By Ng Pau Ling

Challenges vary according to the different ages of homebuyers

THE first-time homebuyer is defined as a person who has yet to own any property but intends to purchase a home.

Depending on the homebuyer’s age, the housing needs will be different and the challenges faced will vary when climbing the property ladder.

Here are four categories of first-time homebuyers in Malaysia. They are differentiated by age, starting in the early 20s where an individual will be of legal age to own property until the retirement age of 60.

YOUNG WORKFORCE
IN Malaysia, 21 years is the legal age to own property. This is also the age group when young adults or fresh graduates enter the job market.
Since the first five years in the workforce is the “exploration and building” period in a career cycle, homebuyers within this group earn comparatively low wages and have weak job stability. Therefore they find it difficult to come up with the initial funds to buy their first property.

Tips: Start financial planning early and save for the down payment when you start working. For Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) borrowers, repay your study loan on time to maintain good credit scores. Go for a smaller housing type such as a studio or SOHO unit.

MATURE WORKFORCE
THE 15 years from the mid-20s account for the establishment stage in a person’s career. A suitable occupational field is selected, and efforts are made to secure a long-term career path.
This is also the time when most people start a family. According to the Department of Statistics, the average (first) marriage age in Malaysia is 28.

People in this category will be in the midst of wealth accumulation and experience changes in the household structure. Hence they make up the majority of the first-time homebuyers.

Tips: Dual-income newly-weds can apply for a joint home loan. The combined resources may increase the chances of getting a higher loan margin.

Take into consideration future household expansion when deciding on buying a home. Statistics show that the average Malaysian household size is 4.06 people, so a home with at least two bedrooms will be a good choice because it can accommodate a growing family.

EXPERIENCED WORKFORCE
AT this point, you are likely settled or have reached the top in your career. However, buyers in this category are also approaching retirement age. Financial entities are more pessimistic towards providing loans to this age group. Factors like mortality, health and the ability to make instalment payments in the absence of employment contribute to this sentiment.

As Malaysia defines youth to be between the ages of 15 and 40, there is an age restriction on some home-ownership programmes such as My First Home Scheme which offers 100% financing for first-time Malaysian homebuyers below the age of 40.

Tips: This group of middle-aged adults is “sandwiched” between ageing parents and raising a family. A home that’s close to amenities such as hospital, school and grocery market will be best to cater to all your needs.

RETIREES
THE maximum home loan tenure offer by the bank is 35 years or up to 70 years old, whichever comes first. It is a risky move if you are looking to buy your first home after age 60.

As the life expectancy of Malaysian is 72.7 years old for male and 77.4 for female, you will have difficulty securing financing or at best be eligible for a short-term mortgage only. Your health will be a factor.

Tips: The margin of error is smaller now. Be extremely clear about your reason for buying if you are only entering the property market after 60.

Is that a vacation home, an income property, or an asset to pass on to the next generation? If you opt to buy and stay, a property for senior living with care facilities will be most suitable.

FROM NEW HOMEOWNERS

JAMES Ooi, 42, bought his first property, a freehold landed terrace house, through loan financing. Citing cumbersome loan processes, Ooi said that banks should provide a more accessible payment method for customers who are qualified.

“Banks can help first-time homebuyers by giving advice and flexible loan options,” he said, adding that his greatest obstacle was the lack of information.

Ooi stated that he had to ask around as there was no guide to buying a first home.

“It all depends on the developers making it easy for you, explaining the sale and purchase agreement and the processes involved.

“Developers are often too focused on selling and clearing stocks,” he said, adding that they could sell better if they hold more workshops and share the types of homes that suit their customers.

Young couple Vikneshwaran Krishnan, 31, and Ranjidham Pathimogan, 28, are also entering the property market for the first time. They have taken a joint loan to finance their purchase.

According to Ranjidham, they did not utilise any particular housing scheme for their purchase.

“The legal processes were smooth because the developers arranged everything,” she said, adding that it took six months for them to find the right property.

Ranjidham also felt that the banks could help first-time homebuyers by loosening the loan requirements and speeding up the application process.

To Read More: Problems faced by first-time homebuyers

To Read More: 12 steps to your first home

To Read More: Choosing your first real estate agent

To Read More: 5 tips for first-time house buyers

To Read More: MRTA or MLTA for new homebuyers

COST OF PURCHASING YOUR FIRST HOME

Down payment
10% of the purchase price or difference between the loan amount and the purchase price.
Stamp duty
First-time homebuyers who purchase property priced below RM500,000 are exempted from stamp duty with effect from 1 Jan 2017 to 31 Dec 2018. There will be a 3% stamp duty for property priced RM500,001 and above.

Sale & Purchase agreement
1% - the first RM500,000
0.8% - the next RM500,000
0.7% - the next RM2mil
0.6% - the next RM2mil
0.5% - thereafter

Agent fee
If you are buying a subsale property, prepare a maximum of 3% of the transaction price of the property for agent service.

Loan tenure
Maximum 35 years or up to the age of 70, whichever comes first. Maximum margin: 90% of the property price

Other costs
• Monthly maintenance fee if you are buying a strata property
• Deposits for utilities such as electricity, Internet and phone line, water and sewerage services
• Assessment fee twice a year
• Annual quit rent • Repairs, renovation, furniture and home appliances

Interested in similar topics?

StarProperty.my will be coming up with an ebook titled “Looking for your first house? House-hunting tips in 2018.”.

Register at bit.ly/househuntingtips2018 to get a free ecopy.