13 April, 2022

Property Guides

Let Mah Sing’s Mira guide you through common property terms and their definitions.

Buying your dream home is an exciting journey, but we know the research process can be challenging with new property terms. Let Mira guide you through six property-related terms you may encounter during your research and what they mean.

1. Debt Service Ratio (DSR)
Banks use this calculation method to determine if you can afford the loan you’re applying for. This allows the banks to estimate how much you can pay per month for your home loan based on your income and other debts (e.g., car loans, student loans, etc.). The DSR is then compared against the bank’s DSR eligibility criteria to determine if you qualify for the loan. A safe DSR to aim for is 40%, which helps prevent loan rejections.

The formula to calculate your DSR is:

Net Income (after deductions) ÷ Total Monthly Commitments (including the loan you’re applying for) × 100 = DSR %

2. Base Rate (BR)
This is the interest rate that the bank refers to from Bank Negara before deciding on the interest rate to be applied to your home loan. It is then calculated against the individual bank’s cost of funds and Statutory Reserve Requirement (SRR) alongside your credit risk, liquidity premium, operating cost, and profit margin.

Every Malaysian bank can determine its interest rate based on this formula—so be sure to research which bank can provide a better deal for you.

3. Bumi Lot
This refers to property or land that can only be purchased and owned by the Bumiputeras in Malaysia. The Bumiputera people include the Malays, Sabah and Sarawak natives, the Orang Asli of Peninsular Malaysia, and non-Malay Muslims. The Bumi Lot quota was created to increase the number of Bumiputera homeownership in the country.

4. Down Payment
This is the sum of money the buyer pays in the beginning stages of purchasing something expensive, such as a house or a car. A property down payment must be a minimum of 10% of the property’s purchase price. The remainder is usually paid off with a loan.

5. Vacant Possession (VP)
Here is a term you’ll look forward to in your home purchase process. Vacant Possession refers to the property handover process where you, the buyer, are handed the keys, to your new home. Congratulations!

6. Defect Liability Period (DLP)
Think of the DLP as a warranty period your developer provides you if you discover any defects after the VP process. Under the Housing Development Act (HDA) in Malaysia, the DLP is typically 24 months, beginning from the date you receive your keys. During these 24 months, examine your home for damages, defects, or signs of poor workmanship. Report them to your developer immediately so they can prepare for repairs.

Do you feel ready to own a home after mastering these terms? View our exciting launches now!

Follow us for more tips to know before purchasing your first home. Head to our Instagram and learn more from Mira.

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