Prior sections of the Industrial Malaysia property buying guide covered how to set a budget for a property purchase, how to choose the correct property, and what paperwork are requiring in the property buying process. If you are planning to invest in industrial land for sale, industrial warehouse for your e-commerce, continue to read this article.
Related article: Why should you buy industrial land ?
This book then instructs property buyers on how to acquire a industrial property such as land industrial for sale/ warehouse/ factory as well.
First-time buyers of commercial property are always intimidated. However, it is comparable to the purchase of a residential home, albeit with different prices and stages.
Here are a few of the most significant distinctions between purchasing commercial and residential property.
1. Maximum Loan
For residential properties, banks offer a maximum loan amount of 90%, whereas the maximum credit amount for commercial properties under personal name is just 85%.
2. Loan-To-Value Ratio
For residential properties, the highest loan a buyer can receive is 90%, but only for their first two residential properties.
After that, the maximum loan that may be secured for their third property is 70%.
However, commercial properties are not subject to the same restrictions.
As in the third quarter of 2022, a commercial property purchaser can continue to receive a loan margin between 80% and 85% for the purchase of commercial property without limitation.
Commercial Real Estate Loans
Only commercial properties are eligible for the commercial property loan. The following is a complete list of properties that can be funded using a commercial property loan:
- Retail store lot / Shop building
- Office
- Factory
- SoVo / SoFo units
- Commercial land
- Agricultural land
- Depending on the bank’s corporate policies, this may include SoHo and Serviced Apartments.
There has been misunderstanding as to whether SoHo developments should be financed with a Commercial loan or a Residential loan due to the nature of SoHo units, which are the only developments that can have Commercial status but enjoy HDA protection.
Commercial Loans Granted By Banks
When it comes to commercial property loans, different banks have varied requirements, and some banks are more severe than others in granting the loans.
Certain financial institutions will only fund particular types of commercial assets, such as the ground floor of shop lots or retail space within shopping malls.
The following are some of the factors that banks evaluate when extending loans to commercial property purchasers:
- Location
- Type of commercial property
- Commercial land
- Industrial land
- The unit type if it is located in a mixed-use development.
- Total number of floors in the structure
- The level where the property is situated.
Loan Documents
-Sdn Bhd Business
A Sdn Bhd is a company consisting of at least two individuals.
Individuals who operate a Sdn Bhd corporation will not only be required to submit different income tax forms, but also different documentation when purchasing a property in their own name.
Purchasing a home through the firm will necessitate distinct documentation.
-Form 24 & 49
-Latest Profit & Loss statement
-Article of Articles
-Company Description
-Form 9
-12 Months Bank Statement
-Recent Audited Accounts
Those who are operating a business as a Sole Proprietorship or Partnership — a separate type of corporation – are required to submit the following additional documents:
- Form A as well as Form D
- Title Card
Visit the Loan Documents page for information about purchasing a commercial development in Malaysia, whether as a foreigner or a local.
Acquainting Oneself With Property Terms
Obtaining a commercial loan for your industrial land for sale is nearly identical to obtaining a loan for a residential property.
The applicant must submit a loan application to their preferred banks, preferably those with the lowest interest rates, and wait for their Letter of Offer.
Typically, obtaining the Letter of Offer will take at least one week.
Upon receipt of the Letter of Offer, buyers must be conversant with the following terms:
1.Type Of Credit
The available loans for commercial properties vary from bank to bank.
Commercial loans have fixed or variable interest rates like residential loans.
As of October 2022, CIMB offers numerous types of commercial property loans, including the BizFlexi plan and the BizFlexi Smart plan.
The BizFlexi plan provides flexible payment terms for commercial buildings, whilst the BizFlexi Smart plan allows for prepayments, which can shorten the loan term or reduce interest charges.
2. Amount Of Credit
After receiving the Letter of Offer, purchasers should examine the loan amount to see how much the bank is willing to finance them.
Effective stated previously, as of Q3 2022, the maximum loan amount for a commercial property is 85% of the property’s value.
3. Reason For Loan
Also included in the Letter of Offer is the loan’s purpose, which, in the context of commercial real estate, indicates the reason for the loan.
4. Description Of Real Estate
The Letter of Offer will also provide a description of the property being acquired. In this instance, it will depend on whether the business property is a industrial land for sale, retail space, factory, etc.
In terms of size, land area, etc., the particulars will be specified in detail.
5. Durability
Commercial property loans have a longer maximum repayment period than residential property loans.
The latter has a maximum loan term of 35 years, whereas the former has a maximum loan term of 25 years. The duration will be specified in the Letter of Offer.
6. Setup/Processing Fee
Obtaining a commercial property loan, like a residential property loan, needs a processing or setup charge. The fees will be outlined in the Letter of Offer.
As of October 2022, the processing charge for UOB’s Intelligent Retail Loan is only RM200.
7. Monthly Monthly Service Fee
Monthly service fees are an additional expense that borrowers must pay. These fees are also included in the Letter of Offer.
The fees are often small, with CIMB charging only RM10 for its Flexi Vacant Land Financing loan as of October 2022; this is a notable exception.
8.Current Rates Of Interest And Repayment
In the Letter of Offer, the customer’s required payback schedule and interest rates will be explicitly stated.
In the event of late payments, the bank is permitted to adjust the interest rate payment.
“Upon your default in making payment for any monthly interest due pending the commencement of instalment or default in the payment of any monthly instalment due, the Bank shall be entitled to vary the interest rate for the facility to BLR + (the rate as in the letter of offer) or to such rate as may be prescribed by the Bank in its absolute discretion by providing you with adequate prior notice”
9. Instalments
The instalments, which are monthly payments to the bank, will be calculated depending on the loan amount and listed in the Letter of Offer.
10. Security Paperwork
The security documents that a bank may request for a commercial property loan may include any paperwork related to the loan’s security and banking facilities.
Also included may be the Letter of Offer and the agreement between the bank and any security party.
11. Prepayments
A prepayment occurs when a borrower makes an additional payment. Depending on the sort of loan they are taking out, the interest rate can be reduced, have no effect, or the loan can be paid off early.
12. MRTA/Fire Insurance
Herein lies a second distinction between residential and commercial property financing.
While fire insurance is not required for residential structures, it is required for commercial properties.
If the borrower so wants, banks are able to include the cost of fire insurance in the loan.
These phrases are some of the most prevalent terms found in Letters of Offer.
A property purchaser must also pay attention to these provisions when reviewing the terms and conditions.
There is a distinct guide for buyers of residential property, and the following guide will assist buyers through the legal document signing process.
Last but not least,
If you are searching the industrial properties such as industrial land for sale, you may contact with the estate specialist from Industrial Malaysia to learn more about industrial real estate or schedule a time to visit the sites.
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