Applicable fees in a property transaction

For every property purchase, there will be acquisition costs involved. The biggest portion of costs for your home acquisition are as follows:

  1. Fees for the property acquisition.
  2. Fees for the property mortgage.

1. Fees for property acquisition

When you place your booking fees for your desired unit, the developer will instruct their lawyers to prepare the Sales & Purchase Agreement (S&P) for the property. The S&P is the agreement where i) the developer agree to sell the property to you at the sales price, and ii) you agree to firstly make an initial cash payment (5% or 10% of the price) and pay the remaining balance within a stipulated period of time, usually 3, 6 or even 9 months. Normally, within this period, you will undertake to pay the balance to the developer either by bank financing, or your own cash.

Fees usually applicable are: The S&P costs, which includes the stamp duties based on the property price, and the legal fees for the drawing up of the S&P.

2. Fees for property mortgage.

Many buyers misunderstand that the acquisition costs and the property mortgage costs are the same. Where property acquisition costs refer to cost related to the purchase of property with the developer, property mortgage costs refer to costs for the financing of the property by the bank.

Among the costs included in the mortgage costs are: The loan facility agreement (which includes stamp duties based on the financing amount), lawyer fees, and other variable charges (including entry of caveat, discharge of charge, submission of charge, deed of assignment, transportation charges, photocopy charges, etc – based on the individual cases).

If you have chosen a bank home loan package with zero entry costs, most of the mortgage costs will be borne by the bank (but not all!). Some minor charges will still be borne by you, it is important to confirm with your bank, and the legal firm appointed, the charges to be borne by you.

So what are the charges involved? Although the actual charges varies from case to case, there are basic charges already determinable as stipulated by the Stamp Duty Act and the Solicitors Remuneration Order 2005 (SRO).

Click here for a summary of the various charges.

Do note that for stamp duty, there will be 2 separate instances where you need to pay the stamp duty i.e. i) for the signing of the S&P based on property amount; and ii) for the signing of the loan facility with the bank based on the financing amount.

Are there exceptions to paying stamp duty? From year to year, the Malaysian government gives incentives to homebuyers with regards to stamp duty.

For example, the stamp duty is exempted for a property which is refinanced from a conventional loan into an Islamic banking financing for the housing loan portion only, provided the stamp duty for the original loan has been paid earlier. Other example include the exemption of stamp duty for low cost houses. Check with your lawyer if your house loan can qualify for any exemptions!

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