Home Loan BYTES FROM OUR KITCHEN

Home Loans In Malaysia

Planning to purchase a property? Why not widen up your financing options by applying for a home loan? Here are some of the best home loans available in Malaysia. Just compare the interest rates and apply as per your convenience.

How to Use a Housing Loan Calculator?

Do you want to check if you are eligible for a particular mortgage loan? Wonder how much financing you will get from the bank? Using a this loan calculator is an excellent way to give you a rough idea to go about about all these. If you are unsure how to use a housing loan calculator, Here we are to help you.

You can calculate the monthly instalments you would be paying in order to work out the math and come up with the right loan amount you need to borrow. There are calculators available online to help you calculate the instalments. You will also find an illustration on how the monthly instalment amount is split into principal reduction and interest payment.

If you think that the instalment amount isn’t within your budget, you can increase the loan tenure or check if a reduction in interest rate is feasible. You may even try a smaller loan amount so that the monthly payments can be reduced.

When you approach different banks to apply for a loan, it affects your credit history. So instead of approaching banks, you can take a look at the various loan facilities offered by banks and then use a home loan calculator to find out the approximate amount you will be paying every month. This will give you a better idea of your repayment ability.

This is how the home loan is been calculated :

The formula for Home Loan monthly repayment

You can try this formula to calculate your monthly repayments:

Monthly Repayment = P * [i/(1-((1+1)^-n))]

where

P = Loan Amount
i = monthly interest rate
n = loan duration in months

You could try replicating this formula using the following Excel function:

Monthly Repayment = PMT(i,n,-P)

Years Principal(RM) Interest(at 4.25%) Balance
1st 6,346.31 21,127.33 493,653.69
2nd 12,967.66 41,979.62 487,032.34
3rd 19,875.96 62,544.95 480,124.04
4th 27,083.66 82,810.90 472,916.34
5th 34,603.71 102,764.48 465,396.29
6th 42,449.67 122,392.16 457,550.33
7th 50,635.66 141,679.82 449,364.34
8th 59,176.41 160,612.71 440,823.59
9th 68,087.29 179,175.47 431,912.71
10th 77,384.35 197,352.04 422,615.65
11th 87,084.33 215,125.71 412,915.67
12th 97,204.68 232,479.00 402,795.32
13th 107,763.62 249,393.70 392,236.38
14th 118,780.16 265,850.79 381,219.84
15th 130,274.14 281,830.46 369,725.86
16th 142,266.24 297,312.00 357,733.76
17th 154,778.04 312,273.83 345,221.96
18th 167,832.08 326,693.43 332,167.92
19th 181,451.86 340,547.30 318,548.14
20th 195,661.88 353,810.92 304,338.12
21st 210,487.73 366,458.70 289,512.27
22nd 225,956.10 378,463.97 274,043.90
23rd 242,094.84 389,798.88 257,905.16
24th 258,932.99 400,434.36 241,067.01
25th 276,500.87 410,340.13 223,499.13
26th 294,830.10 419,484.53 205,169.90
27th 313,953.67 427,834.60 186,046.33
28th 333,906.02 435,355.89 166,093.98
29th 354,723.06 442,012.49 145,276.94
30th 376,442.26 447,766.93 123,557.74
31st 399,102.73 452,580.11 100,897.27
32th 422,745.24 456,411.23 77,254.76
33th 447,412.37 459,217.74 52,587.63
34th 473,148.51 460,955.24 26,851.49
35th 500,000.00 461,577.39 0.00

Amortization refers to the process of paying off a loan or mortgage. An amortization table is a depiction of periodic payment details on a loan. This table generally illustrates the full summary of loan repayment, depicting the years against corresponding interest, principal payments made as well as the outstanding loan amount at each milestone.

Benefits of using repayment calculator for home loan

  • Using the home loan calculator for checking your loan repayment plan and other related details, is a great way to ensure that you are well-informed and aware of all the related aspects of the loan before you decide to get your hands on one. Some of the most outstanding advantages of using an online calculator are –
  • You get to know your tentative housing loan instalment beforehand; this enables you to plan your expenses more efficiently since you now know how much of your monthly income will go into loan repayment
  • You can try varying your loan amount or loan tenure so as to reach that optimum monthly repayment amount which you know you will be comfortable to pay, each month. And you can then apply for that optimum blend of loan amount and tenure.
  • You can easily check how much your monthly repayment is varying in case the processing charges are varied. This, though is not in a customer’s hand, but can lend you good knowledge in order to decide which bank to choose for availing a home loan.

Compare Housing Loans From Different Banks In Malaysia

Bank Name
Loan/Financing Amount
Interest Rate/Profit Rate
processing fee
Know more
Affin Bank Malaysia Affin Bank
Conventional: Up to RM5 million.
Up to (BR + 3.11)% p.a
-
Affin Bank Malaysia Affin Bank islamic
Islamic: Up to RM500,000.
Up to (BR + 4.61)% p.a.
No charge
Alliance Bank Malaysia Alliance Bank
Conventional: Up to 90% of property valuation.
Pegged to base rate.
Up to RM212
Alliance Bank Malaysia Alliance Bank Islamic
Conventional: Up to 90% of property valuation.
Pegged to base rate.
No charge
Ambank Malaysia AmBank
Conventional: Up to 95% of property valuation.
Pegged to base rate.
Up to RM212
Ambank Malaysia AmBank Islamic
Islamic: Up to 95% of property valuation.
Up to 9.99% p.a.
Up to RM212
Bank Islam Malaysia Bank Islam
Up to RM500,000
As per bank’s discretion.
No charge
Bank Muamalat Malaysia Bank Muamalat
Up to 90% of valuation of the property.
Up to 10.50% p.a.
No charge
Bank Rakyat Malaysia Bank Rakyat
90-110% of valuation of property.
Up to 5.35% p.a.
-
BSN Malaysia BSN
Conventional:Up to 100% of property valuation.
Up to 6.95% p.a.
No charge
BSN Malaysia BSN Islamic
Islamic:Up to 100% of property valuation.
Up to 6.95% p.a.
No charge
CIMB Malaysia CIMB
Conventional:Up to 100% of property valuation.
Up to 5.35% p.a.
Up to RM212.
CIMB Malaysia CIMB Islamic
Islamic:Up to 100% of property valuation.
Pegged at a base financing rate.
Up to RM212.
Hong Leong Malaysia Hong Leong
Conventional:Up to 100% financing.
As per bank’s discretion
RM0.50 per cheque.
Hong Leong Malaysia Hong Leong Islamic
Islamic:Up to 100% financing.
Pegged at a base rate of 3.69% p.a.
-
Kuwait Finance House Kuwait Finance House
Up to 90% of margin of financing.
Up to 4.99% p.a.
Up to RM500.
Maybank Malaysia Maybank
Conventional:Up to 95% of property valuation.
Pegged to bank’s base rate.
Up to RM200 + GST.
Maybank Malaysia Maybank Islamic
Islamic:Up to 90% of property valuation
Based on the bank’s base rate.
Up to RM200.
OCBC Malaysia OCBC
Conventional:Up to 90% of property valuation.
Pegged to base rate at 3.83% p.a.
No Charge
OCBC Malaysia OCBC Islamic
Islamic:Up to 90% of property valuation.
Pegged to base financing rate at 6.76% p.a.
No Charge
Public Bank Malaysia Public Bank
Conventional:RM100,000 and above.
Up to 4.35% p.a.
Up to RM212.
Public Bank Malaysia Public Bank Islamic
Islamic:RM100,000 and above.
Pegged to base financing rate at 6.72% p.a.
Up to RM212.
RHB Malaysia RHB
Up to RM400,000.
Up to 4.75% p.a.
RM212.

Home Loan Overview

For many, owning a home is a long-term goal and one which can’t easily be realised without the aid of a financing facility. Here’s a complete guide to help you understand all you need to know about financing your home.

Why Home Loan?

Planning to purchase a property, but don’t have enough finances? This is where taking a home loan can help you beat the blues.

There are several banks and institutions in Malaysia offering both Islamic and conventional home financing schemes. All you need to do is check choose a scheme, check your eligibility, and apply. However, a deeper understanding of how the property financing scheme works in Malaysia will help you save more on your investment.

How do Home Loan in Malaysia Work?

Before you take up a loan, make sure you have a clear-cut idea on how the property financing schemes work in Malaysia.

Click to know: Things to Consider When Applying For A Home Loan
Things To Consider When Applying For A Home Loan In Malaysia

Knowing the different home loan types

Whether you need a conventional or an Islamic home loan, the vast majority of them can be classified into three main categories – term loans, semi-flexible loans, and fully flexible loans. While a term loan comes with a fixed interest rate and loan tenure, it isn’t very flexible when it comes to paying more than your monthly instalment and reducing the overall interest. But, with a fully flexible loan, you can pay additional amounts whenever possible. Semi-flexible loans combine the features of term loans and fully flexible loans.

Keep tabs on the mortgage industry

When it comes to mortgage financing, Bank Negara Malaysia constantly introduces updates and reforms. So, whether it’s policy changes or announcements, be sure to keep a track of all the latest going-ons.

The importance of interest rates

While the interest rate is what most of you would look at when it comes to applying for a home loan, it isn’t the be all and end all. In fact, low-interest loans can mean less flexible terms, such as a lengthy lock-in period or an early settlement penalty.

Pre-qualifying for a home loan

Pre-qualifying involves your bank checking your overall financials, including your current assets, debt, and income. This way, you get a good idea of the mortgage size you qualify for and discuss your individual needs with the lending bank.

Plan your mortgage

The first step to taking out a mortgage is to plan around it. Once you know how much money you’re going to need, you should consider coming up with a repayment plan right away. This way, you’ll know what you need to go through to ensure your payments are made on time always.

Get Mortgage Reducing Term Assurance (MRTA)

The cost of insurance coupled with home loan payments can burn a sizeable hole in most wallets. The best way to protect yourself financially if something unfortunate happens is with MRTA. This way, you can be sure that your loan payments are covered whether you’re permanently disabled or are no more.

Sift through plenty of options

The chances of finding the ideal home loan offer in your first search are pretty remote. So, don’t just settle for the first offer that comes your way. Compare as many options as you can and remember to read the fine print thoroughly so you’re able to zero in on an offer that’s in line with your expectations and financing needs.

Features and Benefits of Home Loans in Malaysia

The loan schemes for housing offered by different banks in Malaysia come with an array of features and benefits which are as follows:  

  • The loan can either follow conventional principles or Islamic principles.
  • Get financing for a completed home/property, under-construction house and also for a shophouse.
  • Refinancing facility is available with many home loan schemes in Malaysia.
  • Many banks offer the facility to make or withdraw excess payments any time via multiple easy methods such as online transactions, ATMs, or through cheques.
  • You can access the facility of consolidating your current account, salary account, and home financing account into one easy-to-manage account.
  • Flexible tenures are available to fit your lifestyle.
  • Loans are open to residents and non-residents of Malaysia.
  • The home loan schemes are available on a variable or fixed interest rate basis.
  • You can take a home loan to buy a house for self-use or as an investment.
  • They are secured loans; the financed property will be used as collateral.
  • You can be an individual applicant or a joint applicant.

Tax Benefits on Home Loan

The Malaysian government provides income tax benefits on your home loan interest payment to a limited extent. You can expect a maximum of RM10,000 tax exemption per year on your loan’s interest amount for a period of the first 3 years from the date of the first drawdown.

If you are a joint applicant for the financing, the tax relief is still RM10,000 per year on the interest. All the applicants will be eligible to get the relief. The eligibility criteria to get the tax relief is listed below:

  • You must be a Malaysian citizen.
  • You must be a resident of Malaysia.
  • The property must be residential.
  • The property must not be given out for rent.
  • You must have a valid Sale and Purchase Agreement.
  • Tax relief is limited to one residential unit.

Types of Home Loans in Malaysia

There are different types of housing loan packages offered by various banks in Malaysia which are as follows.

Conventional Home Loan: It is a standard loan offered by a bank that involves either fixed or floating interest rates. The interest is paid on a monthly basis on the principle amount that you have borrowed from the bank. With the variable interest rate facility, your monthly instalments may fluctuate if there are any changes to the interest rate of the loan. In fixed interest facility, you will pay the same instalment amount throughout your tenure.

Flexi Home Loan: A flexi loan is similar to that of a conventional loan. It allows you to make excess payments and also allows you to withdraw them at any given point of time. Moreover, your current account is linked to the loan account and as such, allows for easier repayment through auto-debit.

Islamic Home Financing: This type of financing works on the Shariah principles of banking that includes concepts, such as Bai’ Bithaman Ajil (BBA) and Musharakah Mutanaqisah (MM).

  • Bai’ Bithaman Ajil (BBA) Home Financing: A buy-and-sell concept is used in this type of home financing where the bank buys a property for you at the current market price and sells it back to you at an agreed price. The price that you purchase the property from the bank consists of a mark-up for the bank’s profit.
  • Musharakah Mutanaqisah (MM) Home Financing: It works on the concept of partnership between the bank and you (applicant). The bank buys a property and leases it out to you until you own the property completely by paying the instalments. Here, you pay the rental to the bank as per the Ijarah concept.

Housing Loan Tools

Everything you need to know about home loans in Malaysia. Make the search for your home loan easier with these tools and guides.

Guide
Calculator
Rates
Eligibility
Glossary

How to Choose the Right Home Loan Product?

There are many factors you need to consider when you are shortlisting the financing product to buy your home. Here is a list of a few significant factors:

  • Type of loan: If you have a fixed income and a number of commitments on your plate, you can choose the term loan. You are required to make a fixed monthly instalment every month and the repayment tenure will be set at the time of loan approval.

If you have less commitments, then you can choose a flexible loan where you can make additional payments other than the set monthly instalment. This will help you clear the loan well before the specified tenure.

  • Margin of finance: Know the financing margin available with each loan scheme. Some banks say that they provide 100% financing, however there can be a catch, like having a maximum limit on the loan amount.

Also, the property’s value is decided based on the property valuers appointed by the bank. The property value may be decided considering the market value of the property, the current real estate rates in the locality, and other factors. Research and apply for the loan that provides you with highest possible loan amount.

  • Loan tenure: Generally, banks in Malaysia provide a loan tenure of 35 years or until you attain an age of 70 years. The drawback of having a longer repayment tenure is that you will end up paying a lot more on interest. So, plan accordingly and choose the repayment tenure with the interest part in mind.
  • Early settlement facility: You need to know if your loan can be settled well in advance, i.e. within the lock-in period. Some loans have strict bounds where an early settlement makes no difference in terms of saving on interest. You need to pay an early settlement penalty equivalent to the sum of the interest you would be paying through the rest of the tenure. Whereas, certain schemes do not come with a lock-in period.
  • Interest/Profit Rate: Some banks provide fixed interest rates while the others peg the rates to the base rate, i.e. variable interest rate. So, you need to calculate on the total interest you will be paying at the end of the loan tenure to decide on the better package. Also, ask for the effective rate and not just the flat interest rate to get a practical overview of things.
  • Fees and Charges: Don’t ignore the fees and charges associated with a loan as it may take up a considerable part of your loan amount. You will be required to pay certain fees and charges at the time of disbursal and on a monthly basis. At the time of disbursal, you will be required to pay a stamp duty charge, documentation charge, service fee, and valuation fee.

If you miss a payment, the lending institution may levy a late payment penalty.

Loan-related Terminologies

Base Rate: Base Rate (BR) is a reference standard on which the actual interest rate for a loan is determined. BR is used when your home loan follows a floating/variable interest rate. Each bank follows its own BR. A BR varies when the Overnight Policy Rate (OPR) changes. It is computed using the benchmark cost of funds and the Statutory Reserve Requirement cost. Both conventional and Islamic banking systems follow the base rate.

Down Payment: Down payment is the money you pay when you are entering a deal to purchase a home. The down payment is a certain percentage of the total cost you have agreed to buy the house for. If you get a loan that finances 90% of the total purchase value, you have to arrange the rest 10% from your own pocket to be paid as a down payment.

Foreclosure: It is a situation where the bank/financial institution takes over your property when you stop making payments due to financial issues. The bank/finance institute may sell your property in order to recover the loan amount that is overdue.

Loan Tenure: Loan tenure is the period of time you are given in order to completely repay the borrowed money. You are required to make instalment payments every month during the loan tenure so you can clear the loan on time.

Mortgage Reducing Term Assurance (MRTA): MRTA is one such insurance policy that covers the loan and your family in case of unfortunate events, such as your death or if you are diagnosed with total and permanent disability. Though it is not mandatory to buy one, banks recommend you to subscribe for an MRTA to keep your house on the safer side.

Prepayment: An early repayment of a loan by means of refinancing to get a reduced interest rate is known as prepayment of loan.

Islamic vs Conventional Mortgages

Islamic Mortgage Conventional Mortgage
Risks are shared in cases of natural disasters, discontinued construction, and others. The lender does not share the risk.
Documentation costs are high. Documentation charges are comparatively less.
Many fees and charges are applied even if they are not mentioned beforehand. A transparent system is followed as all the applicable fees and charges are mentioned.
Some banks provide 20% discount on Stamp Duty. No discounts provided on Stamp Duty.
Early settlement does not exist. Even if you settle the loan before the end of tenure, you will end up paying a penalty. Some banks provide early settlement facility without a penalty.
The floating interest rates have a ceiling rate to avoid extreme fluctuations. The concept of ceiling rate does not exist even if the conventional banking follow floating rates.

Transfer of House Ownership

Paying off your loan amount completely is not the end of the story. You need to keep in mind that a mortgage loan or a home loan involves transferring the ownership of the property to the bank during the loan disbursal.

A lawyer has to prepare the documents for the transfer of ownership and a stamp duty is applicable to the process. Given below is the percentage of the property value that will go into it:

  • The first RM100,000 of the loan amount—1%.
  • Next RM400,000—2%.
  • Beyond RM500,000—3%.

Home Loans for Foreigners

Many foreigners stay in Malaysia as part of the government scheme—Malaysia My Second Home (MM2H) scheme. The scheme provides foreigners with a visiting pass valid for a minimum of 10 years. Getting funds to buy a home in Malaysia is easier when you have the pass. However, the margin of finance may be less than 80%.

If not a MM2H license, you at least need to have a valid work permit that does not expire for a considerable period of time.

There are a few restrictions on the type of properties an expat can buy, such as:

  • A minimum property value is set for each state when you are an expat, i.e. not less than RM1 million.
  • You cannot buy a property listed as a low or medium cost residential unit by the state government.
  • You are not supposed to buy a property on the Malay reserved land.
  • You cannot own a property that is meant for Bumiputera.

Pre-qualification and Pre-approval

Here’s how pre-qualifying for a mortgage and getting a pre-approval on a mortgage loan are different.

  • Pre-qualification: You provide a bank with your personal and financial details. The bank evaluates your finances and lets you know the amount you can borrow to buy a home. This is for the purpose of giving you an idea of how much financing you can manage to get and need not be accurate. Keep in mind that pre-qualifying is not equivalent to applying for a mortgage. It does not include a deep analysis of your credit history. You can get this done over a phone call or online.
  • Pre-approval: For a pre-approved mortgage loan, you need to fill an application form and provide all the required documents to the bank. You will then get to know the actual financing amount you are eligible for. The bank also informs you on the final say regarding the interest rate and tenure. You will be given a document stating the approved loan attributes. You can then start looking for a property of value less than or equal to the approved financing amount.

Home Renovation and Refurbishment Loan

Malaysian banks offer a separate loan for you to refurbish your home called a home renovation loan. Usually, such a loan is offered only to a home loan applicant with the bank. Some loan packages in itself contain funding for home renovation as a facility. Banks, such as OCBC Bank allow you to start the instalment payment up to 1 year after the loan disbursement. You can expect a repayment tenure of up to 10 years or up to an age of 70 years, whichever is higher.

Statistics on Home Financing

The banks in Malaysia go through a huge lot of applications and approve financing only for the applicants who provide valid information and support their statements with valid documentation. Speaking of home loan approvals, a total of RM40 billion was distributed among 152,000 applicants in 2016. The banks approved about 74% of the applications and 75% of the total applicants were first-time buyers.

Maybank plans to provide financing of up to RM10 billion in 2018 under its first-time buyer’s home loan product—MaxiHome Ezy. The bank has recorded a growth of 7.6% year-on-year in mortgage sector.

MBSB Bank together with the Public Sector Home Financing Board (LPSSA) has targeted to disburse financing for residential properties. They plan to give out RM500 million loans over a period of 3 years dedicated to public sector employees.

Due to the probable policy changes after the GE14, Keith Wee, a UOB Kay Hian banking analyst says that a sharp slowdown can be expected in the construction-related loan growth in Malaysia. This could cause a downside to the expected 5% loan growth for the year 2018.

Recent Updates on Mortgage Loans

New lease of life for housing scheme in Johor Bahru

The affordable Rumah Mampu Milik Johor (RMMJ) scheme is to be renamed into the Rumah Mampu Biaya (RMB) scheme. Mentri Besar Datuk Osman Sapian noted that the move shall facilitate easy repayment of housing loans. Under RMMJ, many owners have been unable to repay housing loans, leading to the auction of their houses.

A task force is to be set up to assess the details of the new scheme. Osman noted that the need for affordable public housing has intensified with the presence of 15,000 squatters currently, including foreigners. Additionally, lack of housing space and high rent has raised the demand for more housing space.

The new scheme shall also ease the process of house ownership. Currently, 20% of loan applications are rejected by banks even though eligibility certificates have been issued. The state Housing and Rural Development Committee chairman, Dzulkefly Ahmad, noted that reasons included lack of availability of payslips for some people, or for people servicing other loans.

As a response, the state government plans to provide assistance to the eligible buyers through other measures such as the hire-purchase scheme with 10% of rent as down payment.

Banks offering Home Loans in Malaysia

The following is the list of banks offering home loans in Malaysia:

Home Loan Eligibility

The eligibility criteria to get a home loan in Malaysia are as follows:

  • Nationality criterion: Malaysian citizens and foreigners with a valid work permit and Visa.
  • Age criteria:
  • Minimum age: 18 years
  • Maximum age: Up to 75 years old (at the time of completion of the tenure)
  • Minimum income requirement criterion is as per the bank’s discretion and based on the financing scheme applied for.
  • For joint applications, the applicants must be an immediate family member, such as spouse, children, parents, or siblings.

Documents Required for Home Loan

For an individual or a joint applicant:

  • A copy of NRIC (both front and back sides).
  • Payslips - original draft and copy of the last 3 months.
  • Last 3 months’ bank statement.
  • Latest EPF statement.
  • Confirmation Letter from the employer
  • J Form / Latest Income Tax Declaration.
  • Copy of Sale and Purchase Agreement and/or other property documents.
  • Copy of Property Evaluation Report from panel valuers registered with the bank.

For a self-employed applicant:

  • A copy of NRIC (both front and back sides).
  • Last 6 months’ bank statement.
  • Latest EPF statement.
  • Business Registration Certificate (if applicable).
  • J Form / Latest Income Tax Declaration.
  • Copy of Sale and Purchase Agreement and/or other property documents.
  • Copy of Property Evaluation Report from panel valuers registered with the bank.

For an organization:

  • Organisation’s bank statement for a period of 6 months.
  • Organisation’s financial statement for last 2 years validated by an authorised audit body.
  • B/BE form and LHDN receipt.
  • Business Registration Certificate (SSM).
  • Memorandum and Articles of Association (M and A) / Form 24, Form 44 and Form 49.
  • Board of Director Resolution.

For a foreign applicant working in Malaysia (salaried or self-employed):

  • A copy of your identity card or passport.
  • Working Permit (if any) or PR card with a validity for a minimum of 6 months.
  • Property booking receipt.
  • A copy of the Sales and Purchase Agreement or title.
  • Latest salary slips for a minimum 3 to 6 months.
  • Latest bank statements for a minimum 3 to 6 months.
  • Employment or validation letter by the employer or the latest KWSP statement.
  • Latest income tax declaration form with payment acknowledgement receipt.
  • Deposit statement, such as fixed deposit, ASB, or other bonds (if applicable).

For a Malaysian applicant working overseas (salaried or self-employed):

  • Copy of NRIC or Malaysian Identity Card.
  • Working permit (if any).
  • Booking receipt for the property (1 copy).
  • Vendor Sale and Purchase agreement or title copy or new sales and purchase agreement.
  • Last 6 months’ personal bank statement.
  • Latest profit and loss statements (if applicable).
  • Business registration certificate (if applicable).
  • Latest deposit statements; for example, fixed deposit, ASB or bonds (if any).
  • Any other document as requested by the bank or finance institute.

How to Apply for Housing Loan

Offline application: You can go to the nearest branch of the bank of your choice and fill in the loan application form. You need to submit the supporting documents required along with the completed application form to complete the application procedure.

Online application: Some banks allow you to apply for the loan on their website. You are required to fill in the key fields of the application and submit the required documents. A bank representative will get in touch with you and carry the process forward. Certain banks will allow you to express your interest in acquiring a home loan by filling in your details on an online form. Once you submit the form, a representative from the bank will reach out to you and initiate the application process.

Home Loan Interest Rates is Malaysia

Bank Name Interest Rates (Estimated)
Public Bank 4.35% p.a.
BSN Floating rate pegged to the bank rate
RHB Bank 4.75% p.a.
Bank Islam Floating rate pegged to the bank rate
AIA 4.99% p.a. to 5.15% p.a.  
Bank Rakyat Floating rate pegged to the bank rate
Affin Bank Floating rate pegged to the bank rate
HSBC Bank Floating rate pegged to the bank rate
AmBank Floating rate pegged to the bank rate
OCBC Bank Floating rate pegged to the bank rate
CIMB Bank 4.95% p.a. to 5.35% p.a.
Hong Leong Bank Floating rate pegged to the bank rate
CIMB Islamic Bank 4.4% p.a. to 6.95% p.a.
Maybank Floating rate pegged to the bank rate

Fees and Charges of Home Loan

Following are the basic fees and charges associated with a housing loan:

Fees Type Description
Stamp Duty Charges 0.5% of total financing amount as per the Stamp Duty Act 1949 (Revised in 1989).
Processing Fee As per the bank’s discretion (Often waived for new customers or as a special privilege).
Disbursement Fee As per the bank’s discretion (Includes registration fee, stamping fee etc.).
Legal Fee (pertaining to securities documentations) As per the bank’s discretion.
Valuation Fee As per the bank’s discretion (Applicable to completed properties only).
Late Payment Charges Commonly charged at 1% p.a. on the amount in arrears.
Early Settlement Fee As per the bank’s discretion.
housing loan malaysia

House loan application approval process

Once you have submitted the application for a housing loan, there are a few steps involved until you get the approval for the same. Let’s have a look at the procedure involved:

Application form assessment: When you submit the application form to the bank, the representatives look into the form and check if all the required fields/information is filled. You are requested to make the application again if there are any mistakes or incomplete information given.  

Valuation of documents: The bank staff will evaluate the documents you have submitted. The documents are checked against the factors, such as the validity of the information you have given and tally the information in one document with another if necessary to finalise on the authenticity.

Credit assessment: This is one of the main criteria where the approval or disapproval of the loan is decided. The bank checks your credit score that depends upon your spending habits, investments, savings, and your loan history (if any). A negative credit score may turn out as a reason to deny the loan, whereas a healthy credit score is favourable to grant the loan.

Final call of approval or disapproval: After passing through every stage with scrutiny, the bank then decides whether to grant you a home loan or not.

House Loan vs Mortgage

There is a thin line between a home loan and a mortgage. To understand the exact difference between the two, you need to know the definitions of both. A home loan, as you know, is given by a bank to purchase a residential property or a house. The house acts as collateral so that the loan can be secured against it. If a borrower fails to repay the loan amount, the bank or finance institute can seize the property. Whereas, a mortgage is a type of loan where the borrower needs to give a property or any other security as a mortgage. Here, the mortgage could be a land, insurance, or gold.

House Loan Refinance

Home loan refinancing is a type of loan that is borrowed to pay off an existing home loan. The new loan may include a whole new set of features and obligations. Read below to know how refinancing can benefit you and provide financial security:

  • It helps in debt consolidation.
  • You can decrease your monthly instalments by opting for a refinancing.
  • Refinancing helps in clearing an old loan and reduce the loan tenure considerably.
  • You can also combine first and second mortgage.
  • It also helps to reduce the overall interest that you have been paying on your existing loan.
  • You can conveniently shift from a conventional loan scheme to an Islamic loan or vice versa by refinancing.
  • It is helpful in eradicating MRTA mortgage insurance.

House Loan Malaysia Guide

Here’s the guideline to help you choose the ideal home loan in Malaysia:

  • Repayment capacity: Make sure that you can make regular repayments before committing to a loan amount. Since the repayment tenure for a home financing is long, you may end up paying a lot of money towards interest over the tenure.
  • Down payment: Make sure to put a good amount as down payment. This will reduce the actual finance amount you actually need and will make repayments easier. Do not take a loan to make the down payment. It is advised to use your savings for this purpose. If you don’t have savings right now, delay the purchase and put some money aside before making a commitment on a home loan.
  • Fees and charges applied: Be familiar with all the fees and charges involved with a home loan. If you overlook them, they can drastically increase the overall cost of the loan and make repayments a long and arduous task.
  • Interest rates: Home loan interest rates/profit rates charged by different banks can have a profound impact on the affordability of the loan. Choose an interest rate that can keep your instalments in check and well within your affordability.

FAQs

Q. How long can a loan approval procedure take?

A. Loan approval and disbursal may take a period of up to 7 business days. It also depends on the loan amount, tenure, the bank from which the loan is being acquired, and the eligibility of the candidate. If you have not provided complete documentation as specified by the bank, the approval may get delayed.

Q. How is the monthly repayment instalment amount calculated by a bank for a home loan scheme?

A. The monthly repayment instalment is based on the amount financed, loan tenure and the profit or interest rate associated with the scheme. You can get an estimate of the monthly instalment amount by using the calculator tool on the bank’s official website or a bank representative will inform you about the same during the application process.

Q. Can I make additional payments on my home loan apart from the regular monthly instalments?

A. Yes, you can make additional payments, provided the bank offers the facility. The additional payments made by you can be withdrawn at any given point of time if you are in need for some cash.

Q. Can I get a home loan with a joint applicant who is a self-employed individual?

A. In this process, the joint applicant needs to provide valid proof of identity and income as asked by the bank. If his/her income criteria does not match the bank’s designated eligibility, there is a chance that your loan application might get rejected.

Q. What could be the possible effects if I won’t be able to repay my loan?

A. The bank or finance institute may seize your asset that you have secured for the amount financed. However, the bank will send you notice and reminders initially on your missed repayment instalments.

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