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.
For many, owning a home is a long-term goal and one which can’t easily be realised without the aid of a home loan. Here’s a complete guide to help you understand all you need to know about financing your home.
There are different types of home loan packages offered by various banks in Malaysia which are as follows.
Conventional Home Loan: It is a standard home 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 home loan is similar to the conventional home loan. The loan allows for 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 Islamic principle of banking that includes concepts like Bai’ Bithaman Ajil (BBA) and Musharakah Mutanaqisah (MM).
The home loan schemes offered by different banks in Malaysia come with an array of features and benefits which are as follows:
The following is the list of banks offering home loans in Malaysia:
The eligibility criteria for obtaining the home loan in Malaysia are as follows:
For an individual or joint applicant:
For a self-employed applicant:
For an organization:
For a foreign applicant working in malaysia (salaried or self-employed):
For a malaysian applicant working overseas (salaried or self-smployed):
Offline Application: You can go to the nearest branch of the bank that you wish to get the loan from and fill in the application form. You need to submit the supporting documents required along with the completed application form.
Online Application: Some banks allow you to either apply for the loan on their website. You are required to fill in key fields of information and submit the required supporting documents and 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 a particular page. Upon doing so, a bank representative will reach out to you and initiate the application process.
|Bank Name||Interest Rates (Estimated)|
|Public Bank Home Loan||4.35% p.a.|
|BSN Home Loan||Floating rate pegged to the bank rate|
|RHB Home Loan||4.75% p.a.|
|Bank Islam Home Loan||Floating rate pegged to the bank rate|
|AIA Home Loan||4.99% p.a. to 5.15% p.a.|
|Bank Rakyat Home Loan||Floating rate pegged to the bank rate|
|Affin Bank Home Loan||Floating rate pegged to the bank rate|
|HSBC Home Loan||Floating rate pegged to the bank rate|
|AmBank Home Loan||Floating rate pegged to the bank rate|
|OCBC Home Loan||Floating rate pegged to the bank rate|
|CIMB Home Loan||4.95% p.a. to 5.35% p.a.|
|Hong Leong Home Loan||Floating rate pegged to the bank rate|
|CIMB Islamic Home Loan||4.4% p.a. to 6.95% p.a.|
|Maybank Home Loan||Floating rate pegged to the bank rate|
A Home Loan Calculator tab is available on most of the banks’ official websites. The calculator helps you to get an estimation of the monthly instalment to be paid. You are required to enter key fields of data such as desired loan amount, the interest rate and the tenure to get your monthly instalment estimate.
Following are the basic fees and charges associated with home loans:
|Home Loan/Home Financing||Type of Fees and Charges|
|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|
Once you have made the application for a home 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 an applicant submits the application form to the bank, the bank 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 then go on evaluating each document submitted by you. The documents are checked against the factors such as their validity, background check of the information given, tallying of one document with another if necessary and the authenticity of them.
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 loaning history if any. A negative credit assessment can deny a loan to a customer whereas a healthy credit score can land you a loan.
Final Call of Approval or Disapproval: After passing through every stage with scrutiny, the bank then decides whether to grant a home loan to you or not.
There is a thin line between a home loan and a mortgage. To understand the exact different between the two, one needs to know the definitions of both. A home loan is a loan/financing given by a bank to a borrower for obtaining a residential property or a house. In a home loan, the home or property acts as a 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 anything from a land and insurance to gold.
Refinancing is commonly referred to the type of loan that is borrowed to pay off other loan. Through refinancing, an old loan is cleared out with the help of a new loan that offers different terms and features. Read below how refinancing can benefit you and provide financial security:
Here’s a guideline to help you choose the ideal home loan in Malaysia:
Click here to read the full guide on home loans.
Q. How long can a loan approval procedure take?
A. Approval period and disbursal may take up to 7 business days. The approval and disbursal time is also affected by loan amount, tenure, the bank from which the loan is being acquired and the eligibility of the candidate.
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 provided the bank offers the facility. The additional payments made by you can be withdrawn any given point of time if you are in need of 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 and when I won’t be able to repay my loan?
A. The bank or finance institute that you have taken the loan for, may seize your asset that you have secured for the amount financed. However, the bank will send you notices and reminders initially on your missed repayment instalments.