What No One Tells You About Buying Your First Home


If you ask almost any Malaysian who owned a house, they will probably never forget the first time they bought a home. 

As the common assumption is that you need a 10% downpayment to buy a home, most Malaysians only save up for that number, leaving them unprepared for a seemingly endless list of costs, one after the other.

To smoothen this transition, we compiled some of the biggest costs of buying a home in Malaysia that no one tells you about for every stage of your property transaction journey.

1. Before Buying a Home 

A. Booking Fee (Also known as an earnest deposit)

This non-refundable deposit serves to demonstrate the buyer’s commitment to the purchase and is generally equal to 3% of the total property value. The remaining amount of the downpayment is to be paid in full on the day of signing the Sale and Purchase Agreement (SPA).

So for a RM 700,000 house, a booking fee estimate would cost as follows: 

RM 700,000 x 3% = RM 21,000.

The earnest deposit is usually submitted alongside a Letter of Offer or Offer to Purchase. It is important to note that these agreements typically state that the deposit will not be refunded if the deal fails to complete.

This fee will be included as a portion of the down payment should you choose to move forward with the home. 

B. Valuation Fees 

If you are getting a loan, financial institutions typically require a property valuation before approving a loan amount, and the fee is usually borne by the buyer. An official valuation may also be required if the buyer and seller disagree on the price. 

The exact fee for the valuation is calculated as a percentage of the finalized home price. 

Here is an estimated breakdown based on the value of your home: 

First RM 100,000 = 0.25% of the property’s value

The next RM 2 million = 0.20% of the property’s value

The next RM 7 million = 0.167% of the property’s value

The next RM 15 million = 0.125% of the property’s value 

C. Mortgage Insurance (MRTA or MLTA)

When buying a house with a loan, banks will often imply the requirement to purchase insurance to ensure they are protected. But insurance schemes are also vital and beneficial for buyers.

The two main kinds of insurance you would encounter are MRTA and MLTA. Be prepared that the cost can range from RM 10,000 to RM 30,000 or more, either made as a lump sum payment in the beginning or stretched out as monthly payments. 

The exact cost varies on which insurance you purchase, along with factors like your home loan value, interest rates, and loan term.

Mortgage Reducing Term Assurance (MRTA)

This is a type of home loan insurance that takes care of your mortgage payments in the event of your death or, in some cases, a terminal illness or disability.

As you pay off your home loan, the value of your outstanding debt will fall. MRTA is designed so that the amount that would pay out at the point of a claim covers the total value of your outstanding home loan.

Mortgage Level Term Assurance (MLTA)

Meanwhile, the MLTA is a type of home loan insurance where the sum insured remains level throughout the term of the plan. It does not reduce, unlike an MRTA.

MLTA provides a defined benefit amount during the entire period of the policy. Unlike MRTA, any additional amount is paid to the beneficiary.

D. Agent Fees 

It is still surprisingly common for Malaysians not to factor agent fees into the overall cost, which can significantly impact you financially if you are on a tight budget. 

With Ohmyhome’s Super Agents, you will be charged with a 3% commission, inclusive of SST, with a guarantee of aggressive marketing. From guiding you through every step of the process (and fees you’d need to pay) to leveraging their years of experience to get the best possible price for your dream home, they’ll expertly navigate you through the turbulent seas of homeownership. 

2. Transaction Fees While Buying a Home 

Now it’s time to walk through the buying process, in this stage, you will be shouldering a few types of fees – legal fees, disbursements, and stamp duty.

Legal fees are made to the necessary legal firms and representatives throughout the buying process. 

Disbursements are payments made to compensate the expenses incurred by the lawyers involved in preparing your agreements. 

Stamp duty is the official tax you pay to the government on legal documents such as the instrument of transfer (MOT or DOA) and loan agreement.

The Sales and Purchase Agreement (SPA) is one of the most important documents of the entire process. 

The SPA is a legally binding contract intended to protect the buyer’s interest (that’s you). And as you can imagine – without appropriate legal representation, there are many ways the SPA can go wrong.

It is often too late when people realize their SPA’s crucial importance until something goes wrong. 

Having a legal firm allows you to have an expert manage the extensive paperwork and negotiate on your behalf while protecting your interests every step of the way. Legal representatives are trained to manage complex legal documents, negotiate on your behalf, and protect your interests throughout the acquisition process.

This is also why hiring the right property agent is essential. You’ll be able to tap into their vast experience and network of contacts to ensure you’re doing things the right way. They know every trick in the book and can connect you with the right representatives.

Here’s a breakdown of how SPA legal fees are charged:

Value of PropertySPA Legal Fee Percentage
First RM 500,0001%
Next RM 500,0000.8%
Next RM 2,000,0000.7%
Next RM 2,000,0000.6%
Subsequent RM 2,500,0000.5%

For example, if you’re buying a house worth RM 700,000, here’s what your SPA legal fees might look like:

RM 500,000 x 1% = RM 5,000

RM 200,000 x 0.8% = RM 1,600

Total = RM 6,600

A basic rule of thumb is the higher the value of your house, the more you’ll have to pay in fees. 

B. Loan Agreement Fees

The loan agreement is a document that contains all the details of your loan with the bank. These costs usually cover the processing and signing of your loan agreement. 

Value of PropertyLoan Agreement Percentage
First RM 500,0001%
Next RM 500,0000.8%
Next RM 2,000,0000.7%
Next RM 2,000,0000.6%
Subsequent RM 2,500,0000.5%

The stamp duty for the loan is then calculated as 0.5% of the total loan amount. The bank processing fee is usually within the few hundred range, so there’s not too much to worry about there.

The fees for a 90% loan on a house costing RM 700,000 might look something like this:

Loan Agreement Legal Fees:

Total Loan Amount = RM 630,000

First RM 500,000 x 1% = RM 5,000

Next RM 130,000 x 0.8% = RM 1,040 

Stamp Duty:

RM 630,000 x 0.5% = RM 3,150 (0.5% of the loan amount)

Total Loan Agreement Fees = RM 6,040 + RM 3,150 = RM 9,190

C. Stamp Duty for Memorandum of Transfer (MOT) or Deed of Assignment (DOA) 

One other essential document in this process is the Memorandum of Transfer (MOT). This is a document to transfer ownership from the seller to the buyer. In cases where the property to be bought had not received its relevant Land Title, a Deed of Assignment (DOA) form is used to transfer ownership of the property.

Here’s how a stamp duty fee is calculated:

Value of PropertyStamp Duty Percentage
First RM 100,0001%
RM 100,001 to RM 500,0002%
RM 500,001 to RM 1,000,0003%
RM 1,000,001 and above4%

So for your RM 700,000 house, here’s an estimated fee:

First RM 100,000 x 1% = RM 1,000

RM 500,000 x 2% = RM 10,000

Bal RM 100,000 x 3% = RM 3,000

Total stamp duty = RM 14,000

The total amount you’ll need at the start

Here’s a table of how much you’d have to save up for your RM 700,000 home in transaction fees:

DownpaymentRM 70,000
Valuation FeeRM 1,750
SPA FeesRM 6,600
Loan Agreemen Fees with Stamp DutyRM 9,190
Stamp Duty Fees on SPARM 14,000
Total PayableRM 101,540

So the actual amount you need at the start is not only 10% — it is actually closer to 14.5%.

3. After Buying a Home 

A. Maintenance, Utility, and Sinking Fund 

If you’re buying a subsale high-rise property, expect to pay a maintenance fee. This fee is instrumental to ensuring the property is well-maintained and managed. This includes maintaining common areas such as lifts, lobbies, corridors, gardening, security, and recreational facilities. 

The sinking fund is the building’s way of hedging against future large-scale repairs or major works on a building. By contributing to the sinking fund, buyers can ensure that their property is protected in the event of an unexpected major repair, which can be costly and disruptive.

B. Quit Rent, Parcel Rent, and Assessment Rates 

In addition to considering home-related costs such as home deposits, housing loans, home insurance, property owners are required to pay quit rent, parcel rent, and assessment rates under the Malaysian legal system. 

Quit Rent or Parcel Rent 

Quit Rent is calculated by multiplying the size of an owned property in sq ft or sq meters by a specified rental rate. As many Land Offices don’t list the quit rent rates on their official websites. Hence, it’s advisable to visit the nearest Land Office or contact them. 

In June 2018, a new land tax was created for strata properties in Selangor to replace the quit rent, called parcel rent. This new parcel rent is now a separate charge billed directly to owners.

While this significantly increased the amount of taxes charged to Malaysian strata property owners, the change was made to ease the transfer of ownership of strata properties to make up for defaulters. 

C. Assessment Tax

This is a tax collected by the Municipal Council of the location of your property to cover the cost of financing the development and maintenance of local infrastructure and services. 

Payments are to be made to your local Municipal Councils, for example, these would be councils like DBKL, MBPJ, MPKJ, MPSJ, MPSP, MPAJ in the Selangor area. 

Secure Your First Home With An Experienced Super Agent

Buying a home can be one of the biggest investments you make in your life. Having an experienced Super Agent from Ohmyhome gives you invaluable peace of mind as you know you have someone who is looking out for your best interests. You will only be matched with an experienced agent specializing in your area – which means they will have extensive knowledge of the real estate market and the neighborhood where you want to buy a home.

They can provide you with invaluable insights into the local market conditions, including the trends in home prices, the availability of homes for sale, and the potential for investment in the area.

In addition to that, a good agent is able to negotiate a lower purchase price, better terms, or even additional contingencies to ensure you are protected.

Our Super Agents have served more than 8,000 happy customers, with over 70 families housed almost every single month. Secure an appointment with any of our Super Agents today by dropping us a message on WhatsApp or via our Live Chat at the bottom, right-hand corner of the screen. 

Subscribe Now

Get a notification every time we upload a new blog post.


Featured Blogs

Your one-stop guide for must-know HDB tips