Mortgage Property

A Complete List Of Jargons for Buying And Selling Property in Malaysia

The terminology used in selling and buying property can be confusing if you are not used to it. As such, we have gathered all jargons used in selling and buying property in Malaysia for you to refer.

Accessory parcel

Any parcel shown in a strata plan that is used exclusively by the homeowner. A common example is the car park bay.


The purpose of adjudication is to ensure that the instrument is duly stamped to protect the parties to the contract in respect of the admissibility of the instrument as evidence in court during a civil proceeding. An instrument which is not duly stamped is not admissible in court as evidence.

Assessment tax

Known as “cukai pintu” in Bahasa Malaysia. It is payable twice a year to the respective local authorities to finance the maintenance cost of the city such as waste transportation, landscaping and street lights. It is payable on or before every Feb 28 and on or before every Aug 31.


An apartment normally features basic facilities like a swimming pool and security. It has fewer facilities than a condominium.


A public sale of a property or real estate that is sold to the highest bidder. These are properties that are available at below-market prices and sold on ‘as-is-where-is’ basis. No guarantee is given on vacant possession and titles.

Base rate (BR) / Base financing rate (BFR)

A floating interest rate determined by financial institutions in Malaysia, based on their benchmark cost of funds, and the Statutory Reserve Requirement. Different banks offer different BRs, with current rates hovering between 3% and 3.95%. The rate offered is depending on their own efficiency in managing borrower credit risk, liquidity risk premium and operating cost. A profit margin will be set above the BR, for example BR + 1.15%. Hence, when the BR is 3.2%, this translates into an effective lending rate (ELR) of 4.35%.

Banks with large and cheap deposits are able to offer more attractive BRs for their customers.


Bungalows in Malaysia come in one, two- and three-storey styles. They are also known as detached houses. These detached houses which have open spaces on all sides. There is also the option to choose to design and build your own house if you purchase a ready bungalow lot.

Capital gain / appreciation

Capital appreciation is an increase in the value of a property. This due to changes in market conditions or supply and demand. Capital gain is the positive gain made from the sale of a capital asset.


A warning on a title to a purchaser that a third party might have some interest in or right to the property.

Certificate of completion and compliance (CCC)

A document issued by local authorities and endorsed by a registered member of the Board of Architects Malaysia. It is a vital document to show that the property is completed according to the required standards and is fit for occupation. Document issued by local authorities and endorsed by a registered member of the Board of Architects Malaysia. It is a vital document to show that the property is completed according to the required standards and is fit for occupation.

Commercial property

Properties that are mainly used for business purposes such as malls, offices, and so on.


Condominiums, also commonly known as condos, have common areas such as walkways as well as recreational facilities such as a swimming pool, gym, clubhouse, CCTVs and so on. They are jointly owned by the unit owners. The owners and occupiers of condominiums are subject to the rules and regulations of the condominiums.

Common property

Shared areas of a property that do not belong to any individual proprietors, such as stairways, guard houses, cables, open spaces, walls and fences, swimming pools, playgrounds, jogging tracks and any part of the land used or enjoyed by all occupiers of the building.

Consent from developer

Get the consent of the developer to the sale of the property to the new buyer and to undertake
the registration of the property in the name of the new buyer.


Property pledged as security for a debt, such as real estate as security for a mortgage.


The process of transferring property between a buyer and a seller. In real estate, conveyancing involves drawing up and carrying out a written contract that sets out the agreed purchase price and the date of transfer, as well as the obligations and responsibilities of both parties.

Deed of Assignment (DOA) ( if title is not issued )

DOA is a legal document that transfers the interest of the owner of that interest to the person to whom it is assigned, the assignee. When ownership is transferred, the deed of assignment shows the new legal owner of the property. Sign DOA, When land still under master title.

Defect liability period

A period of between 18 and 24 months whereby the developer must repair any defect(s) identified by the homeowner due to defective workmanship or non-compliance to the original floor plan. In other words, this is a warranty period given by the developer after key collection.


Builder of the property

Disbursement fee

Various types of fees such as the registration of charge fee, land search fee, bankruptcy search fee incurred by banking institutions and solicitors attending to the financing documentation in relation to the financing which are payable by the customer.


Removing a debt by making full payment. A mortgage discharge is a document formally specifying that a mortgage debt have been paid.

Disposable income

Income / money that is left after all expenses have been deducted.

Debt Service Ratio (DSR)

The DSR is meant to show how much of a person’s income is used to service debt installments, and is represented as a percentage (%) of income. Sometimes it is referred as Debt Burden ration ( DBR ). It is derived from division of 2 main components:

DSR = Financial Commitment / Net Income

Financial Commitment = All Loan Repayments ( Car Loan, Credit Card, Personal Loan and Homeloan )

Net Income = Gross Income – Deduction

  • Deduction = EPF + SOCSO + Income Tax + etc.
  • Gross Income = Basic Salary + Fix Allowance + Part of Variable Income

The calculation will be vary from bank to bank up to 20% variance due to difference in recognizing variable income.


A registered interest in a land by a person who is not the land owner. This is stated on Land Title, which can be obtained from a title search with the Land Office. Examples of encumbrances include easement, mortgage, covenant and other liabilities. It may devalue the property or prevent the property owners from exercising full control of their property.

Earnest deposit

Earnest deposit is like a booking fee, given by the purchaser to the seller when he makes the offer to purchase the property. It is counted to part of down payment, and refundable if the offer is not accepted. The earnest deposit payment should be made payable to the real estate agency. Once the SPA is signed, this earnest deposit will be the real estate agent’s commission from the seller.

Fixed rate

Interest rate that remain constant throughout loan period even when base rate changes.


A freehold property is owned by the buyer indefinitely. However, the state can still take back the freehold plot if it is for public purposes such as building highways. In such cases, compensation is given, usually in the form of cash or discounted new properties.

Flat rate

Flat interest rate mortgages and loans calculate interest based on the amount of money a borrower receives at the beginning of a loan and not outstanding balance of the loan.

Flat interest rate, as the term implies, means an interest rate that is calculated on the full amount of the loan throughout its tenure without considering that monthly installment that gradually reduces the principal amount. As a result, the Effective Interest Rate is noticeably higher than the nominal Flat Rate quoted in the beginning. The formula of calculating fixed rate of interest is –

Interest Payable per Instalment = (Original Loan Amount * No. of Years * Interest Rate p.a.) / Number of Instalments

For example, if you take a loan of RM 100,000 with a flat rate of interest of 10% p.a. for 5 years, then you would pay:

Principal repayment of RM 100,000 + RM 10,000 (interest @10% of 100,000) X 5 years = Total payment of RM 150,000. This is equivalent to RM 30,000 every year or RM 2,500 per month.

Over the entire period, you would actually be paying RM 150,000 (2,500 * 12* 5). Therefore, in this example, the monthly installment of RM 2,500 converts to an Effective Interest Rate of 17.27% p.a.

This method is particularly used to calculate the interest payable for personal loans and vehicle loans. In this method, you have to pay interest on the entire loan amount throughout the loan tenure. It is actually less popular among the borrowers because even if you gradually pay down the loan, the interest does not decrease. Flat interest rates generally range from 1.7 to 1.9 times more when converted into the Effective Interest Rate equivalent.


Flippers purchase a property for a resale profit. These properties are usually the ones with the highest capital appreciation / gain in the shortest amount of time. The duration can range between a few months to a few short years.

Gated and guarded community

Developments have controlled access with a guardhouse and perimeter fencing.

Gross development value

The GDV of a property development is the figure that is based on the total value possible from the sale of all the units within that proposed development.

Individual/Strata title

Developers are responsible for obtaining the titles for individual properties within a stipulated time after the handover. Like birth certificates, these titles validate the existence of the property and its ownership. An individual title is given to owners of landed properties such as terraced, bungalow and semi-detached homes. Meanwhile, strata titles are issued to property owners with shared facilities such as condominiums, apartments and gated-and-guarded landed homes.

Joint management body (JMB)

Established under Strata Management Act 2013, comprising the developer and homebuyers. They are responsible for maintaining the common properties, determining and collecting the service charges necessary for such purposes, insuring the building against fire and other risks, complying with orders given by local authorities and enforcing house rules.

Jabatan Penilaian dan Perkhidmatan Harta (JPPH)

Valuation and Property Services Department of Ministry of Finance, JPPH advises the Federal Government, State Government, Statutory Body and Local Authority in Malaysia on matters pertaining to the valuation of real estate and property services. Besides this, JPPH also provides information on sale or transfer of real estate to valuers, appraisers or estate agents who are registered with the Board of Valuers, Appraisers and Estate Agents Malaysia

Joint management committee (JMC)

The committee elected by the JMB to carry out the duties and powers of the JMB. A JMC should consist of at least one representative from the developer and between five and 12 purchasers. A purchaser can only hold office for no more than three years.


An owner of a leasehold property is not the owner of the land upon which the building is erected, but is a lessee of the land for a period varying from three years to 99 years (the maximum period of lease permitted by the National Land Code 1965). Opposite to leasehold , is what is known as freehold, it basically means permanent and absolute tenure of land or property with freedom to dispose of it at will.

Letter of intent to purchase

A Letter of Intent to Purchase, also known as a booking form is a document outlining an agreement between two or more parties before the Sale and Purchase agreement is finalized. The letter provides an outline of the proposed terms of the transaction so the parties can negotiate before committing to a contract. It is needed to minimize misunderstanding and document progress towards a sale. Since this intent letter is not a binding contract, which means the property owner can still sell the property to someone else. It’s also a great way for a buyer to help secure financing.

Letter of offer

A contract between the borrower(s) and the bank stating the terms of the housing loan package.

Loan agreement

Also known as a loan or credit facility agreement or facility letter. An agreement or letter in which a lender (usually a bank or other financial institution) sets out the terms and conditions (including the conditions precedent) on which it is prepared to make a loan facility available to a borrower.

Loan tenure

The period of time that a person will take to fully repay their loan.

Lock-in period

The number of years that a person is tied to their lender aka financial institution. If the loan is fully redeemed within this period, there will be a full redemption penalty that is equal to a percentage of the loan quantum. Lenders may also charge a penalty for making partial payments within this period.

Loan-to-value (LTV)

The relationship between the amount of outstanding home loan and the total value of the property. For example, if you receive a loan of $900,000 on a home that costs $1,000,000, the loan-to value ratio is 90% when you sign up for the loan it reduces as you as you pays down the principal portion of the loan.

Malay reserve land

Land that is exclusively for Malays or Bumiputeras. It cannot be sold to other races including foreigners.

Management corporation (MC)

MC must be formed to take over the JMB’s responsibilities within two years after the handover. An MC consists of owners who have their strata titles and registered themselves as parcel owners. It exists under the Strata Titles Act 1985 and does not need to be registered with the Registrar of Companies or the Registrar of Societies. It is a corporate body that may prosecute and be prosecuted, and has a perpetual succession right.

Market value

Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. In simpler terms, it means the price an asset is able to fetch in the marketplace.

Margin of Financing

The margin of financing depends on a few things, the value of the property, your income and your repayment capability. The amount of financing provided by a financial institution depends on the market value (for completed properties only) or purchase price of the house, whichever is lower. For example, if a property is priced at RM500,000 and the Margin of Financing is 90%, the amount of own money is RM50,000.

Master title

A title, or title deed, indicates the owner of a property. In most cases, every property during the stages of development and construction will be under a single Master Title.

Memorandum of Transfer (MOT)

Signed by both the developer or seller and homebuyer after the signing of the SPA and before the payment of balance purchase price. MOT is an official form that needs to be submitted to the Land Office for the ownership transfer of the property to the buyer.

Mortgage Reducing Term Assurance (MRTA)

A home loan life insurance that provides financial protection for property loan borrowers and their families by helping to settle outstanding loan amounts in the event of death or disablement of the borrowers.

National Land Code (NLC)

The main land laws for all states in Peninsular Malaysia. Sabah and Sarawak are governed by Sabah Land Ordinance and Sarawak Land Code respectively.

Overdraft facility

A facility with a credit line granted based on a predetermined limit. There are no fixed monthly instalments as the interest is calculated based on the daily outstanding balance. This provides borrowers with the flexibility of repaying the loan anytime and the freedom to re-use the money. The interest charged is generally higher than the term loan.

Principal and Interest

The principal and interest payment on a mortgage is probably the main component of your monthly mortgage payment. The principal is the amount you borrowed and have to pay back, and interest is what the lender charges for lending you the money.

Repaying both interest and the principal will allow you to gradually increase your equity in the property by reducing the size of your mortgage, and at the end of the loan term you will be the sole owner of your home.

PRIMA (Perumahan Rakyat Satu Malaysia)

PR1MA was established to plan, develop, construct and maintain affordable lifestyle housing for middle-income households (average monthly household income of between RM2,500 to RM7,500) in key urban centres. The government plans to build affordable homes in cities and towns all over Malaysia.

Interest rate / financing Rate

The fee charged by a lender to a borrower for the use of borrowed money, usually expressed as an annual percentage of the principal; the rate is dependent upon the time value of money, the credit risk of the borrower, and the inflation rate.

Quit rent

“Cukai tanah” means land tax. The NLC makes it compulsory for all landowners to pay quit rent annually to the relevant state Land Office usually by every Jan 1.

Real Property Gains Tax (RPGT)

A form of capital gains tax on chargeable gains (profit) from the sale of your property. The rate varies according to your ownership tenure (date of SPA signed to date of disposal). If you want to avoid paying RPGT, it is best to sell your property after at least five years of ownership.

Redemption sum

The outstanding amount owing to the Vendor’s bank (“Redemption Sum”). Where the Redemption Sum exceeds the Purchase Price or the Balance Sum, additional provisions are required to be made for payment of the amount in excess by the Vendor.

Reducing / Diminishing Interest Rate

Sometimes it is called monthly rest or daily rest loan.

Reducing/ Diminishing balance rate, as the term suggests, means an interest rate that is calculated every month/daily on the outstanding loan amount. In this method, the installment includes interest payable for the outstanding loan amount for the month in addition to the principal repayment. After every installment payment, the outstanding loan amount is reduced. Therefore, the interest for the next month is calculated only on the outstanding loan amount. The formula for calculating reducing balance interest is :

Interest Payable per Installment = Interest Rate per Installment * Remaining Loan Amount

For example, if you take a loan of RM 100,000 with a reducing rate of interest of 10% p.a. for 5 years, then your installment amount will reduce with every repayment. In the first year, you would pay RM 10, 000 as interest; in the second year you would pay RM. 8,000 on a reduced principal of RM 80,000 and so on. In the final year, you would pay only RM 2,000 as interest. Unlike the fixed rate method, you would end up paying lower around RM 130,000 instead of RM 150, 000 for the same rate.

This method is particularly used to calculate the interest payable for housing, mortgage, property loans, overdraft facilities, and credit cards. In this method, you have to only pay interest on the outstanding loan amount. The interest rates quoted for such loans are the Effective Interest Rate, which is similar to the interest rates used for Fixed Deposits (FD) and Savings Accounts.


The process of paying off a portion or the entire amount of the existing loan with the intention of obtaining another loan from the same or another banking institution.

Refinance with cash out

Cashing out means refinancing a loan where the borrower will take out money on their own home. If a home is appraised at $1,000,000 and the borrower’s outstanding mortgage loan is $700,000, it is possible to enter into an 80% cash-out refinance transaction for a loan of $800,000 (80% of $1000,000). The new mortgage of $80,000 will pay off the $700,000 loan and leave $100,000 cash-out to the borrowers.

Sales and Purchase Agreement (SPA)

SPA is actually a written contract representing the seller and buyer in a real estate transaction. It spells out all the terms and conditions of the purchase as well as the role of both parties. In the event there is a default from any one party, the termination and indemnity clause in the agreement will provide protection.

Service charges

Funds collected by the JMB or MC from owners to maintain and manage a strata development.

Semi-dettached house

Also known as Semi-Ds, these are two houses which are built side by side and connected on one side of each house. Semi-D houses have open spaces at its front, rear and any one side. These houses often have generous gardens and backyards.


Shophouses are a row of terraced houses but with one major difference: The ground floor is usually where a shop / business is operated.

Sinking fund

A special fund opened and maintained by the JMB or MC for unexpected costs that may arise and for the long-term structural upkeep or upgrades to the common property such as:

  • painting or repainting any part of the common property
  • purchase of costly materials for the upkeep or upgrade of the common property
  • renewal or replacement of any common facilities
  • any other expenditure as the committee deems necessary.

Stamp duty

For the transfer/assignment (if no individual title is issued), based on the adjudicated value by
the Stamp Office

Strata Title

Strata Title is the separate property deed for each unit in a sub-divided property (multi-storied building or a number of buildings on a piece of land that have common facilities administered by a management committee). These can include: apartments, condominiums, townhouses and sometimes landed house.


Completed existing properties that are available and are usually occupied by owners or renters, or vacant.

SoHo / SoFo / SoVo

SoHo is small office home office, SoFo is small office flexible office and SoVo is small office virtual office. Each is relatively similar but differs in terms of functionality.

Tenancy agreement

A standard tenancy agreement stipulates that the tenant is obliged to pay two months’ rental in advance as a security deposit, one month’s rental as advance rental and a refundable utility deposit that is normally fixed at one month’s rental (subject to both parties’ agreement). It is important to remember that the tenancy agreement is for the benefit of both parties concerned and should be irrefutable

Terrace house

Terraced houses are all connected to each other in a row and usually have open spaces at the front and back. The corner lots are quite similar to semi-detached houses as one side will have more open space compared to the rest. Each row may consist of 10 to 12 units depending on the size of each house, as it must comply with the regulations of the Fire Services Department which state that each row shall not exceed 130 feet in length.

Term loan

A facility with regular predetermined monthly installments that do not change during the entire term of the loan. Each installment payment consists of the loan amount plus the interest.

Title search

A check of the title records to ensure that the seller is the legal owner of the property and that there are no other claims or liens outstanding.


Generally, townhouses are not as popular as other types of houses in Malaysia. They are two properties built on the same piece of land with the lower unit usually occupying the ground and part of the first floor, while the top unit occupies the remainder of the first floor and the second floor. Most of the time, the owner of the lower unit is different from the owner of the top unit.

Vacant possession (VP)

Property handover day! With the delivery of vacant possession, homebuyers will also receive a copy of the CCC.


Valuation establishes an opinion of value utilizing an objective approach based on facts related to the property, such as age, square footage, location, cost to replace, etc.


Property developer or seller of the unit.

Void or Unenforceable

A void contract is a formal agreement that is illegitimate and unenforceable from the moment it is created. There is some overlap in the causes that can make a contract void and the causes that can make it void and unenforceable contract is a valid contract that cannot be fully enforced due to some technical defect.


The interest earned by an investor on an investment, stated as a percentage of the amount invested. The basic formula for calculating rental yield is annual rental income divided by property price.

Zero entry cost / free moving cost loan package

A loan package where borrowers do not have to pay for all or certain charges and fees involved in obtaining / refinancing a loan such as legal fees, stamp duty and disbursement charges.