Mortgage & Financing
Getting a Loan
Where can I obtain a loan?
There are a few sources of funds to choose from:
• Commercial banks
• Finance companies
• Government loans
• Employees housing loans
• Building Societies and Cooperations
Normally, home buyers get their loans from commercial banks. Commercial banks offer several types of loans:
• Loan facility
• Overdraft facility
• Loan and overdraft facility
• Endowment mortgage
• Mortgage from Islamic banks
Features of commercial banks loans:
Basically banks offer up 70% to 90% loan of the purchase price. Repayment period maximum up to 30 years.
Condominium/ Apartment up to 90%
Commercial Property up to 70%
Landed Property 70% up to 85%
Interest Rate: Normally 10% – 13% depending on the Base Lending Rate
Now BLR: 5.55%
Loan Applications: Documents Required
You need to provide the following basic documents before the financial institution can process your loan application:
• A photocopy of identity card or passport
• Your latest 3 months’ salary slip
• Your latest income tax return form (Form J) or EA form
• Sale and Purchase Agreement/deposit or booking receipt/letter of offer from the housing developer
• A photocopy of the land title (if any)
• The latest bank statements (compulsory in the absence of salary slips and/or Form J/EA Form) dating back six months/savings passbook/fixed deposits
• Valuation report for completed houses and/or
• If you are self-employed, you need to provide your business registration documents, latest 3 months bank statements, latest financial statements and other supporting documents to support your income
However, some financial institutions may require additional supporting documents.
Upon acceptance of the letter of offer, you will need to appoint a lawyer to draw up the loan documentation for you. Normally, you would select your lawyer from a list of panel lawyers provided by your financial institution. Some of these documents need to be submitted to the relevant government authorities for registration and to the Stamp Office for stamping.
Upon completion of the above, these registered documents are then submitted to the financial institution and you will be given a copy of the Loan Agreement. In general, the timeframe for the completion of this legal process should not exceed 6 months.
Insurance
It is extremely important to take insurance coverage when you purchase a house. The most important factor is that it gives you and your loved ones peace of mind, in the form of financial security if an unfortunate event should occur. There are two important insurances to consider:
1. The House Owner/Fire Insurance policy
This policy provides coverage for your property against natural disasters such as flood, fire, riot, strike and malicious damage. For properties with strata titles such as apartments or condominiums, you need not buy the insurance because the Management Corporation (MC) would have taken up insurance on the entire building. You should ensure that you obtain the sub-certificate of the Master Policy issued by the insurance company from the MC and present it to the financial institution. This is necessary so that the financial institution is aware that the property has been insured and will not buy another fire insurance on your property. In such a case, you will be required to assign your rights under the policy to the financial institution.
2. The Mortgage Life Assurance or MRTA
This type of policy provides for full settlement of the outstanding balance of the housing loan with the financial institution, in the event of total permanent disability or death of the borrower. Premiums can usually be included in the loan amount, and the repayment period of the premium is usually spread over the loan tenure. The premium is only incurred once. There are no monthly or yearly premiums to be paid. In the event of early termination of housing loan, you will generally have the option to request for a refund of the premium for the balance of the unexpired period or to continue the insurance coverage. Financial institutions have their own panel of insurers and most of them can arrange insurance on your behalf with the annual premium charged to your loan account.
Fees and Charges
There are also related costs such as professional fees and government charges that you would have to pay. Below are some of the common fees and charges you would expect to incur:
Sales & Purchase Agreement/Transfer/Financing
First RM150,000 – 1% (minimum fees of RM300)
Next RM850,000 – 0.7%
Next RM2,000,000 – 0.6%
Next RM2,000,000 – 0.5%
Next RM2,500,000 – 0.4%
Excess RM7,500,000 – negotiable (not exceeding 0.4%)
Please note that the type of charges and the amount charged might change in the future. You should meet with your financial institution’s loan officer for further advice and discussion regarding any questions that you may have concerning the type of fees and legal services.
A Loan Officer can provide invaluable assistance, and clarify issues which you are unsure. Take the time to discuss your housing loan questions with a loan officer at length so that you can choose a loan facility that best suits your needs.
Local Bank Contacts
Affin Bank 04-3906001
Alliance Bank 04-8182121
Am Bank 04-2263939
Bank Rakyat 04-6579634
Bank Islam 04-6425094
Muamalat Bank 03-26977077
Bank Simpanan National 03-21623222
CIMB Bank 04-2206990
Citibank 04-8181072
EON Bank 04-2966988
Hong Leong Bank 04-2615022
HSBC Bank 04-6503293
Maybank 04-2613271
Scotia Bank 04-6410766
OCBC Bank 1300 88 5000
Public Bank 04-2613415
RHB Bank 04-2621725
Standard Chartered Bank 04-2623000
UOB Bank 04-2588066
