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Am I Ready to Buy House? 7 Key Factors to Consider

Updated: Mar 6, 2023

If you've never bought a property, you might feel overwhelmed before taking any step. Most people aren't sure when the right time to buy a house is. A 2019 Malaysian home survey says that 20% of Malaysians fear buying the wrong property. The financial heftiness of buying a house also seems to put off many prospects. What if your monthly salary isn't enough to deal with a mortgage? Chances are you would opt for a rental instead of planning to buy your first house.

So buying a house is a tough decision, whether you want a flat or a single story terrace. It calls for a lot of thinking. So, many people ask can't stop asking, "am I ready to buy a house?" Here are key factors to help you decide whether now is the right time to buy a property.

You Can Afford a Down Payment

If you've been planning to buy your first house, you may already have a down payment. This is the primary rule across Malaysia, and it can affect the amount your lender can advance you. The down payment usually comes from your savings and it shows proof that you're ready to buy a house. The only way that you can escape it is if you're applying for government house schemes.

If you're buying your first house, lenders would ask for a 10% down payment. That means, your lender will provide the remaining 90% to cover the home price. It would be best to pay a larger down payment and avoid higher loan expenses. A larger one could mean less interest rate and a reduced burden from monthly instalments.

There's always a plan B if not, there's probably C, D, E...

You Qualify for a Mortgage

Applying for a home loan is easy and almost everyone can qualify. Even with an insufficient income and a bad credit score, you can still qualify for a mortgage. Decide on the property you want to buy and visit your choice of the mortgagor. Make sure you have the right documentation─ a booking fee receipt if you're dealing with a developer. If you're buying a sub-sale house, you may need a deposit slip from your seller's lawyer.

Your bank can provide feedback on your loan request within three days. They will check your income and compare it to the cost of the property. They will also check your credit scores. What if you're not able to qualify for a loan? The best alternative would be to try a third party housing loan. In this case, your spouse, sibling or parent can become your co-borrower. Their clean records and stronger financial boost can help you to own a house.

Try taking advantage of this pandemic

The Economic Outlook Favours Buying a House

Buying a home requires paying attention to the market condition. Property prices usually fluctuate based on how the economy is performing. For instance, the global recession in 2008 saw the real estate market crumbling. Many homeowners lost money.

Recession may also force many homeowners to sell their property. As a result of higher supply than demand, prices may drop. It's at such times you're likely to land an amazing property at a steal. The market favours the buyer as the depressed property has a chance of appreciating.

The ongoing COVID-19 pandemic has already affected markets than the 2008 global recession. Analysts already predict the impact to affect real estate prices. The current situation is definitely a sign of a buyer's market.

Now you can buy a cheap house while boosting back the economy. It's two birds with one stone!

Low-Interest Rates

You can answer your question, "should I buy a house" by looking at interest rates. Interest rates affect the price of a house and the final cost of a mortgage. Interest rates fluctuate, sometimes they're high and sometimes they're low.

Lower interest rates show it's the best time to buy a property. A drop in interest from 4% to 3% could have a massive impact on the cost of a mortgage. So, it would be best to hunt for a house when the interests are falling. Higher interest rates will result in more payments made to your mortgage.

Look at the interest rates in Malaysia in 2020. In July, the Malaysian central bank lowered its interest rates to a record low of 1.75%. The goal is to encourage borrowing and speed up the pace of economic recovery.

It's not about how fast you can go, but how long you can wait.

You're Thinking About Long Term Investments

Depressing times are usually good for borrowers and buyers. But they also come with a disadvantage─ savings could lose value very fast. The best way to save your hard-earned savings is to invest in property.

Your savings are more secured against inflation when invested in property. More than likely 100000 Ringgits will not buy the same value of property in the next five years. Holding your savings instead of investing is one of the worst financial mistakes.

Property prices may drop in the short run when the economy fails. But when tough times end and property demand increases, your house could regain its value. If you're investing in rental property, the returns are worth it no matter the economic situation.

A swimming pool full of money and coins sounds like a terrible idea for your home (Source: The Walt Disney Company)

Your Earnings are Steady Enough to Accommodate Monthly Instalments

You also need a consistent source of income before purchasing a property. There should be enough proof that you're able to pay your mortgage instalments. Your bank will look at your statements to learn whether your income can afford the mortgage.

Your employer can also determine the outcome of the mortgage appraisal. If you're working with a reputable company, you'll have a higher chance of getting a loan. Or you can request for a lengthier repayment period to reduce the size of instalments.

"You'll get your rent when you fix this damn door!" (Source: Netflix)

You've Been a Tenant for Many Years

Renting can become a pain and most of the time it's expensive in the long run. If you've been a tenant for many years, you may feel like you need your own home. The thought of having a safe and comfortable place for your family can also prompt you to buy a property.

Cost should not discourage you from buying a house. There are many affordable homes and affordable loans in Malaysia. Besides, what if your monthly rent was a contribution to your mortgage instalment? It could be a painful experience changing your lifestyle to pay your mortgage. But nothing will feel as liberating as living in your owned property.

Shameless plug time: Check out our show units over at Bayu Indera!

You're Ready to Buy Property

As you can see, all the factors are showing it's time you buy a property. The market condition and the interest rates all seem to be buyer friendly. Investing in a home will also save your savings from potential inflation.

If you're searching for a property, our professional agent will be happy to help you. Don't hesitate to contact us today.



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