Best Home Loans Malaysia 2020

Best Home Loans Malaysia 2020

Home Loans in Malaysia – FAQ

Update: As of 2nd January 2015, Base Lending Rate (BLR) has been updated to Base Rate
(BR) to reflect the recent changes made by Bank Negara Malaysia, and
subsequently by major local banks.

Buying a house is probably the most important purchase you’ll ever make. Your home
loan is likely to be not only your biggest household expense, but the largest
financial commitment of your lifetime. For this reason, we’ve compiled a short
guide to explain how a home loan works, and what you need to know before you apply
for a mortgage.

What is a Home Loan?

If you already have an existing housing loan in Malaysia and want to change to
another product or lender without moving home, it is known as a ‘refinancing’.

How do Home Loans in Malaysia work?

Interest rates for housing loans in Malaysia are usually quoted as a percentage
below the Base Rate (BR). For example, if the current BR rate is 4.00% (Update:
As of 2nd January 2015, Base Lending Rate (BLR) has been updated to Base Rate
(BR) to reflect the recent changes made by Bank Negara Malaysia, and
subsequently by major local banks), the interest rate on a ‘BR + 0.45%’ loan
would be 4.45%. You can check all the home loan interest rates and fill in the
home loan application in the home loan calculator above.

In a typical Malaysian mortgage, you make monthly payments for an agreed period
(i.e. the loan tenure) until you’ve fully repaid both the principal of the loan
and the interest. During the early years of the loan, the majority of your
monthly repayments are used to repay interest, however, as time passes, a
larger proportion of your repayments will go into paying down the principal.

Read about:   How to Choose the Best Mortgage for You

How to use a Housing Loan Calculator?

iMoney has created a housing loan
calculator that makes calculating the monthly repayments easy for you.
To use the mortgage calculator just scroll up to the top of this page, type in
the property price that you would like to borrow and for how long. It will do
all the calculations and will present you with the best mortgage deals for you.

BR & Other Loan Terms

Base Rate (BR):

BR in Malaysia is a reference interest rate used
by banks to decide how much to charge for various products they offer. In
Malaysia, home loans are normally quoted as a percentage above or below the BR.
This means, if the BR increases or decreases by a certain amount, the interest
rates charged on floating rate loans also increase or decrease by the same

Down payment:

An upfront payment made by the buyer of a house or car (or other highly priced
goods/services). Down payments are typically expressed as a percentage of the
full purchase price. For example, a 10% down payment of a RM500,000 home is


A foreclosure happens when the bank repossesses your property and attempts to
sell it in order to settle the outstanding amount on your loan. This usually
happens when you consistently fail to pay your loan instalments.

Loan Tenure:

This means “period” or “number of years”. If a mortgage has a “tenure” of 30
years, it usually means it would take 30 years to fully pay off the loan.

Mortgage Reducing Term Assurance (MRTA):

This is a type of mortgage insurance. An MRTA provides protection for an
outstanding loan amount (usually a home loan), in the event of death or total
permanent disability of the person insured. The amount of protection reduces
over time, and normally matches the outstanding loan amount.

Read about:   5 Tips for Finding the Best Mortgage Lenders

Prepayment (of house loan):

Fully or partially paying off your (home) loan before it is due.

Islamic Vs Conventional Mortgages

The banks presented in the comparison table offer both Islamic and conventional
loans. Islamic loans are Shariah compliant. Instead of borrowing and lending,
Islamic finance relies on sharing the ownership of the assets and therefore
risk and profit/loss. Check out our page dedicated to Islamic Home Loans


You might choose to refinance your current mortgage in case another bank offers
a lower mortgage interest rate. In order to do it, please submit your
application for the bank loan that you would like to take and our mortgage
consultants will contact you and explain you the details.

Check out our page dedicated to Housing
Loan Refinancing

Some Factors You Need To Be Aware of When You Choose a Home Loan

Margin of Financing: the margin of financing is also known as the loan-to-value
ratio. The margin of financing is the amount of your loan expressed as a
percentage of the property’s value. The lower the margin of financing, the more
‘equity’ there is in the property. The margin of financing could go as high as
95% (of the value of the house), and is assessed on factors such as:

  1. Type of property
  2. Location of property
  3. Age of the borrower
  4. Income of the borrower

Early Termination Penalty: Some mortgage lenders may apply an early termination
penalty if the loan is paid off in part or in full within a specified time
period, including if you refinance the loan with another lender. This specified
time period where you are liable to pay an early termination penalty is called
the ‘lock-in period’. Depending on the term and size of your loan, this charge
can be quite significant.

Read about:   Calculate Local 15-YR Home Loan Refi Payments Nationwide

Fees & Charges: There are a number of related costs (such
as professional fees and government charges) that you would have to pay when
you take out a mortgage.

Some common fees and charges you would expect to incur include:

  1. Stamp duties: Sale & Purchase Agreement (0.5% to 1.0%), Loan
    Agreement (0.5%) and Transfer of Title (1.0% to 2.0%)
  2. Disbursement Fees: varies by state, land office and type of property
  3. Processing Fees: one time charge by the lenders (up to a few hundred

Get the latest Home Loan
News in Malaysia with iMoney.

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