How To Finance An Apartment Purchase In Malaysia

If there was a contest to determine the most popular business in Malaysia, mortgage lending could certainly compete. Just about any institution with cash i.e. banks, or access to someone else's cash i.e. insurance companies, wants to be in the residential lending game. It is a fact one can easily confirm with a quick glance at the local newspapers. You will see pages after pages of mortgage lending offers.

There are many lenders in the market, and the first time apartment buyer should talk to as many people as possible. The reason for this is to find the best mortgage lending offers available. In additional to the newspaper, good mortgage lending offers can also be found in the yellow pages, real estate directory and by asking real estate lawyers, real estate brokers and agents, and people who have bought apartments recently.

For many years the best known mortgage lenders were Malaysian local banks such as Maybank, Public Bank and Hong Leong Bank. In the recent years, the insurance companies have jumped on the mortgage lending business bandwagon. Even tough the insurance companies are not primarily in the mortgage business, they have managed to packaged mortgage plan bundled with their insurance product. In some cases, first time apartment buyers can obtain access to insurance funds only through mortgage bankers and mortgage brokers.

Mortgage bankers are individual and organizations who loan their own funds and the funds of others to real estate purchasers. Once a mortgage is made, the mortgage banker typically sells the loan to an investor. A mortgage broker, unlike a mortgage banker, does not have capital to lend but instead loans money that belongs to others. He makes his money on fees, charges and points. In addition, a mortgage broker may also service loans.

Just like in any country, to finance an apartment purchase in Malaysia can be a daunting task. A typical mortgage payment term for the average Malaysian is from 15 to 30 years. The best thing for a new apartment purchaser to do is to get advice from the right people before signing on the dotted line of a mortgage agreement.

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Renting A Property

With consumer confidence as low as flat, buying property is the least on the mind of most young and single working professionals. However, it is not unheard of a small family renting a single unit of landed or high-rise property. Here are some of the reasons why people prefer to rent.

To Save Money
Contrary to popular belief, renting a room can actually help you save up, especially if you are living all by yourself. By renting, you wouldn't need to worry about closing fees, mortgage interest, property taxes, private homeowners' insurance and maintenance; as all these will be the landlord's responsibility. The sum from these areas can either be invested for more return, or saved up as emergency rations or to fund your new Perodua MyVi. Besides, a recent study by Fidelity Investments indicates that stocks provided investors with nearly 4.6% higher average returns in the past 45 years than real estate; a worthy venture for the extra money.

More Options Available
While there are more incentives for house buyers now, rental rates are also seeing a slight decrease. In prime locations and popular areas, competition can be stiff, with various innovations coming up to attract potential tenants such as partial furnishing, utility fees inclusion etc. Amenities and furnishing are some of the attractions that tenants most often look for, such as built-in cabinets, fridge and other accessories of the kitchen; amenities that are sometimes not available in newly-bought homes, or are unaffordable in new homes.

More flexibility
Buying a home is a big commitment. If you have to move for any reason - say, for work - your property would need to appreciate by at least 10% for you to recover your sales costs, which typically takes about five years. Renting allows you the freedom and mobility you need to find the right job before you tie yourself to a massive home investment.

Over all, it is sort of a low-cost-less-responsibility option that satisfies most working professionals, who may expand their career elsewhere, and college/university students, who will be leaving their education institute after graduation.

However, renting is not a completely fool-proof solution to stand against the economic whirlwind now. For those who are looking to building up equity and for long term gains, or preparing for retirement, renting may not be a suitable option, and buying a property should be in serious consideration.