Home-buying terms explained
Quick answer: The key terms: SPA (Sale and Purchase Agreement), LA (Loan Agreement), MOT (Memorandum of Transfer), VP (key handover), CCC (completion certificate), DSR (share of salary going to debt) and Bumi lot (Bumiputera quota unit, usually 15% off in Johor). All 20 terms are explained below.
- SPA (Sale and Purchase Agreement)
- The contract between buyer and seller/developer setting the price, completion date and terms. Signed before a lawyer.
- LA (Loan Agreement)
- Your agreement with the bank/LPPSA for the home financing. 0.5% stamp duty applies unless exempted.
- MOT (Memorandum of Transfer)
- The document that transfers the title into your name at the Land Office. Transfer stamp duty is charged on it.
- VP (Vacant Possession)
- The day the developer hands over the keys. Under the Housing Development Act: usually 24 months from the SPA for landed homes, 36 months for strata.
- CCC (Certificate of Completion and Compliance)
- Certifies that a building is complete and fit to occupy. Projects with CCC for every phase show as completed on KPKT's TEDUH.
- DSR (Debt Service Ratio)
- The share of net income going to all debt repayments. Each bank sets its own limit — usually 60–70% for lower incomes, higher for larger incomes.
- CCRIS & CTOS
- Your credit records. CCRIS (Bank Negara) shows the last 12 months of repayments; CTOS adds other data such as lawsuits and bankruptcy.
- Margin of financing
- The share of the price the bank finances — usually 90% for a first or second home; the rest is your deposit.
- Bumiputera lot (Bumi lot)
- Quota units for Bumiputera in new projects, usually 15% off in Johor. Reselling to a non-Bumiputera needs state approval.
- Freehold / leasehold
- Freehold is owned indefinitely; leasehold is for a fixed term (e.g. 99 years) and transfers may need state consent.
- Strata / individual / master title
- Strata for condos and gated strata homes; individual for ordinary landed homes; master title means separate titles have not been issued yet.
- Schedule G / Schedule H
- The progressive payment schedules in new-launch SPAs — G for landed, H for strata. The bank pays the developer as construction progresses.
- LAD (Liquidated Ascertained Damages)
- Compensation the developer must pay for late handover, usually 10% a year of the price for the period of delay.
- DLP (Defect Liability Period)
- 24 months after VP — the developer must repair defects reported in this period.
- Booking / earnest deposit
- An initial payment showing commitment. Subsale is usually 2–3% of the price; new launches fall under Housing Development Act rules.
- MRTA / MRTT
- Insurance/takaful that settles the loan if the borrower dies or is permanently disabled. MRTT is the Shariah-compliant version.
- Valuation
- A registered valuer's report on market value. Banks finance on the lower of the purchase price and the valuation.
- SBR (Standardised Base Rate)
- The home-loan reference rate linked to Bank Negara's OPR. Your loan rate = SBR + the bank's spread.
- State consent
- State Authority approval needed for some properties (e.g. leasehold or Bumi lots) before the transfer.
- Lock-in period
- A period (usually 3–5 years) during which a penalty applies if you settle early or refinance.
Frequently asked questions
What does SPA mean when buying a house?
Sale and Purchase Agreement — the contract between buyer and seller or developer setting the price, completion date and terms, signed before a lawyer.
What does VP mean?
Vacant Possession — the day the developer hands the keys to the buyer.
What is an MOT?
Memorandum of Transfer — the document transferring the title into the buyer's name at the Land Office.
What is DSR?
Debt Service Ratio — the share of net salary used to pay all monthly debts.
What is LAD?
Liquidated Ascertained Damages — compensation the developer pays for late handover, usually 10% a year of the purchase price.