Buying a house in Malaysia involves 12 steps, 3 lawyers, 2 government agencies, and about 90 days of waiting. Most guides skip the specifics — the exact sequence, the deadlines that trigger penalties, the costs nobody mentions until the bill arrives. This is not that kind of guide. Here is exactly what happens, in order, with real timelines and real numbers.
The process is not complicated. It is long. There is a difference. Each step is straightforward if you know what to expect, who is responsible, and how much it costs. The people who get burned are the ones who start house hunting before checking whether a bank will lend to them. Or the ones who sign a booking form without knowing they have 14 days to sign the SPA or lose their deposit. Do not be those people.
Step 1: Check Affordability — Day 0
Before you look at a single listing, run three numbers.
Debt Service Ratio (DSR): Banks reject loans when your DSR exceeds 60-70%. Calculate yours:
DSR = (Total Monthly Debt Commitments / Net Monthly Income) x 100%
Include everything: car loan, personal loan, credit card (5% of total limit, not outstanding balance), PTPTN, existing mortgages, and the proposed new mortgage.
Downpayment: For your first two residential properties, most banks offer up to 90% financing per Bank Negara Malaysia's LTV guidelines. You need at least 10% cash. For third property onward, expect 70% financing — meaning 30% down.
Monthly commitment: Your new mortgage instalment plus all existing debts must stay under the DSR threshold. Use a home loan calculator to estimate instalments at current rates.
| Gross Salary (RM) | Estimated Net (RM) | Max DSR 65% (RM) | Existing Debt (RM) | Available for Mortgage (RM) | Approx Max Property (RM) |
|---|---|---|---|---|---|
| 5,000 | 4,250 | 2,763 | 800 | 1,963 | ~350K |
| 8,000 | 6,600 | 4,290 | 1,200 | 3,090 | ~550K |
| 12,000 | 9,600 | 6,240 | 1,500 | 4,740 | ~850K |
| 15,000 | 11,800 | 7,670 | 2,000 | 5,670 | ~1M |
Assumes 35-year tenure, 4.2% interest rate, 90% margin. Actual amounts vary by bank.
For a deep dive on DSR, including what banks count as income and debt, read our DSR eligibility guide.
Step 2: Get Bank Pre-Approval — Day 1-7
A pre-approval letter (also called a Letter of Offer in Principle) tells you exactly how much a bank is willing to lend you. It is not a commitment — it is a signal.
Why this matters: Without pre-approval, you are guessing. You might spend weeks viewing RM 700K properties when the bank will only lend you enough for RM 500K. Pre-approval costs nothing, takes 3-7 working days, and gives you a firm number to work with.
What you need:
- IC (MyKad)
- Latest 3-6 months payslips
- Latest 3-6 months bank statements
- EA form (for salaried) or tax returns (for self-employed)
- EPF statement
- CCRIS/CTOS report (bank will pull this, but check yours first)
Apply to 2-3 banks simultaneously. Different banks have different DSR thresholds, income calculations, and interest rates. Getting multiple pre-approvals gives you negotiating power and fallback options.
Step 3: House Hunting — Day 7-30
Now you know your budget. Start looking.
Channels:
- Property portals: iProperty, PropertyGuru, EdgeProp
- Developer showrooms: for new launches
- Property agents: for subsale
- Auction listings: LPPEH (Lelong.com.my)
- Direct owner: Mudah, Facebook groups
When evaluating properties, check comparable transaction prices on JPPH (Valuation and Property Services Department) data or portal transaction history. Do not rely solely on listing prices — they are asking prices, not market prices. For more on this, see our property valuation guide.
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Step 4: Letter of Offer / Booking Form + Earnest Deposit — Day 30
Found your property. Now you lock it in.
For subsale: You sign an Offer to Purchase (OTP) or Letter of Offer through your agent or directly with the seller. You pay an earnest deposit of 2-3% of the purchase price. This deposit is held by the seller's agent or lawyer as stakeholder.
For new launch: You sign a booking form at the developer's sales gallery. Booking fee is typically RM 1,000-RM 10,000 depending on the developer.
This deposit is refundable under specific conditions (e.g., loan rejection) but forfeited if you simply change your mind. Read the terms carefully.
Step 5: Sign SPA (Sale and Purchase Agreement) — Day 44
The SPA is the legally binding contract. For new developments, the format is standardized — Schedule G for landed, Schedule H for strata, under the Housing Development (Control and Licensing) Act 1966 and its Regulations 1989. For subsale, the lawyer drafts it.
Critical deadline: You typically have 14 days from signing the booking form to execute the SPA. Miss this deadline and you risk forfeiting your earnest deposit.
Both buyer and seller sign. The SPA specifies the purchase price, payment schedule, completion date, penalties for delay, and defect liability period. For a detailed breakdown of SPA clauses, see our SPA agreement guide.
Step 6: Pay Remaining Downpayment — Day 44-60
If your loan margin is 90%, your total downpayment is 10% of the purchase price. You already paid 2-3% as earnest deposit. The remaining 7-8% is due per the SPA payment schedule — typically within 14-21 days of signing the SPA.
Example for RM500K property:
| Item | Amount (RM) |
|---|---|
| Earnest deposit (3%) | 15,000 |
| Balance downpayment (7%) | 35,000 |
| Total downpayment | 50,000 |
This is just the downpayment. Legal fees, stamp duty, and valuation fees are additional costs. Budget separately.
Step 7: Stamp SPA at LHDN — Within 30 Days of SPA
Your lawyer submits the SPA to LHDN (Inland Revenue Board) for stamping. The stamp duty on the Memorandum of Transfer (MOT) follows a tiered schedule under the Stamp Act 1949:
| Property Value Tier (RM) | Stamp Duty Rate |
|---|---|
| First 100,000 | 1% |
| 100,001 - 500,000 | 2% |
| 500,001 - 1,000,000 | 3% |
| Above 1,000,000 | 4% |
First-time buyers purchasing properties up to RM 500,000 may qualify for 100% stamp duty exemption. Check the latest budget announcements. Full details in our stamp duty guide.
The SPA must be stamped within 30 days of execution. Late stamping incurs penalties.
Step 8: Loan Documentation + Loan Agreement Signing — Day 45-60
Once the bank approves your loan, they issue a formal Letter of Offer. You accept it and sign the loan agreement. This is a separate legal document from the SPA.
Loan agreement stamp duty: 0.5% of the loan amount. For a RM 450,000 loan, that is RM 2,250. First-time buyers may get an exemption on this too (for loans up to RM 500,000).
Your bank's panel lawyer handles this. You may or may not use the same lawyer handling the SPA — if they are different lawyers, costs go up. Using the bank's panel lawyer for both transactions (where possible) saves money.
Step 9: Loan Disbursement — Day 60-90
For subsale: The bank disburses the loan amount to the seller's lawyer, who holds it as stakeholder until all conditions are met (title transfer, discharge of existing charge if seller has an outstanding loan).
For new launch: Disbursement follows the developer's construction schedule — progressive release based on stages of completion (foundation, superstructure, roofing, etc.). You start paying interest on the released amount.
Step 10: Transfer of Title (MOT/SPA Registration) — Day 90-180
Your lawyer registers the transfer of ownership at the land office. This involves:
- Filing the MOT (Memorandum of Transfer)
- Registering the bank's charge on the property
- Paying the registration fees
This step takes 1-6 months depending on the land office backlog. For strata properties without individual titles yet, a Deed of Assignment is used instead.
Step 11: Vacant Possession (VP) — Keys Handover
Subsale: VP is typically within 3-4 months from the SPA date, or as specified in the SPA. The seller moves out and hands over keys.
New launch: VP is 24 months from SPA date for landed properties (Schedule G), 36 months for strata (Schedule H), as prescribed under the Housing Development (Control and Licensing) Act 1966. Developers who deliver late must pay LAD (Liquidated Ascertained Damages) at 10% p.a. calculated daily on the purchase price.
Step 12: Defect Inspection or Move-In
New property: You have a 24-month defect liability period from VP date, as stipulated in the prescribed SPA under the Housing Development (Control and Licensing) Act 1966. Report any defects — cracked tiles, leaking pipes, uneven walls, electrical faults — to the developer in writing. They are legally obligated to fix them at no cost.
Subsale: The property is sold in "as-is" condition. What you saw during viewing is what you get. Inspect thoroughly before signing the SPA.
Complete Cost Breakdown: What You Pay and to Whom
Here is every cost for a RM 500,000 subsale property with a 90% loan.
| Cost Item | Amount (RM) | Paid To | When |
|---|---|---|---|
| Earnest deposit (3%) | 15,000 | Seller/Agent (stakeholder) | Booking |
| Balance downpayment (7%) | 35,000 | Seller's lawyer | After SPA |
| SPA legal fees | ~6,500 | Buyer's lawyer | After SPA |
| MOT stamp duty | 9,000 | LHDN | Within 30 days of SPA |
| Loan agreement legal fees | ~4,500 | Bank's lawyer | At loan signing |
| Loan agreement stamp duty (0.5%) | 2,250 | LHDN | At loan signing |
| Valuation fee | ~300-500 | Valuer (via bank) | During loan processing |
| MRTA/MRTT insurance | ~5,000-15,000 | Insurance provider | At loan signing |
| Total cash outlay | ~77,550-87,750 |
Legal fees calculated under the Solicitors' Remuneration Order 2023 (which replaced the SRO 2005, effective 15 July 2023). First-time buyer exemptions can reduce stamp duty by RM 9,000-11,250.
Key takeaway: Budget 15-18% of the property price in total cash for a subsale purchase (10% downpayment + 5-8% transaction costs). For new launches, the total is lower because developers often absorb legal fees and offer installment plans for the downpayment.
Subsale vs New Launch: Side-by-Side
| Factor | Subsale | New Launch |
|---|---|---|
| VP timeline | 3-4 months from SPA | 24-36 months from SPA |
| Negotiation | Price negotiable | Typically fixed (but rebates/discounts offered) |
| What you see | Actual unit — inspect before buying | Show unit only — actual unit may differ |
| Financing | Full stamp duty + legal fees | Developer may absorb MOT stamp duty + legal fees |
| Downpayment | 10% upfront | Often installment plans (e.g., 5% + 5%) |
| Rental income | Immediate (rent out after VP) | Wait 2-3 years |
| Renovation | May need updating | Brand new, minimal renovation |
| Price premium | Market price | Developer margin built in (often 10-20% above subsale comps) |
For investors focused on cashflow, subsale is almost always better. You start earning rental income in 3-4 months instead of waiting 2-3 years. The higher upfront cost is offset by immediate returns. For a detailed walkthrough of subsale transactions, see our subsale process guide.
Common Mistakes
1. Not getting pre-approval first. You find the perfect unit, pay the booking fee, then discover the bank will not lend you enough. Your deposit may be at risk. Always get pre-approved before house hunting.
2. Missing SPA deadlines. The 14-day window between booking and SPA signing is tight. If your lawyer is slow or documents are missing, you could miss the deadline and forfeit your earnest deposit. Have your lawyer ready before you book.
3. Not budgeting beyond the downpayment. The 10% downpayment is just the start. Legal fees, stamp duty, valuation fees, insurance, and renovation add another 5-10% on top. Budget 18-25% total cash for a comfortable margin.
4. Ignoring the valuation gap. If the bank's valuation comes in lower than the SPA price, you pay the difference in cash. Check comparable transaction prices before committing. Read our valuation guide for details.
5. Choosing the wrong loan tenure. A 35-year tenure gives you lower monthly instalments but costs significantly more in total interest. Run the numbers on both 30 and 35 years. For details on loan structures, see our legal fees guide.
Timeline Summary
| Step | What Happens | Who Does It | Typical Duration |
|---|---|---|---|
| 1. Affordability check | Calculate DSR, downpayment, monthly commitment | You | Day 0 |
| 2. Bank pre-approval | Submit documents, get indicative loan amount | Bank | Day 1-7 |
| 3. House hunting | View properties, check comps, shortlist | You + Agent | Day 7-30 |
| 4. Booking | Sign OTP/booking form, pay earnest deposit | You + Agent | Day 30 |
| 5. SPA signing | Execute Sale & Purchase Agreement | Lawyer | Day 44 |
| 6. Balance downpayment | Pay remaining 7-8% | You | Day 44-60 |
| 7. SPA stamping | Stamp at LHDN | Lawyer | Within 30 days of SPA |
| 8. Loan agreement | Sign loan docs, stamp at LHDN | Bank's lawyer | Day 45-60 |
| 9. Loan disbursement | Bank releases funds to seller/developer | Bank | Day 60-90 |
| 10. Title transfer | MOT registration at land office | Lawyer | Day 90-180 |
| 11. VP | Keys handover | Seller/Developer | Subsale: ~Day 90. New: 24-36 months |
| 12. Move-in/inspection | Defect check (new) or move in (subsale) | You | After VP |
The entire process for a subsale property takes roughly 3-6 months from first viewing to key collection. For new launches, add 2-3 years of waiting for construction.
If you are a first-time buyer, make sure you claim every exemption available to you — stamp duty waivers, EPF Account 2 withdrawal, and potentially the Skim Rumah Pertamaku 110% financing. These benefits exist precisely because the government knows the upfront costs are a barrier. Use them.
Sources
- Housing Development (Control and Licensing) Act 1966 — Schedule G & H — KPKT
- Bank Negara Malaysia — LTV Guidelines for Residential Properties
- JPPH / NAPIC — Property Transaction Data
- Stamp Act 1949 — MOT Stamp Duty Rates
- Solicitors' Remuneration Order 2023 — Malaysian Bar
- EPF Housing Withdrawal — KWSP
Use our stamp duty calculator to estimate your exact costs before committing to any property.