7 questions you must ask before buying your first property

Another method to determine your affordability is the 3-3-5 rule. It’s an advisable guideline that you can take into consideration before purchasing your first property.

The rules are:

3 — You should have a capital of at least 30% of the property’s asking price.

3 — You should not spend more than ⅓ of your monthly wages on your monthly mortgage repayment.

5 — The price tag of the property should not be more than 5 times your annual income.

You can also easily calculate the suitable property price based on your income using CIMB Property Affordability Calculator.

Remember that your debt includes all of your existing loan/financing payments, fixed monthly expenses and the monthly mortgage of the home you are interested in purchasing. Get an estimated value of your monthly mortgage with the CIMB Property Monthly Instalment Calculator.

It’s important for you to remember that a good credit score is key in determining if you’re a good paymaster, which increases your chances of successfully acquiring a loan/financing.

Your credit score acts as your financial report card that contains your financial background such as outstanding credit, loans/financing, credit card and loan/financing application history, payment history and more.

A healthy CTOS credit score ranges between 697 and 850. The higher the score, the higher your chances are of getting your home loan/financing approved. 

In Malaysia, there are many financial institutions that offer housing loans/financing that suit your needs. Here are a few options for you to consider in 2022:

1. Full Flexi Loan/Financing

A Flexi loan/financing is a type of loan/financing that provides you with the flexibility of repayment to deposit any amount, anytime. Any excess repayments will then be used to offset the principal loan/financing amount and ultimately reduce your overall interest/profit rate. Full Flexi loans/financing are usually tied to the borrowers current account which also gives you the freedom to withdraw any excess repayments that have been made. For more information on these type of loans/financing, click here. 

2. Semi-Flexi Loan/Financing

Similarly to full Flexi, Semi-Flexi loan/financing also offer borrowers the flexibility to pay off their home loan/financing quicker by making prepayments (subject up request) and ultimately save on interest right from the start. Apart from that, you enjoy the flexibility of paying lower monthly instalments for the first 5 years with CIMB FlexiOwn, a Semi-Flexi package offered by CIMB. To find out more, click here. 

3. Regular Term Loan/Financing

This would be your regular term loan/financing that follows a fixed repayment schedule until the end of the loan/financing tenure. For more information, click here. 

The interest/profit rates in Malaysia are often calculated based on a Standardised Base Rate (SBR) set by banks as the minimum rate. Take advantage of the current interest/profit environment that offers a low base rate of 2.50%!

But keep in mind, the final interest/profit offered to you may vary depending on other factors such as the type of home loan/financing (Term, Semi-Flexi, Flexi), the loan/financing tenure, margin of finance, the type of property and your credit score. For more details on this, click here.

If you have gone through all of the above questions and done the math, the final question is to ask yourself how comfortable are you after adding it all together? It’s everyone’s dream to own a house, but it’s also important to not rush into your first home loan/financing. You should understand your financial situation and know that you’re able to confidently commit to your decision in the long run.

As societal pressure may overcloud your decision, try to take a step back and ask yourself if you’re ready or because you don’t want to miss out. If you’re ready - congratulations, otherwise, let’s start planning on saving for that dream home of yours!

This article is for informational purposes only and CIMB does not make any representation and warranty as to the accuracy, completeness and fairness of any information contained in this article. As this article is general in nature, it is not intended to address the circumstances of any particular individual or entity. You are advised to consult a financial advisor or investment professional before making any decisions based on the information contained in this article. CIMB assumes no liability for any consequences arising from your reliance on the information presented here.