Common Property Buying Myths That You Need To Stop Believing

Purchasing a home is one of the most significant purchases you will ever make, but do not believe some of these misconceptions about home buying.

Buying a home is an expensive dream for many people, as property prices continue to rise and individuals struggle to keep up. This is partly because of the slower rate of our salary increment, which cannot catch up with the increase in property prices.

However, if you have decided to buy a home, Friends, family, even coworkers and random acquaintances will start offering their advice. Although they mean well, what worked for someone else may not be the best option for you.

Additionally, there has been a lot of misconceptions going around about buying property. Falling for them can actually make it harder to find the right place.

1. If your mortgage loan is approved, it means you can afford buying the property

If the bank has authorized your loan, it does not mean that you can afford to buy the property. When calculating a loan, a good rule of thumb to remember is that the monthly payments should not exceed one-third of your monthly wage.

2. You have to pay at least 20% of the down payment for a property

Malaysian law requires only 10% of the property price as a down payment, even though a bigger down payment allows you to save more on monthly installments.

Remember that your budget should include other expenditures associated with purchasing a home, such as stamp duty, legal fees, a memorandum of transfer (MOT), mortgage insurance, and so on.

3. Buying a property can help you to earn passive income

Most people have a tendency to think that renting out their houses is a simple method to generate passive income. However, being a landlord comes with its fair share of responsibilities such as paying for the maintenance fees, insuring the unit against fire and repairing damaged appliances.

4. You can only buy a property if you have perfect credit score

A good credit score will increase your chances of loan acceptance. However, having a maximum credit score of 850 is not required in order to get your mortgage authorized.

Most banks consider a respectable credit score to be between 697 and 850. The higher your credit score, the more likely your loan will be granted.

5. Buying a property is a huge investment so you should wait until you are older

Buying a house when you are younger can be a wise decision because you will have more working years to pay off your mortgage and can apply for a longer mortgage loan term of up to 35 years.

If you buy a house when you are older, your loan may be approved with a shorter term, resulting in a larger monthly payment.

Besides, property prices will most probably double every 10 to 18 years through the property cycle. If you purchased a property priced around RM300,000 back in 2010, the property can easily be sold for RM600,000 today, which is double the original price.