A HOUSE OF YOUR OWN / Home Loans in Malaysia

One of the momentous decisions you’ll ever make in your lifetime is buying a house. The pressure build-up is intense, especially for first-time buyers. Typically, the decision to purchase comes when you are in a stable financial position to apply for a mortgage loan with a bank.

Sometimes the time is ripe to shift from rental to house ownership. Whatever the circumstance and when the opportunity knocks, you can make it happen. Most reputable banks offer home loans in Malaysia with affordable payment schemes and flexible terms.

What are the considerations for a home loan?

  1. Types of home loan

First, you need to check if the property you are considering is acceptable to the bank as collateral. If it is, you have a choice between a fixed-term loan and a flexible home loan which is also called the flexi-loan.

The term loan is the traditional type where you pay a fixed monthly amortization for the duration of the loan.  On the other hand, a flexi-loan is the recommended choice if you want to reduce the interest on the loan in case you have extra means to pay-off the loan.

You can purchase a completed house or even if it is still under construction.

2. Interest rate

The quoted interest rate for home loans is the benchmark rate called the Base Rate (BR) plus a little percentage point over the BR rate.

Rates may vary from bank to bank. The same may be adjusted from time to time depending on the BR reference. As an example, the rate may be higher today and lower next week, but normally, the bank with the lowest rate is your preference. The term of the loan range from 30 to 40 years subject to the bank’s parameters.

There is also a lock-in period where you can’t pay off the loan within a particular period otherwise the bank will impose pre-termination charges for the early liquidation of the loan.

  1. Loan Limits

All banks have set limits on the maximum loanable amount. Sometimes the loan limit will depend on the location of the property. There is also a margin or financing where the borrower needs to pay a down payment on the property equivalent to a percentage of the property value.

Some banks offer 100% financing while in others, the margin of financing can be up to the extent of 95% of the property’s purchase value. In such case, you will need to put up the 5% as equity. The higher the margin of financing, the lower is your cash outlay.

4.        Total Cash Outlay

Your total cash outlay would be the amount of equity or the down payment plus the mandatory fees and charges. The fees on the Sales & Purchase Agreement, stamp duty, processing fee and other fees related to the purchase are for the account of the borrower. An added monthly cost is the Mortgage Reducing Term Insurance which is obligatory for asset protection.

Home loans in Malaysia are popular personal banking products available to gainfully employed individuals intending to purchase a family home or upgrade to a better property. If you are financially ready to fulfill your lifestyle goal, your dream house is only a few steps away.