What You Should Know About Home-Buying in Malaysia

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Home ownership in Malaysia has never been as affordable as it is today, whether you are a foreigner who has decided to call Malaysia a temporary home while you work on your career, or you are a native Malaysian who is determined to build a family in your own home. Home ownership is not generally possible by making a cash purchase using your own funds or privately borrowed funds, so the affordability and availability of a standard housing loan is crucial to your ability to make a purchase that will ensure a lifelong refuge for you and your dependents. With a 4.8% standard lending rate for the average home loan, at up to 90% of the value of the property, homeownership in Malaysia has never been as affordable as it is today.

Rental Vs. Ownership

Leasing a home is a convenience that can benefit short-term, temporary housing needs, offering affordability without a long term commitment or investment other than the term of the lease agreement. However, in today’s Malaysian residential real estate market, leasing a home means that you will miss out on the predicted growth of property values, losing the opportunity to make a profit by capitalising on the anticipated increase in the value of real estate that has become the norm for residential real estate in Malaysia.  Along with Hong Kong and Singapore, Malaysia is one of the least restrictive markets for foreign buyers of residential real estate, opening the market for growth and opportunities to foreigners who wish to call Malaysia home. In addition to the other positive factors, Malaysia boasts relatively low “round trip” transaction costs to foreign buyers, while rental property income is heavily taxed, resulting in fairly high rental prices.

The Home Loan Process

The process of obtaining a home loan to give your family the home and lifestyle they deserve has never been as easy as it is today. Prospective home buyers can choose from a wide range of innovative home financing solutions that can put their dream home within easy reach. The loan to value rate is competitive compared to world wide residential real estate loan markets at 90% of property value. The repayment period for a home loan in Malaysia is unprecedented at 35 years or by the age of 70 years for buyers, whichever comes first.  The process of obtaining a home loan in Malaysia is further simplified and made more convenient as lenders offer online applications to borrowers, and instant approval of loan amounts when minimal lending standards are met, you can read here about home loans in Malaysia.

Selling Your Home

In order to encourage long term ownership of homes, and to discourage the practice of “turn and burn” property transactions, Malaysia has instituted fairly high taxes on capital gains from the sale of residential real estate. In order to minimise the capital gains taxes that may be imposed, homebuyers are encouraged to stay in their homes for a minimum of 5 years. This is not unreasonable considering the high prices of rentals in the country, and it should not discourage potential buyers from making the choice to invest in their own Malaysian home.