OMG! There are so many hidden costs when buying a house?

You think buying a house only requires a deposit and down payment? NO!NO!NO! There are some hidden costs too! First-time homebuyers must read!

Do you think buying a house only requires a 10% downpayment and monthly installments? In reality, there are many hidden costs you need to pay!

To help first-time homebuyers smoothly purchase a house and reduce the financial burden of buying a house, the government has introduced many home-buying policies to attract buyers and stimulate the housing market.

Many first-time homebuyers think that when buying a house, they only need to provide the down payment (or even nothing) and the monthly installment money. However, what they don’t know is that after signing the Sales and Purchase Agreement (SPA), there are still these hidden costs waiting for them!

Below are 7 hidden costs of buying a house. If you’re planning to buy a house, remember to bookmark this, so it can help you prepare a budget and financial plan for buying a house!

Hidden Costs Content

1. Booking fees

2. Downpayment

3. Legal fees

4. Stamp Duty

5. MOT

6. Quit Rent

7. Assessment Rate

8. House Insurance

1. Booking Fees

Once you’ve decided to purchase the unit, you’ll need to pay a deposit to “reserve” your property. The amount of the deposit varies: for new houses, it’s typically between RM500 and RM5,000, while for second-hand houses, it’s between 2% and 3%.

Once your bank housing loan application is approved, this deposit will automatically be deducted from the down payment. If the housing loan application is not approved, the deposit will be refunded to you.

2. Downpayment

In general, the minimum down payment amount is usually 10%, and the specific percentage depends on the loan amount.

For some new projects where loans can cover over 90% of the property value, developers may accept zero down payment. Real estate agents or bank agents will typically only inform you that you need to start making installment payments once you’ve received the keys to the house.

However, before the project is completed, the buyer is responsible for paying the bank interest, similar to monthly installments, which must be paid every month!

As for how this interest is calculated, it increases based on the progress of the project’s completion.

Additionally, you can refer to Schedule H Third Schedule in the Sales and Purchase Agreement (SPA), where it clearly outlines the interest to be repaid for each stage of the project.

In simple terms, the construction interest you repay each month will increase as the project progresses. However, it typically won’t exceed the monthly installment amount of the house until the project is completed.

3. Legal fees

After the bank approves your housing loan, the developer (for new projects) or seller (for second-hand houses) will hire a lawyer to assist in preparing the Sales and Purchase Agreement and the Loan Agreement.

This incurs legal fees, which are typically borne by the buyer.

Generally, legal fees do not exceed 1%. However, in July 2023, Malaysia announced the latest Solicitors’ Remuneration Order 2023 (SRO 2023) in the Gazette, adjusting legal fees.

Below are the revised legal fee rates:

Property PriceLegal Fee Rate
Up to RM500,0001.25%
RM500,001 to RM7,500,0001%
Above RM7,500,000Negotiated by both parties, but the rate must not exceed 1%

So, how are legal fees calculated? Let’s take a property price of RM550,000 as an example:

First RM500,000 x 1.25% = RM6,250 Next RM50,000 x 1% = RM500

Total: RM6,250 + RM500 = RM6,750

4. Stamp Duty

Buyers are required to pay stamp duty for the Loan Agreement, which is a fixed rate of 0.5% of the housing loan amount.

For example:

If you purchase a house worth RM500,000 and obtain a loan from the bank for 90% of the property price:

RM500,000 x 90% = RM450,000
RM450,000 x 0.5% = RM2,250

You would need to pay RM2,250 in stamp duty.

5. Memorandum Of Transfer (MOT) Fees

Whether you’re buying a new or second-hand house, when the developer or seller transfers the property to your name, buyers need to pay the property transfer fee or transfer fee (MOT).

This is a tax payable to the government, with rates typically around 2% to 3% of the property’s selling price, clearly stated in the sales and purchase agreement.

The original property transfer fee rates are as follows:

Property PriceTransfer Fee Rate
Up to RM100,0001%
RM100,001 – RM500,0002%
RM500,001 – RM1,000,0003%
Above RM1,000,0004%

Generally, the property transfer fee is the most expensive part of buying a house. However, when the government introduced the Home Ownership Campaign (HOC), houses priced below RM1 million were exempt from MOT.

Since the end of HOC, the new home-buying policy in Malaysia, called the Home Ownership Initiative (i-MILIKI), also provides MOT exemptions, but only for houses priced below RM500,000.

The MOT rates under i-MILIKI are:

Property PriceExempt Transfer Fee Rate
Up to RM500,000100%
RM500,001 – RM1,000,00075%

6. Quit Rent

After purchasing a house and receiving the keys, homeowners in Malaysia are required to pay two types of property taxes to the local government each year—assessment tax and quit rent or parcel rent.

Quit rent (cukai tanah) is levied by the state government’s land office based on the valuation of the land where the property is located.

It’s important to note that quit rent is only applicable to homeowners of landed properties or properties with land ownership.

The rate of quit rent varies from state to state, and you can check the official websites of each state government for details.

The calculation of quit rent is as follows:

For example:

Quit rent rate in Selangor: RM0.035 per square foot

Property land area: 2,000 square feet

2,000 x RM0.035 = RM70

It’s worth mentioning that if you purchase an apartment, while you don’t need to pay quit rent, apartment owners are required to pay parcel rent.

Parcel rent (cukai petak) is a property tax imposed by the state government on strata properties (apartments), and the rate varies depending on the state government.

Unlike quit rent, parcel rent is calculated based on the area of the housing unit and any ancillary areas (such as parking spaces).

The calculation of parcel rent is as follows:

For example:

Parcel rent rate in Selangor: RM0.025 per square foot

Property land area: [850 square feet (unit) + 130 square feet (ancillary area)] x RM0.025 = RM24.50

7. Assessment Tax

Assessment tax (cukai taksiran) is a tax collected by the local government or city council to fund the development and maintenance of local infrastructure.

This tax is determined based on the type, area, and estimated annual rental value of the property, with a typical rate of 4% of the rental value.

The calculation for assessment tax is as follows:

Monthly rental value: RM1,600

Annual rental value: RM1,600 x 12 = RM19,200

RM19,200 x 4% = RM768 (per year)

However, assessment tax is usually paid semi-annually, so the amount paid each time would be RM384.

8. House Insurance

Once your housing loan application is approved, it’s essentially a successful purchase, and the bank will typically include home insurance in your mortgage.

Home insurance comes in two types: Mortgage Reducing Term Assurance (MRTA) and Mortgage Level Term Assurance (MLTA).

These two types of insurance have different premiums, coverage, and prices depending on the borrower’s age, loan amount, and repayment term.

Mortgage Reducing Term Assurance (MRTA)Mortgage Level Term Assurance (MLTA)
As the name suggests, it’s a decreasing insurance where the coverage amount decreases gradually along with the outstanding loan amount. If you pass away or become permanently disabled, losing your economic capability, the insurance will be used to repay the remaining loan balance.The coverage amount of this insurance remains constant over time, although some insurance companies may increase the coverage amount annually, and it may also have cash value. The compensation from the insurance not only repays the remaining loan balance but also allocates to beneficiaries.

Borrowers can choose to make a lump sum payment or include it in the mortgage, repaying it monthly along with the house installments.


If you’re purchasing an apartment, don’t forget about maintenance fees! The management of the apartment complex will collect a deposit of three months’ fees from each unit owner.

After buying a house, in addition to monthly installments, there are other expenses such as renovation costs, furniture expenses, utility bills, etc., all of which can add up.

Of course, if you’re a first-time homebuyer, you can enjoy purchasing benefits from various Malaysian home-buying plans like i-MILIKI, which can help you save some expenses!

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