What is Developer Interest Bearing Scheme (DIBS), the term used when buying property from a certain developer?

Question: Could you explain to me what is DIBS? Is it really buyer don’t need to pay a single cent to developer?     Answer: DIBS means “Developer interest Bearing Scheme”. Our basic understanding is (a better clarification and explanation can be made by a banker or developer)  if you purchase a property under construction from a developer, let’s say Developer A which has DIBS, Developer A will bear the interests of the loan during the construction period. Make it simpler, You purchase your property for RM 300,000.00. You pay Developer A a minimum of RM 15,000.00 (as down payment of 5%, sometimes this can be 10% or more depending on your loan) and you borrow from a bank for the remaining RM 285,000.00. You opt for interest only loan package from the bank (that means, you only pay the interests but not the principal of the loan during the construction period). Under DIBS, Developer A will pay the monthly interests until completion of the property. In other words you don’t have to pay anything to the bank until construction completes. You only start paying the bank instalments after completion of the property. So, you only pay RM 15,000.00 and […] read more

20 Tips to Increase the Success of Your Home Loan’s Application

Update: Corrected the formula for Net Income calculations. Credit to www.propertywtf.com Loan’s application declined to RM45.26bil from RM47bil! The Bank Negara had showed on their website that loan approvals’ percentage for residential properties in the country declined to 46.8% in the first half of this year from 50.1% during the same period in 2011. While the application for loans for residential properties purchases increased by 2.9% but the actual loans approved during the six-month period declined to RM45.26bil from RM47bil in the same period in 2011. This is evident when our clients have to resort to different banks when they buy their properties and this prolonged the property transactions period. Why declined and how it is assessed? One of the reasons for the increasing numbers of bank loan disapproval is because of the recent change of policy by Bank Negara to use Net Income instead of Gross Income of borrowers in approving loans. From our recent meeting with a local bank manager on this policy, he explained that if a person: Has a salary/total income of RM3,000.00 a month (after deductions of EPF and SOCSO) Has a car commitment of RM500.00 a month Other commitments of RM1,000.00 a month (house, […] read more

Is it alright to have Sale and Purchase Agreement reflecting higher purchase price to get higher loan?

“No-Money-Down” Strategy To Buy Property If you read property investment books, you definitely will come across a strategy known as “No-Money-Down” strategy. In other words, it means you don’t have to pay a single cent to purchase your property. Wait a minute, did I just say “you can purchase a property without paying any advancement or deposit?” This is true considering our government has a scheme known as “My First Home Scheme” to assist young adults in purchasing their first property, by allowing them to get 100% financing from Financial Institution. But what about another strategy where you have the Sale and Purchase Agreement reflecting higher purchase price to enable you to get higher bank loan? Let’s say, you need a 10% deposit for a house priced RM400, 000. You negotiate with the Seller to have the Sale and Purchase Agreement to reflect RM440, 000 as the selling price. Now, you can purchase your property without any money down because the 10% deposit in the sum of RM 40,000 came from the bank for a RM 400,000 property! This is exactly what happened today where we have friend, who came to our office and asked us whether it’s viable to […] read more

Want to Evade Stamp Duties And Pay Lesser Fees to Lawyers in Purchase of Property?

A purchaser came during lunch time and had inquired from me how to evade stamp duties payable on purchase of a landed property and of  course he also wanted cheaper legal fees be paid in the purchase of the property. To him, paying lower stamp duties comes with it also lower legal fees in property transactions. “Wow! It’s a good idea!” I told him. I also told him, “Now, you also want free lunch?” He smiled and to his delight, I offered him some sweets but, no free lunch! He was happy before we started our conversations further. It seems that any small thing which is a benefit or a gain to him, however small, seems good thing to him. We can’t blame him because human nature teaches him to take advantage of opportunities that come along his way. I then asked him, what will happen if the government has no money to run the country? Will there be development for us? If you are running the government what should you do? He just kept quiet and listened to me. I also asked him if he is a lawyer dealing with property transactions, what should he do when his clients insist paying […] read more

Getting Rid Of Tenants Who Refuse to Vacate and Pay Rental?

The property investment strategy of buying a property and letting it out to tenants may be sound, wise and good strategy. But what happen if you rent your property or house to a tenant who refuses to pay his rental or refuse to return vacant possession upon the expiry of the tenancy agreement between you and him? This problem often occurs and as a prudent investor, you should be prepared and equipped with the knowledge on how to deal with these tenants. Recently, a friend came to us and told us his story: “My tenancy agreement with my tenant will be expiring end of this month and I told my tenant that I want to increase the rental. My tenant declined my proposal to increase the rental and told me that he will continue occupying the premises without paying me rental for the next three months because I’m holding his rental deposits. He refuses to vacate by end of this month and refuses to pay me rental for the following months. I’m lost.” There are also situations of tenants who are in arrears of rental for months and refuse to vacate the property on the request of the landlords. If […] read more

7 Tips In Selling Your House

 Selling your property can be an expensive affair if not done correctly. Selling of property can be an expensive affair for several reasons: Selling at undervalued price – you have no idea that your property is worth more than the price you sell. Not able to sell your property in short time – waste of time is equivalent to waste of money because you lose the potential interest or the capital that can be used for other income generating activities. Hired expensive agent or the wrong agent – you hired an agent who cannot sell your property in a short time, negotiate in your favour or cost you a big hole in your pocket. Entered into an agreement that is not favourable to you or significantly different from your terms and conditions, especially the selling price. Get cheated – property transferred and you don’t get your money. Getting the wrong property transferred – you intend to sell Property A but your more valuable Property B is transferred instead. You breached the agreement unintentionally – and this caused you to pay the other party for breaching the agreement. There are many reasons how selling your property or house can be an […] read more