Tips for First-Time Home Buyers

Buying your first home can be nerve-racking and confusing. Getting into the right mindset can save you future troubles. A careful research and good planning always pays.

These tips will help you navigate the process and avoid common mistakes. We break them into three categories:

  • Mortgage tips.
  • House search tips.
  • First-time home buyer mistakes to avoid.

Mortgage tips

Start saving for a down payment early

It’s common to put 10% down, but some banks now allow much less, and first-time home buyer programs. Allow yourself some time to to save up. Do not overstretch your credit.

Understand your affordability, down payment and mortgage options

There are lots of mortgage options out there, each with their own combination of pros and cons. If you’re struggling to come up with a down payment, check out:

The amount you put down also affects your monthly mortgage payment and interest rate. If you want the smallest mortgage payment possible, opt for a 30-year mortgage. But if you can afford larger monthly payments, you can get a lower interest rate with a 15-year mortgage loan.

Research for government programs

Research on government house ownership programs. Federal government l
program like PRIMA can benefit you greatly if you qualify. Research on state level program as well. Sometimes it is available only for the state that you live in.

Determine how much home you can afford

Before you start looking for your dream home, you need to know what’s actually within your price range and which area that you can afford. In order, to make life easier for you we have built home search tool. Use it to your advantage.

Check your credit and pause any new activity

When applying for a mortgage loan, your credit will be one of the key factors in whether you’re approved, and it will help to determine your margin of financing and possibly the loan terms.

Secondly, check your credit score and improve it. Update your arrears and lower down your credit card balance. Banks calculates credit score based on financial behavior, income, expenses, financial commitment and your demography like age, sex, year of employment, marital status, education level.

To keep your score from deteriorating when you apply for a mortgage, avoid opening any new credit accounts, like a credit card or auto loan, until your home loan approved.

Compare mortgage rates

Many home buyers get a rate quote from only one lender. You can compare mortgage rates from financial aggregator like imoney, gobear and ringgitplus. During campaign period you might get additional goodies. Get at least three quotes from different banks and compare both rates and fees.

You must read the product term sheet to understand mortgage product features. Many banks are offering Flexi Loan where you have the flexibility to pay part or all of your principal early. Research on Islamic Home loan as well as they have discounts for stamp duty, rate ceiling and some other good features.

House search tips

Hire the right professional agent

You’ll be working closely with your real estate agent, so it’s essential that you find someone you get along with well. The right real estate agent should be highly skilled, motivated and knowledgeable about the area.

Pick the right type of house and neighborhood

But even if the home is right, the neighborhood could be all wrong. So be sure to:

Common first-time home buyer makes

With so many things on your mind, it’s not surprising that some first-time home buyers make mistakes they later regret. Here are a few of the most common pitfalls, along with tips to help you avoid a similar mistakes.

Not saving enough for after move-in expenses

Once you’ve saved for your down payment and budgeted for closing costs, you should also set aside a fund to pay for what will go inside the house and moving in cost. What goes inside the house includes furnishings, appliances, rugs, updated fixtures, new paint and any improvements you may want to make after moving in.

Buying a home for today instead of tomorrow

It’s easy to look at properties that meet your current needs. But if you plan to start a family, you may need to buy a larger home now that you can grow into. Consider your future needs and wants and whether the home you’re considering will suit them.


A lot can be up for negotiation in the home buying process, which can result in significant savings. Are there any major repairs you can get the seller to cover, either by fully handling them or by giving you a credit adjustment at closing? Is the seller willing to pay for any of the closing costs? If you’re in a buyer’s market, you may find the seller will bargain with you to get the house off the market.

Compare surrounding property prices as well, we have the tool to help you scan the best deals around.

Condominium Property Rental Return

What is the average rental yield in Klang Valley?

Are you curious about how your property portfolio is performing?

We are too. So we messed around with the data and what we saw, surprised us.

House Rental Yield In Klang Valley


The market’s average gross yield for properties is below 4%.

Below 4% gross yield? What does this mean for all of us?

It means, the gross cashflow generated over a year divided by the value of the property is 4%.

Yield = (total rental income) / (property value)

Yes, gross. Not net cashflow.

Compare this gross yield to the interest rates that the bank is charging below.

Mortgage rate in Malaysia

Mostly at 4.5-4.75%.

In short, we may be in a negative net yield position right now. Cashflow we received from rental is LESS than the interest rate payment we pay banks every month. In short, we are subsidizing our tenants.

Ok, fine. You may argue that you bought the property a long time ago, therefore, the rental payment covers monthly installment. Well that’s great! Congratulations.

But if you have to decide today if you want to buy or rent, as a general rule now (as of Nov 2018), it is cheaper to rent than to own.


Comparison of Malaysia Home Loan Rates

Buying a house is a long term commitment, so does your mortgage. It pays to do your homework researching into best deal in town. We have gathered online information on mortgage rates (from 5 years to 30 years term) by banks in Malaysia to help home buyers. We have processed it, organized it and put our expert thoughts into it to help home buyers to make comparison clearly.

Every decimal point on the rates matters. It may not seems a lot of difference in monthly installment for 0.1% incremental. However, if  you accumulate the saving over term of the loan, it is very significant amount. For example, for a loan of RM500K for 30 years, for every 0.1% difference the amount you could save is around RM 10,700. If you are getting cheaper rate by 0.5% then the saving amount is approximately RM65K and with that saving you could buy decent national car.

Options area many. Banks competition on mortgage is fierce and home buyers have the upper hand in this crowded market. If you have a great financial standing and strong credit record, many  banks are  willing to cut down their rates and maximize the amount of financing in order to have you as their customer. Some banks give zero moving cost or finance moving cost that can help you to save more money. However, be cautious, nothing is truly free from banks, zero moving cost typically comes with higher interest rates or you have to bring in deposit or purchase additional products to compensate for the free moving cost.

Generally, Malaysia  home loan rates are based on the loan amount . As a rule of thumb, it generally differentiated based on these threshold – RM200 K, RM500 K & RM1 M – where the higher loan amount is cheaper.

Local Banks

The most aggressive in term of home loan rates. Campaign rates, special request rates,  goodies, step up rates, higher margin of financing and and zero moving cost. The best time to best special rates is end of the year when they are closing the year end account as they try meet their internal sales target. Housing market is slow this year and you have solid chance to negotiate down your home loan financing rates in the fourth quarter.

Generally speaking the lower your loan amount, the higher interest rate and  below RM200K being the highest. For loan below RM 200K, Hong Leong offers glaringly high interest rate to this non preferred segment of low income group.

Local Bank Mortgage Rates in Malaysia

Islamic Banks

It mirrors conventional local banks structures except it provides additional benefit like 20% discount of loan agreement stamp duty and maximum capping of financing rates should the base rate goes up above the threshold. Customers of any religion, creeds or believe are eligible to take up Islamic Home Loan Financing. However, for some banks that are practicing strict Shariah rulings it will be a red flag if your source of income comes from non-halal source.

Home Loan rates for standalone Islamic banks that does not have a parent company from conventional group generally higher. For example Bank Rakyat,  Bank Islam & MBSB which offer financing rates across all loan amount.

Foreign Banks

Foreign banks provides more sophisticated product offerings. However, they typically scheming the creme where they only want to on-board customers with good financial standing with good financial behavior. They typically avoid celebrities and politician as their customers.  If you are in high net worth category and has potential to buy other products like investment or deposits they will welcome you with open arms and lure you with attractive home loan financing rates.

Foreign Bank Mortgage Rates in Malaysia

*AIA – only offer fixed rate loan

Complete Comparison Summary

Here is the summary of the rates, lock-in & flexi type segregated by type of banks in Malaysia.  At a glance, it is so easy to spot which are the banks that offer best deal such as no lock-in, lower rates and flexi loan.  This should serve as first level of analysis and you should dig deeper into product summary sheet and loan agreement to know more about the mortgage products.

Maybank Islamic and Kuwait Finance House probably offers the best products with flexi option, 4.6% or below financing rate and no-lock-in. However, our analysis is based on published rates there are some banks that offer aggressive campaign rates from time to time. Other factors to consider are:

  • margin of financing,
  • service level
  • free moving cost,
  • online facility
  • default penalty rate
  • online facility
  • nearest location of their branch
  • discount on loan agreement fees
  • discount on valuation fees
  • gifts
  • loan redemption penalty

Generally speaking Islamic local banks have higher lock-in period and higher interest rate. Are they the bank of “the last resort” of which they accept customers with poorer credit, loyal group of customers that are willing to pay for higher rates or simply because they have higher cost of funds that they cannot lend competitively?



Subscribe to our newsletter to receive latest news and expert opinion. We respect your privacy and will not spam you.