzealous house buyers who did not do their homework properly before securing the loans.
If you can’t afford it, just rent a unit for the next few years. Buying overpriced units with the belief that prices will keep rising only fuels further speculation, and encourage the “Investors’ Clubs” to buy more units in bulk and sell them off and reap huge profits from desperate housebuyers like you.
The Government is trying to curb speculation by imposing the new RPGT, but it would only be effective if the bulk of potential housebuyers act more rationally and in the process also deter the Investors’ Clubs from increasing in numbers when they find they can’t dispose off the bulk units.