Home » Investment » Property » 11 Important Considerations when Buying a House (+ 7 useful tips)

11 Important Considerations when Buying a House (+ 7 useful tips)

Handshake deal in front of a house as a sign of successfully buying a new house.

This post is on important considerations when buying a house and other things a house buyer is worth knowing.

Nope, I haven’t bought a house myself. Thanks to my late mother-in-law for the home that we live in now. But, I do have the intention to buy a property in the future. And I have seen my brothers and close friends buying houses for themselves.

From there I got the opportunity to learn about important considerations when buying a house.

Thus, I am putting together things I learned about house buying in this post.

Table of Contents

[Disclaimer: I am not a certified financial planner. My sharing is purely based on my own research and personal experience. To make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a certified financial planner if necessary]

11 Important considerations when buying a house

These are the 11 important considerations when buying a house:

1. Affordability

Among the most important considerations when buying a house is affordability. In other words, your budget for the property. This is especially true if you are a first-time homebuyer.

And the budget here is not only covering the house price but also a list of other expenses such as upfront charges, miscellaneous fees and future costs.

These are some of the things you need to include in your budget:

  • booking fees or deposits to secure the property
  • down payment
  • housing loan interest rates
  • monthly repayment
  • stamping fees
  • lawyer fees
  • mortgage insurance
  • home insurance
  • moving in cost
  • house-warming party
  • renovation and furnishing cost
  • maintenance fees (for high-rise residential property)
  • utility costs (application fees, deposits and installation fees for water and power supply)
  • assessment tax (cukai pintu)
  • quit rent (cukai tanah)
  • agent commission (if you are buying through a property agent)
  • seasonal home maintenance cost (painting, air conditioning servicing)

Some of the expenses above such as renovation and furnishing fees can involve quite a huge sum of money.

From the list above, it is safe to say that you need to prepare a much bigger budget when you are buying a new house. And not just the big figure – monthly housing loan.

Even though you can make a withdrawal from EPF account 2 to cover parts of the monthly housing loan instalment and other selected expenses, I would suggest you only do that as the last resort.

I always believe that EPF saving is for retirement.

So now, do you want to know how much the upfront cost, miscellaneous fees and monthly housing loan instalment is? You can find the estimation for some of these costs in iMoney’s article Are You Financially Ready To Buy A House in Malaysia?

How to know the maximum home eligibility?

If you are unsure whether you can afford the house, you can consider the following:

  1. Do a calculation of how much you can afford based on your financial status. Some property websites in Malaysia offering free calculators on home loan eligibility are iProperty and PropertyGuru.
  2. Prepare a new budget, taking into consideration the housing loan and other expenses related to the new house.
  3. Live as if you are paying your housing loan for at least 3 months.
  4. See whether you are ok with the housing loan commitment.

To be on the safe side, I would suggest not maximizing your monthly home loan amount. Instead, leave some breathing room in your budget.

So that you don’t have a problem paying the monthly housing loan even during tough financial moments such as sudden job loss or business failure.

And don’t waste time looking for a dream property with a minimal budget. Get a property according to your current needs and affordability. In the future, when your finances allow, then you can go for your dream property.

2. The location of the property

Based on my family member’s experience, one of the major considerations when buying a house is the location of the property.

For example, one of my brothers would love to have his new house to be near to other family members. So that it is easier to look after each other.

Some of the top and common questions when you are planning to buy a house are as below:

  • Do you prefer an urban area or a suburban area?
  • Is it near to your frequently visit places such as workplaces, schools, major shopping centres and other needs?
  • Is it easily accessible?
  • How about the number of routes available?
  • Will the property value in that location increase in the next 5 or 10 years? This is important if you plan to sell or rent out the property in the future.

It is worth taking note that a property with a good location usually comes with a higher price tag. But most probably, its value will appreciate higher as well.

If you have the intention to sell the property in the future, perhaps you want to consider a property within a prime location.

Depending on individual differences, some of the considerations when talking about the location of the property are as below:

a. Proximity to frequently visited places

As mentioned earlier, I trust you want your house to be near to important and frequently visited places such as:

  • your workplace and your partner’s workplace.
  • public amenities such as schools, supermarkets, wet markets, shopping centres, restaurants, hospitals, and recreation parks.
  • other family members.
  • transport facilities such as LRTs and monorail, buses and taxis, e-hailing accessibility, train stations, and airports.

The simple reason is you can save your time and money on travelling to these frequently visited places.

Imagine if you stay far away from your workplace and you need a one-hour drive for a one-way trip. That would be 2-hours wasted on the road for a round-trip. For an average of 5-working days in a week, it totals up to wastage of 10 hours.

Add that with the toll charges and fuels needed. You can easily use that money for a family year-end vacation instead.

Also, before buying the house, take the routes yourself at different hours to see and feel the actual condition.

Maybe, try to take the routes:

  • during the busy morning hours when people rush to work.
  • in the afternoon when parents are busy picking up kids from their schools.
  • in the evening when people are rushing back home from their workplace.
  • during the weekends.

By experiencing the routes yourself, you can see and feel the actual traffic condition before confirming that new house deal.

b. The neighbourhood and the surrounding area of the property

Next, before deciding on your house purchase, do consider the neighbourhood of the property.

Among the questions you can ask yourself:

  • Do I like the appearance of this neighbourhood?
  • Are the neighbours friendly and approachable?
  • Is this a safe neighbourhood?
  • How about the crime rates?
  • Is it a place with nature and a green environment?
  • Do public places such as children playground’s under good maintenance?
  • Is the neighbourhood well-maintained?
  • How about the noise level? Is there any loud music or a noisy childcare centre nearby?
  • Do you find stray animals wandering the streets?
  • If you enjoy taking a walk, do you see a proper sidewalk?

Personally, I think the neighbourhood of a house is a very important factor. I believe we all want to spend time in a safe and wonderful community.

c. The location of the property itself

For some, the neighbourhood of the property can be great. But, do consider the location of the property itself within the neighbourhood.

Among the things worth considering below:

  • Do you feel comfortable during the house viewing?
  • What is the shape of the lot?
    • Most people prefer a square or rectangular plot of land over a triangle plot of land.
  • The house facing which direction?
    • This is because, whenever possible, a lot of Chinese homebuyers prefer east-facing houses. Most probably due to the Fengshui for a house facing the sunrise is more auspicious.
  • How far it is from the main road?
    • Can you have a peaceful rest with the noise? Will people and cars passing by look your way?
    • Can your kids play outside safely?
  • Is it possible to take a view from Google Earth?
    • So that you can have a better picture of the property and its surrounding.
  • Are there any possibilities of future development on an empty lot nearby?
    • Because future developments such as highrise buildings might affect the serenity of your home.
  • Is the property prone to flash floods, seasonal floods, or landslides?
    • You can only get the answer by asking the neighbours or those staying nearby.
  • Is the property prone to theft?
    • One of my brothers had to install the CCTV because his new house is prone to theft. Perhaps, consider houses with ‘minimal exit routes’ to the main roads.
  • Do you mind if there are electrical poles or a telecommunication port located in front of your property?
  • Is there any telecommunication tower nearby?
  • Is the parking space sufficient?
  • Does it have good ventilation?

The location of the property itself and the surrounding area are among the top considerations when buying a house.

If you are not careful enough, you might be ended up with a house prone to flash floods, theft, and noise from the busy roads.

d. Infrastructure availability

Another factor that is related to the location of a property is its infrastructure availability.

Consider checking for the following infrastructure before you decide on your house purchase:

  • proper roads or railways condition.
  • sufficient clean water supply with consistent and strong flow rates.
  • reliable power supply.
  • availability of stable telecommunication networks for both mobile and high-speed broadband networks.
  • within the service of e-hailing and online delivery services (Shopee, GrabFood, Foodpanda).

One of my brother’s homes has a very weak mobile network. To get a better mobile signal, he needs to walk to the car porch. Sometimes, he missed important phone calls.

Quite inconvenient, right?

So, even though the developer or property agent said all the above infrastructure is available, I still think you should physically test it out yourself.

3. Duration of stay

When you are buying a property, you should also consider whether it is for a long-term stay or a short-term stay.

For some of us who work outstation, we might prefer to buy a temporary house instead of renting. Because people say it is not worth renting a house when you can afford one. Also with a hope to sell the house for a profit when it is time to move back home.

If this is the case, do consider the following:

  • make sure the property has good resale value or rental value.
  • do your own break-even analysis before the purchase.
  • take note of home loan lock-in periods and Real Property Gain Tax.
  • invest less in renovation and furnishings.

On the other hand, if you decided it will be your permanent home, you might want to:

  • spend more time with a deeper level of consideration of future needs.
  • think less of property resale value as it is less important.
  • invest more in renovation and furnishings of the property.

But, generally, houses do not make a great short-term investment. If you are planning to just own the house for 5 years or less, perhaps you should consider renting instead.

But again, if your financial situation allows, you can choose to rent it out while getting another new house.

Whatever your decision, you need to do your own calculations to see whether it is worth buying a house or not, based on the duration of your stay.

4. Size of the lot

The next thing you should consider when buying a house is the size of the lot.

Among the questions that you can ask yourself before deciding the size of the property:

  • how many people will be staying in the house?
  • how many bedrooms or bathrooms are needed?
  • are you planning to add in new member(s) to the family (having kids)?
  • do you wish to invite your parents or parents-in-law to stay with you for the long term?
  • do you wish to have a guest room?

It is important to buy the right size of property according to your needs.

A property too small will make you and your family uncomfortable. On the other hand, a bigger than your need property will require you more money and time for housekeeping.

Also, if you haven’t familiarized yourself with area calculation, you need to at least know about:

  • square feet
  • square meters
  • points

Besides, you also need to equip yourself with some knowledge about:

  • price per square feet
  • price per square meters

When you are familiar with these calculations, you can immediately imagine the size of the plot and its property. And this will make your property hunting a much easier process.

5. Type of property

The next consideration would be the type of property.

Some of the common types of property are as below:

  • landed property
    • bungalow, semi-detached/detached house, terrace house
  • high-rise residential property
    • condominium, apartment

In big cities such as Kuala Lumpur and Petaling Jaya, most probably a high-rise property is more favourable. The reasons could be:

  • budget-friendly
  • convenient and easily accessible via public transport
  • near to workplace
  • 24-hour security
  • modern-living styles

While in a medium-sized city such as Kuching, many homebuyers still prefer a landed property.

A big majority of my family, friends, and colleagues stay in a landed property. These are the main reasons why my family prefer a landed property:

  • better privacy
  • larger space for personal hobbies such as gardening
  • have full control of the property maintenance

Probably, another reason could be there is more landed property compared to high-rise residential in Kuching.

But, in recent years, I can see that developers in Kuching started to build more high-rise residential targeting younger owners with modern lifestyles.

Whatever your decision, just make sure it is aligned and balanced with your needs and wants. Especially on the budget part.

6. Readiness for occupancy

Another important consideration when buying a house is the readiness for occupancy.

If it is a sub-sale house, get an estimation of when you can move in. And if it is a new house still under construction, ask when the house will be ready to be lived in.

Then, check whether the timeline is acceptable to you.

7. The ownership of the house

As for the ownership of the house, these are the common arrangement:

  • single property ownership
  • joint ownership – couples, family members, friends, relatives

Single ownership means that the owner has the full right to the property. And he will be solely responsible for all the financial matters as well.

As for joint ownership such as married couples, they have a better chance to secure a housing loan from their combined incomes. But, problems might arise when things go wrong such as divorce.

One should consider long-term commitment and know the options in case anything unfavourable happens. In other words, have a proper exit plan.

I find that this article by EdgeProp on the pros and cons of joint ownership is quite comprehensive. Go read it before you decide on your new house purchase.

8. A new house or a sub-sale house?

Are you looking for a new house or a sub-sale house (second-hand house)? This is another important consideration when buying a house.

If you are hunting for a new house, things should be quite straightforward because everything is new. Even though it is still possible for new houses to have defects such as cracks in the wall, water taps not working and door locks not functioning.

On the other hand, if you are hunting for a resale house, you would want to consider the following:

a. Perform a detailed home inspection

Before you decide on the house purchase, it is wise to perform a detailed home inspection by a professional house inspection service.

Generally, this professional house inspection service will be able to check for problems and defects such as:

  • foundation problems such as cracks on the walls, ceiling, doors, windows
  • roof damage
  • plumbing and sanitary fittings
  • out of date wiring

b. Perform a pest control inspection

Aside from home inspection, do perform a pest control inspection as well. Home pests such as termites can cause serious damage to buildings.

Based on my personal experience, in 2012, my hubby spent more than RM10,000 getting rid of termites and replacement of the damage caused by termites in our home.

I still recalled the scary part was the sound of the termites actively chewing the wood. Home pests such as termites are expensive to handle and it requires urgent attention as well.

It is best to avoid it at all costs.

c. Any extension made

Next, inspect if there is any extension made. If yes, find out if the extension is approved by the local council.

Those still undecided whether to get a brand new property or a sub-sale property, I suggest you read through PropertyGuru’s article on the pros and cons of both brand new and sub-sale properties.

9. The quality of finishes

A house can be looking great. But do check the quality of the finishes as well.

Perhaps it is worth spending some money to get a professional home inspection done even for new houses.

Also, it would be a good idea to get feedback from trusted friends or family members on the developer of their existing home. See if there are similarities in their feedback such as a preferred developer.

Use that as a guideline and take the time and initiative to find out the truth yourself.

10. Promotion of schemes offered by both developers and government

Another important consideration when buying a house is promotions or schemes offered by both developers and the government.

Some of the promotions and schemes are as below:

a. Promotion by developers

  • discounts on early birds during project launching
  • stamp duty exemption

b. Schemes and initiatives by government

Although these schemes and initiatives can save you thousands of Ringgit, do take note of the trade-offs.

So, read the small prints before making your decision.

11. Through a property agent or self-survey?

Lastly, if you don’t have time to do a property survey on your own, you might want to consider getting help from property agents.

Just make sure you are dealing with an experienced and trusted real estate agent who protects your interests.

Take your time. Consider the needs and requirements of those staying with you such as your partner. Stay true to your priorities.

7 other things worth knowing when buying a house

Other than the above important considerations when buying a house, here is a list of things worth knowing when you are considering buying a house:

1. Do plenty of property research and survey

Before you begin your house hunting, do plenty of property research and survey such as:

  • read up on the important considerations when buying a house.
  • understand the process of buying a house.
  • get feedback from friends or family members who had bought a house.

Anyway, don’t just take advice from friends or family members. Instead, take the time and effort to find out the truth yourself.

From there, you can make an informed decision.

2. Do you really want to own a house?

After you have done your property research, ask yourself if you really want to own a house.

Or are you pressured by someone else?

For most of us, buying a house means a major financial move with a long-term commitment. Therefore, think wisely before making this important decision.

If you are undecided, I suggest you write down all the reasons to support your decision.

3. Boost your credit score

Most probably you need a housing loan from a financial institution. And financial institutions’ housing loan approval is based on credit scores.

According to an article by Hong Leong Bank on credit score and financial report cards, these are some of the ways you can improve your credit score:

  1. Pay your bills on time.
  2. Minimal amount owes to banks.
  3. holding a mixture of different types of debts such as secured loans and unsecured loans.

If you want to know your credit score, one of the ways is through Credit Tip-Off Service (CTOS). A good credit score will increase your chance of getting a loan.

4. Get a pre-approval for your housing loan

I have heard of many real stories where house buyers found a property they really like but had to let go of because their housing loan is not approved.

Therefore, to avoid a frustrating situation like this, apply for a pre-approval home loan before going house hunting.

A pre-approval home loan will save you time and headaches in house hunting.

5. Know your right as a homebuyer

Another thing worth knowing when buying a home is to know your right as a home buyer, especially if you are a first-time homebuyer.

You might be able to save thousands of Ringgit by taking advantage of special schemes for a first-time homeowner.

6. Never rush into a deal

Buying a house is a huge commitment. It is not like buying a car or smartphone.

Along the way, the seller or property agents might be putting pressure on you to sign the deal. Because they have their own intention.

But, always remember you are the one who is responsible for the huge commitment.

Therefore, never rush into a deal. Instead, take your time to study and evaluate your decision.

7. Be prepared for disappointments

Usually, buying a house is a long process with a lot of procedures in between.

Even after signing the Sales and Purchase Agreement, things can still go wrong. And your dream house slips away.

Be prepared for disappointments and stay calm when the deal is not on. Then, be ready for the next house hunting.

Final thoughts

With so many important considerations when buying a house, the process can take months or years. But, I believe the effort is worth it. Because for most of us we don’t buy a house every year. Instead, we hope to buy and own a home for the rest of our life.

Furthermore, buying a house is one of the important life decisions that could affect you financially.

Through my sharing of important considerations when buying a house above, I hope I can bring out some points which you’ve never considered before.

And if I missed out on any points, feel free to leave your comment below. Let’s help each other to make better financial decisions.

Image Credits

Image by Gerd Altmann from Pixabay

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.