Malaysia Property Progressive Payment Schedule

2018-07-27T11:28:05+08:00By |Loans & Debt, Properties|

What is the progressive payment schedule for buying a new property under construction in Malaysia?

 

The Housing Development Act (HDA) 1966 was updated with Housing Development Amendment Act (HDAA) 2012 that came into effect on June 1, 2015.

 

Details of the breakdown for progressive payment for Schedule G & H are as below:-

Schedule G is for landed residential while Schedule H is for strata residential.

There is no schedule for commercial properties thus less protection for buyers.

 

SCHEDULE OF PAYMENT OF PURCHASE PRICE

Instalments Payable % Amount
1. Immediately upon the signing of this Agreement 10 RM
2. Within twenty one (21) working days after receipt by the Purchaser of the Vendor’s written notice of the completion of:-
(a) the work below ground level including piling and foundation of the said Building comprising the said Parcel 10 RM
(b) the reinforced concrete framework and floor slab of the said Parcel 15 RM
(c) the walls of the said Parcel with door and window frames placed in position 10 RM
(d) the roofing/ceiling,electrical wiring, plumbing (without fittings), gas piping (if any)and internal telephone trunking and cabling to the said Parcel 10 RM
(e) the internal and external plastering of the said Parcel 10 RM
(f) the sewerage works serving the said Building 5 RM
(g) the drains serving the said Building 5 RM
(h) the roads serving the said Building 5 RM
3. On the date the Purchaser takes possession of the said Parcel with water and electricity supply ready for connection to the said Parcel 12.5 RM
4. Within twenty-one (21)working days after receipt by the Purchaser of the written confirmation of the Vendor ‘s submission to and acceptance by the Appropriate Authority of the application for subdivision of the said Building 2.5 RM
5. On the date the Purchaser takes vacant possession of the said Parcel as in item 3 and to be held by the Vendor ‘s solicitor as stakeholder for payment to the Vendor as follows – 5 RM
(a) two point five per centum (2.5%)at the expiry of six (6)months after the date the Purchaser takes vacant possession of the said Parcel RM
(b) two point five per centum (2.5%)at the expiry of eighteen (18)months after the date the Purchaser takes vacant possession of the said Parcel RM
TOTAL 100 RM

 

Monthly Instalment Interest Calculation

RM400,000 at 90% loan rate at 4.40% for first 10% released in month with 30 days

400,000 x 10% x 4.40% x 30 / 365 = 144.65

Examples of Monthly Instalment

1m at 90% loan rate at 4.30%

 

600k at 90% loan rate at 4.35%

400k at 90% loan rate at 4.40%

 

LAD Late Delivery Payment to Housebuyers

Liquidated Ascertained Damages payable to housebuyers for lateness is delivering of vacant possession in 24 months (landed) or 36 months (strata) calculated 3 years from date in S&P.

LAD: 10% per annum on purchase price for period of delay

Notes:

  • Complaint must be submitted within 12 months from CCC
  • Developers for residential properties can apply to extend delivery by another 12 months.
  • Caution: Do NOT sign any documents that waive your rights to LAD which have been practiced by certain unscrupulous developers.

If you face difficulties getting your keys, contact the Housing Tribunal (TPPS)

 

What Developers are No Longer Allowed to Promise Housebuyers

  • Developer Interest Bearing Scheme (DIBS)
  • Free legal fees
  • Projected monetary returns/gains/rentals
  • Claim panoramic views
  • Travel time to nearby destinations
  • Other information developer cannot genuinely lay proper claim

 

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14 Comments

  1. Fizy August 14, 2017 at 1:02 pm - Reply

    Hi
    Just wanna ask..if there is a rebate 13% or 15% . Means 9% when SPA, 2% on stage 2A and 1% on VP. Does it means that i only have to fork out just 1% right?

    Hi Fizy, It depends on the seller for the rebate timing. But yes based on the rebate schedule you provided, it appears you only need to pay 1% (10%-1%) upfront. (Excluding legal/misc fees if applicable)

  2. BiliBala Seng December 26, 2017 at 7:53 pm - Reply

    Hi, referring to your given example eof monthly repayment for “400k at 90% loan rate at 4.3% interest”, can you explain how the “monthly installment amount” being calculated?? Let say during the “Pilling & Foundation” stage, buyer needs to start paying 4.3% interest of the 10% loan (or RM40,000), which should be RM172/month right? May I know the calculation method you use to get RM197?

    Hi BiliBala Seng, Thanks for the query. The previous illustration was a monthly installment for interest + capital payment. We have updated the illustrations to be clearer and more up-to-date, and a new section on monthly installment interest calculation.

  3. Faiz January 3, 2018 at 1:18 pm - Reply

    Hi,
    Will the interest paid during the constuction period be deducted from overall interest amount imposed during loan tenure?

    Hi Faiz, the interest paid will be on the amount of loan disbursed. In a sense, the interest you are paying is part of the overall interest amount due. However, it does not reduce the interest that you will need to pay for the entire property loan based on an amortization table.

    • liam August 9, 2018 at 10:34 am - Reply

      Hi, can you elaborate more on the interest part?

      So assuming based on loan of RM1,000,000 , 30 years, interest rate 4.3%.

      Based on normal amortisation table, the total interest is RM 781,537.

      So because loan release based on percentage of completion, and therefore the interest charged during the early stage is lower, but how do the bank make up the remaining interest back to RM 781,537?

      Hi Liam, to clarify the interest paid during the construction phase is typically not shown for the interest payable for the 30 year loan shown in an amortisation table. So you will be paying the interest during construction + eg RM781k for the 30 year loan duration.

  4. Natrah Noor January 10, 2018 at 9:36 am - Reply

    Hi,
    If the developer failed to deliver the unit on the stated period (36months), what should the buyer do?
    How is the 10% per annum on purchase price calculated, if let’s say the unit priced at 400k?
    And do the buyer still need to serve the interest? What about the monthly installment?

    Hi Natrah, Buyer should contact the developer for liquidated and ascertained damages (LAD) payment. 10% of 400k per annum would be 40k per year (pro-rated for period less than 1 year). The buyer will still need to pay interest and monthly installments as this would be the buyer’s obligation with the financier.

  5. Penny Boh February 28, 2018 at 12:03 pm - Reply

    LAD Late Delivery Payment to Housebuyers
    Liquidated Ascertained Damages payable to housebuyers for lateness is delivering of vacant possession in 24 months (landed) or 36 months (strata) calculated 3 years from date in S&P.

    LAD: 10% per annum on purchase price for period of delay

    I plan to buy a small unit service apartment in Subang. The developer claims that government has extend VC to 48 months. Is this true? If this is false information, is it meaning the developer cheated on us? So we can proceed for LAD claim if they delay after 36months, right?

    Hi Penny, the High Court has in the past made a decision to set aside the order by the urban wellbeing, housing and local government minister to give a 12-month extension to a developer. You may want to seek legal remedy for the extension.

    http://www.freemalaysiatoday.com/category/nation/2017/02/28/delays-are-developerss-responsibility-says-rehda/

  6. Khairis July 24, 2018 at 10:48 pm - Reply

    hi,
    interested how do you calculate the capital. I am got figure out how do you calculate the interest only, but how do you calculate the capital amount. What is the formula?
    Thank you

    hi Khairis,
    The capital payment would be the assumption that you start paying for capital repayments on the property immediately (and not just the interest). Capital based on loan amount and completion stage %.

  7. kalaichelvan July 28, 2018 at 10:29 am - Reply

    Hi,
    Please give me an explanation on the third schedule of payment of purchase price.What is actually foundation,structural framework,internal and external finishes.If I want to check on the above what should I be checking to make sure that they have finished the stages accordingly.

    Thank you.

    Hi Kalai,
    Foundation: development begins on piling and foundation work
    Structural Framework: development begins on concrete framework and floor slab
    Internal and External Finishes: development begins on plastering

    Developer would need to fulfill the requirements before bank releases payment. It is not a norm for personal checking on the property stages. You can try checking with the developer or bank.

  8. leong_2 September 13, 2018 at 5:27 pm - Reply

    Will the principal amount reduce if I made extra payment while serving monthly payment? (Under construction)

    Eg, my total loan was 400k. the first disbursement amount by bank to Developer was 50k. And the monthly payment was at RM250 (serving interest). If I pay 1000, will the extra 750 direct deducted from my principal ? IS the every disbursement amount by bank to developer consider the loan principal ? Will my principal reduced to 350k if I pay a lump sum 50k for the first disbursement ?

    Hi Leong, Yes you can reduce the principal provided the bank accepts your payment instructions for payments to reduce the principal. Usually it will need to be specified (it does not get automatically applied)

  9. Min September 15, 2018 at 7:38 pm - Reply

    Can the buyer or should the buyer choose to start paying 100% of the interest plus capital installment after paying the 10% down payment, instead of paying just the interest based on the mentioned schedule until the key is collected? I assume loan tenure starts after key collection, hence interest paid before that period is extra expenses.

    It really depends on a number of factors including why you’re buying the property for (hint: talk to your financial advisor). If it is to reduce interest, you can start paying for capital if your mortgage provider and loan allows you to do so. Yes you are right that the interest paid during construction can be regarded as “extra expense” that doesn’t reduce your home loan owing.

  10. Charles December 30, 2018 at 11:08 pm - Reply

    Hi,

    In my home loan offer letter, it states that

    “The Loan shall be repaid by monthly instalment as stated in the Letter of Offer or such other amount as maybe prescribed by the Bank and shall commence on the first day of the following calendar month after full release of the Loan.”

    So, the official start of my monthly instalment repay (principle + interest) should be the next month after the very last 2.5% (two point five per centum (2.5%)at the expiry of eighteen (18)months after the date the Purchaser takes vacant possession of the said Parcel)?

    Hi Charles, Yes your loan would be as stated. However, you will still need to service the interest of the loan during construction.

  11. Kibbie February 19, 2019 at 4:03 pm - Reply

    Hi a developer offers me a DIBS when i bought a unut from them . Everything goes well and claimeable for almost three yrs but when it comes to the end of the construction, they said is not claimable anymore. S&P date is on 23 july 2014. Hand over is 36mth from S&P date. And they are late for deliver vacant. The LAD is claimable but the interest they refuse to pay back starting from July 18 to dec 18.
    May i know if i have the right to complain for anything i can do? I had emailed alot of times to the GM but she seems like ignore me. Please advice. Thank

    Hi Kibbie, DIBS is quite in a “gray” area. It will very much be determined by the terms and conditions that are stated to determine whether the developer is liable for the delayed period (and even worse for those whose housing project became abandoned!). May be wise to seek legal counsel.

  12. suresh March 28, 2019 at 3:01 pm - Reply

    hi. if i nevr pay how. will any legal action will taken?

    hi Suresh, yes legal action will be taken & penalties may apply.

  13. Hafiz May 21, 2019 at 12:19 am - Reply

    Hi. For home loan that is still under construction, how the amortization table would look like? Should it start with the first disbursement? or the beginning balance start with the total principal?

    Hi Hafiz. The interest charges would start with the first disbursement.

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