Renovation Loan is a short-term loan provided by financial institutions/banks in order to refurbish a residential property. Refurbishing a property may include additions, alterations, maintenance and other processes. Though several home loans include the cost of refurbishing, a few banks provide exclusive loans specifically for renovation.
List Of Banks offering Renovation Loan In Malaysia
The following banks offer Renovation Loans in Malaysia:
- Alliance Bank Renovation Loan
- Hong leong Renovation Loan
- OCBC Renovation Loan
- Public Bank Renovation Loan
- RHB Renovation Loan
Features & Benefits
- Banks provide their customers up to 30% of standby funds for renovation.
- The customer may not have to pay any monthly fees or maintenance fees depending on the bank they approach.
- A repayment period of 10 years or greater is provided by the banks.
- Renovation Loans provide higher loan eligibility as compared to a personal loan.
- Monthly instalments can be paid via simple methods such as bank branches, ATMs, online banking, etc.
The interest rates varies with each bank that provide Renovation Loan.
- The customer is eligible for Renovation Loan if his/her age is over 21 years at the time of application and not exceed 70 years at the time of loan maturity.
- Banks provide Renovation Loans to individuals, joint applicants, residents as well as non-residents of Malaysia. However, there may be a few banks who restrict the loan facility to Malaysian citizens only.
An aspiring applicant for Renovation Loan must provide the following documents for verification along with the filled application form:
- A copy of NRIC or the Identity Card
- A copy of valid Passport or VISA or Work Permit or Employment Pass for foreign employees (if the bank considers the foreign citizens)
- In case of businessmen, a copy of Business Registration or Form 24 and 29
- Copy of Individual Title Deed
- Copy of Booking Receipt or Sales & Purchase or Letter of Offer from the Developer
- Copy of Property Valuation Report
- Three recent salary slips
- Recent 3 months’ EPF Statements
- Letter of Confirmation of Employment
- Bank statement on transactions of recent 6 months
How To Apply
There are two ways to apply for a Renovation Loan. They are:
- Offline Application: The customer can visit the nearest branch of the bank and seek information on the Renovation Loan. If you are eligible for the Renovation Loan according to the bank’s specific criterion, then the customer can go ahead with the loan process. Carry the necessary documents as mentioned above, fill the application form and submit the form along with the documents to initiate the loan disbursal process.
- Online Application: The customer can browse the official website of the bank that provides the Renovation Loan, click on ‘Apply Now’ button, enter the details like name and contact number to submit the online application. The bank’s representatives will get in touch with the customer within a few business days to take the process further.
Fees & Charges
Generally, the fees and charges applicable for a Renovation Loan is given below:
|Stamp Duty Charges||As per the Stamp Duty Act 1949 (revised in 1989)|
|Late Penalty Charges||1% p.a. on the unsettled instalment amount|
|Processing Charges||RM53 to RM212 (depends on the financing amount)|
|Early Settlement Fee||Varies with banks|
|Maintenance Fee||Up to RM5 per month|
|Charges on Redemption Letter||RM53 per request|
The Renovation Loan calculator allows the customer to predict the monthly installment payable for a certain loan amount. One can visit the official bank website and enter the actual loan amount required and the rate of interest to get the estimate instalment amount that has to be paid on a monthly basis.
The customer can make use of the customer care numbers provided on the official website, such as in the case of OCBC Bank and Maybank, to contact the bank representatives for further information on eligibility, interest rates and other parameters.
Renovation Loan Refinance
There are facilities to refinance an existing Renovation Loan. The loan amount depends on the property value, the outstanding loan amount, the applicant’s income and other factors.
Q. How early should I start the repayment of the loan instalments?
A. Generally, you will have to start the repayment after one month of the loan disbursement. Banks like OCBC will give a period of one year after which you can start the repayment of the loan instalment.
Q. I am 55 years old. What is the loan term I can get to repay the loan amount? Am I eligible to get the Renovation Loan?
A. Yes, you are eligible for the Renovation Loan based on your age. You can repay the loan up to an age of 70 years. A few banks give you a loan term of 10 years and sometimes it can be greater than 10 years.
Q. Is Renovation Loan same as refinancing a home loan?
A. No, they are different. You can refinance your current home loan to reduce the interest rates as of the current standards, which thereby reduces the monthly instalments. However, renovation loan is basically issued to refurbish the house with additional facilities.
Q. Can I refinance my Renovation Loan?
A. Yes, you can refinance your current renovation loan based on the date of issue of your current renovation loan. A minimum of 120 days to 180 days should have passed since the date of issuing the loan to consider refinancing.
Q. How long would it take to approve a Renovation Loan and get the loan amount?
A. It may take up to 3 months for you to receive the loan amount from the time of application.