Community Finance Malaysia Malaysian Mortgage Property

A housing scheme up for grabs for the young ones

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Maybe some young people in this country are unaware of the Youth Housing Scheme, an initiative that allows them to get full financing to purchase their dream homes.

For their information, Bank Simpanan Nasional (BSN) has been appointed by the Malaysian government to implement this scheme effective from 1 January 2020 until 31 December 2021.

To make your life easier, RED ANGPOW has compiled five essential facts about this scheme.

Who is eligible?

If you are a Malaysian youth between 25 to 40 years old with a household income of less than RM10,000 a month, you may apply for this scheme.

Please bear in mind, you must be married.

For those who are still singles, better tie the knot first before filling in the application form.

Yup, the scheme only covers first-time homebuyers.

Details on financing

Amount: Up to 100% from the minimum of RM100,000 to RM500,000.

Tenure: Up to a maximum of 35 years or not exceeding the age of 65 years, whichever comes first.

Interest/profit rate: Up to a maximum base lending rate (BLR) / base financing rate (BFR) -2.4%.

Financing concept: Islamic and conventional.

What do you get from the government?

Homebuyers under this scheme need to pay an installment of RM200 every month for the first two years, starting from the first loan drawdown.

Furthermore, they are eligible to receive a 50% discount on stamp duty for the loan agreement.

Documents you must bring to the bank

Besides the BSN loan application form, you have to present proof of purchase such as sales and purchase agreement, the receipt for the deposit or proforma purchase order.

Don’t forget to attach a copy of Mykad, payslip and bank statement.

Please refer to the BSN website for further details.

housing scheme
Photo: BSN

Other information

Payment will be made via monthly crediting to GIRO/GIRO-i account.

Also, homebuyers are responsible for paying the legal fee.

Just in case you don’t know, this scheme is implemented through a smart partnership with Cagamas and Employees’ Provident Fund (EPF).

So, you may also opt for withdrawal from your EPF account.

Finally, loan applications are subjected to credit guidelines set by BSN.

Before we depart

The Youth Housing Scheme is only limited to 20,000 homebuyers during the two years of its implementation.

What you are waiting for, young people?

Hurry up and submit your application while stocks last.

Other articles:

5 New Year’s resolutions that may help you buy a new home in 2020

What does RED ANGPOW do?

Analysis Finance House Lifestyle Malaysian Mortgage Property

Slow climb out of the housing property market doldrums in 2020

An article published in Star Property recently discussed some interesting points of view by experts on, among others, the outlook of Malaysia’s residential property market in 2020.

Despite the downward trend in this market segment, all of them agreed that there will be some slow and significant improvement during the next 12 months.

Property overhang
Photo: Pexels

Knight Frank Malaysia Managing Director, Sarkunan Subramaniam believed that pricing is the only cause for property overhang in this country right now.

He mentioned several other contributing factors such as mismatch of products, expected yield, unfavorable location in regards to accessibility, distance, lack of amenities and product type.

Photo: Greater Kuala Lumpur Development Facebook Page

On a different note, Sarkunan viewed that several areas like Desa Park City, Taman Tun Dr. Ismail, and Damansara Heights are capable of luring the upper-income group, high-net-worth people, and foreigners.

Besides, the spillover effect of Tun Razak Exchange is expected to benefit the Imbi and Pudu area once the financial district is open for business.

Secondary property market

For 2019, Sarkunan explained that the secondary property market experienced a higher level of productivity in 2018 due to the shift of the base year for real property gain tax from 1 January 2000 to 1 January 2013.

He added, among other factors that stimulated that market are the improved processing procedure for the Malaysia My Second Home application and the revision of price threshold for foreign buyers for unsold high-rise properties in urban areas.

Steady demand
Statistics provided by NAPIC as of the second quarter of 2019.

Meanwhile, Royal Institution of Surveyors Malaysia Deputy Chairman, Aziah Mohd Yusoff said, reasonable price and good location are among the factors which will ensure the steady demand for residential properties especially terraced units and condominiums.

She also believed the secondary property market, mostly in the residential segment, is experiencing a correction period due to poor market sentiment and strict lending rules imposed by Bank Negara Malaysia and the impact would likely to continue next year.

Affordable houses

Malaysian Institute of Estate Agents President, Lim Boon Ping forecasted, the residential property market will continue to be driven by affordable houses, mainly units sold under RM400,000.

For the past few years, he said, more than 60% of the total transactions were made up of residential properties.

Laissez-fare approach
Photo: Pexels

Finally, the Association for Abandoned Building Owners Malaysia Chairman, Dr. Mohamed Rafick Khan implied that the government should take a laissez-fare approach toward the residential property market.

He believed, the housing market must be free from the hands of the government because market forces will correct itself.

What the government should focus on, then? Mohamed Rafick said the government can spend more time on town planning and public transport systems which in turn will stimulate the demand for property.

He also forecasted the property market will not see an oversupply in affordable homes for the next three to five years despite the government has been consistently pushing developers to build more houses in that category.

Lower profit margins and risk are said to be the reasons behind developers’ indifferent response to that call.

Mohamed Rafick concluded prices for new properties will be expected to stay high although the price will be slightly reduced in the secondary market.

Points to ponder

Although things look a little bit promising in the near future, prospective homebuyers should exercise caution before deciding to purchase new homes.

Maybe the worst is yet to come for the residential property market in Malaysia if the domestic and global economies don’t show any sign of improvement next year.

Condominium Elite Finance House Lifestyle Malaysian Mortgage Property Serviced Apartment Urban

5 New Year’s resolutions that may help you buy a new home in 2020

It is less than a week left before we say goodbye to 2019 and greet welcome to 2020. Now maybe a good time to think about what your New Year’s resolutions will be.

If buying a home is at the top of your list, it will be helpful to have resolutions that can keep your financial health in shipshape

Cut down on monthly subscription services
Photo: Pexels

Yeah, it surely seems convenient to have monthly subscription services especially when the payments are automatically deducted from your credit cards.

But, one of the downsides of doing that is you may not realize those payments can hurt your credit rating.

To make things worse, the guy from the bank’s credit risk department may pull your report before you settle your credit card balance in full at the end of the billing cycle.

To avoid that kind of unpleasantness, only subscribe services that you need and better still, settle your bills by paying in cash via debit cards.

Pay your debts on time
Photo: Pexels

Easy to say but hard to do, all the more so for bad paymasters. Please keep in mind, nothing makes lenders happier than loans paid on time by borrowers.

Your ability to pay loans, credit cards, and bills on time will reflect positively on your credit history.

Anyhow, some people may think that it will be easier to secure loans if they haven’t borrowed money from any financial institution or made purchases using credit cards.

That is considerably untrue because your home loan application may be rejected due to your nonexistence in the credit realm.

Always monitor your credit
Photo: Pexels

You never lag in paying your loan installments and bills. So, you think your credit rating is OK. Then, you go and apply for a home loan.

All of a sudden, you find out the bank rejects your loan application because your best friend defaults on his business loan and of course, you are his guarantor.

You can save yourself from this unpleasant situation by checking your credit frequently. At least, do so once a year.

For Malaysians, you may get your credit scores from rating agencies like CTOS, Central Credit Reference Information (CCRIS), and Experian Information Services Sdn Bhd (Experian).

Resist the temptation to take big fat loans
Photo: Pexels

Forget about buying a new car or taking your family overseas on an expensive vacation. In any case, hold your horses until your home loan is approved.

Lenders are also particular about your debt-to-income ratio or to put it in layman’s term, the amount of your debt payment divided by your gross income.

Your loan application has a greater chance to be approved if you have a lower debt-to-income ratio.

The lower your debt-to-income ratio, the less likely you will face trouble in repaying the home loan in the event of financial hardship.

Don’t change jobs
Photo: Pexels

Although it sounds old-fashioned, the saying ‘a rolling stone gathers no moss’ always rings true.

Potential homebuyers should stick to their current jobs as a career move especially to a different industry may raise some alarm to lenders.

Job loyalty can be a positive factor in backing your home loan application as it allows financial institutions to forecast your future income easily.

Besides, the job market in Malaysia doesn’t look good these days due to unfavorable economic conditions which began last year.

On a final note, we at Red Angpow would like to take this opportunity to wish you a Happy New Year. May 2020 will bring success and happiness to all of us.

Condominium Elite Finance House Insurance Lifestyle Mortgage Property Rental Urban

5 questions you must ask before buying a house

So, you want to buy a house. Unless you have stacks of cash at your disposal, purchasing a home requires a long-term financial commitment that may last until the next generation.

Be it a landed or a high-rise property, it is highly recommended for you to gauge your state of readiness before sealing a deal with the developer or the real estate agency.

To make life simpler, we have compiled five questions potential homebuyers must ask themselves as part of their homework prior to making the great leap forward.

1. Do I have the financial capability to purchase a home?

Well, maybe you have saved up enough money to pay the downpayment and all other costs related to the purchase. Or, you may just withdraw some money from your Employees’ Provident Fund (EPF) account.

Thinks look quite good for now. But, after signing the sales and purchase agreement, you find out that you may have to fork out more extra money to install iron grilles on doors and windows. Perhaps, the house needs some repairing to be done.

Besides, don’t forget to calculate other monthly financial commitments like a car loan, an education fund for your kids, study loan repayment and personal loan.

Finally, please make sure you have enough money to cover your expenses and the most important of all, to support your living and family.

2. Buy or rent?

Most of the time, it can be cheaper to rent a house rather than buying it. Of course, owning a house provides you with an indescribable sense of accomplishment (although technically, the bank owns the house until you have the loan in full).

Renting is practical when you don’t intend to stay for a long time, the rental rate is lower than the monthly loan installment, houses are ridiculously overpriced in the area you plan to live or you will inherit your parents’ house.

However, renting too has its downsides. Maybe you are unlucky enough to encounter ‘the landlord from hell’ who shirks from the responsibility of forking his or her own money to pay for the maintenance of the house.

Worse still, the landlord may bring a potential buyer to take a look at the house while you and your family can only stare in horror at the unwelcomed guests.

3. Should I sign up for a home mortgage insurance plan?

The only certainty in life is death. Grim as it may sound, every homebuyer needs to consider this fact, especially for those who are above 40 and planning to pay for their home loan installments for the next 30 or 35 years.s

Yes, you have to pay an additional sum to insure your home loan but at the same time, it bestows peace of mind to yourself and your loved ones.

Financial institutions in Malaysia offer two types of mortgage life insurance namely, Mortgage Reducing Term Assurance (MRTA) or Mortgage Decreasing Term Assurance (MDTA) and Mortgage Level Term Assurance (MLTA).

Please consult your friendly banker for further information on MRTA/MDTA and MLTA to help you choose which one is the most suitable for you.

4. Does the house have a good resale or rental value?

Some people buy houses for the sake of reselling or renting them. Nothing wrong with that as it is not illegal making money that way.

Since cheap houses are hard to find these days, please perform an evaluation to ensure the prices will not plummet in the long run.

Find out the resale and rental value of other houses within the same locality and other factors that may influence the prices such as the availability of amenities, public transportation system, or crime rates.

If the forecast looks gloomy, find a house somewhere else.

5. Do I really need to buy a house at the moment?

Most of the time, newlyweds get pretty excited about buying a dream house to shelter themselves and their yet-to-be-born children.

The trend has always skewed toward homeownership especially among those with a higher level of education.

Still, always think about the future because you may need to relocate due to a change in jobs or business locations.

Don’t simply jump into the bandwagon just because everyone else is doing it. The road lies ahead is full of uncertainties and you may be in for a rocky ride.

Analysis Condominium Mortgage Rental

Rentals near Schools

People are willing to pay 40% higher rental to be near school. This is the rental psf vs distance to school for Apt & Flat, housing for the poor in cities. See the orange line. RM1.40 near school vs RM1 psf if >3km from school Who says the poor don’t care about education?

If you look at condominium and serviced residence market, the distance to school has no bearing to condo rental rate. We suspect that the condo are for the singles and young families. In fact, serviced residence has direct relation with distance to school. the further, the higher. interesting.

Analysis Mortgage Property Proptech Realtor

What does RED ANGPOW do?

It may sound innocuous but we at RED ANGPOW get variations of this question a lot whenever we meet new people at events and functions.

In short, RED ANGPOW aggregates, stores and organizes real estate market data from multiple unstructured sources to design and build data pipelines and a range of tools to provide information and insights to help homeowners, agents and developers make the decision.

For a FEE, of course. Not for free. (No, we have not introduced the price plan yet. But it is in the plan).


You can sample our products on the website such as search tools, analysis, and market updates.

Then, please head over to our main page at (Yes the tools look basic because we are solving the algorithm and the architecture bits first before spending time on the UI/UX because we can’t focus on too many things)


Data & AI

We focus on data and artificial intelligence (buzz word alert, honestly, we use Python a lot) to mine important data to make informed and smarter decisions. We are doing the hard work for you.

If you are a developer or a real estate investor, we can complete your due diligence and feasibility studies in a matter of minutes compared to weeks using traditional methods (OK, we now know how to do it quickly, but we currently are in the process of automating the workflow, you think it is easy ah?).


Apart from the real estate data startup, we also provide other services such as data analytics, locational intelligence, geo-analytics and custom-mapping with MapBox (most of which are in line with what we are doing as a setup).

We are more than pleased to entertain inquiries from government agencies, business organizations and members of the public who want to know more about RED ANGPOW.

Should you need help or just want to talk to us, please do not hesitate to contact or

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.


Comparison of Malaysia Home Loan Rates

Buying a house is a long term commitment, so does your mortgage. It pays to do your homework researching into best deal in town. We have gathered online information on mortgage rates (from 5 years to 30 years term) by banks in Malaysia to help home buyers. We have processed it, organized it and put our expert thoughts into it to help home buyers to make comparison clearly.

Every decimal point on the rates matters. It may not seems a lot of difference in monthly installment for 0.1% incremental. However, if  you accumulate the saving over term of the loan, it is very significant amount. For example, for a loan of RM500K for 30 years, for every 0.1% difference the amount you could save is around RM 10,700. If you are getting cheaper rate by 0.5% then the saving amount is approximately RM65K and with that saving you could buy decent national car.

Options area many. Banks competition on mortgage is fierce and home buyers have the upper hand in this crowded market. If you have a great financial standing and strong credit record, many  banks are  willing to cut down their rates and maximize the amount of financing in order to have you as their customer. Some banks give zero moving cost or finance moving cost that can help you to save more money. However, be cautious, nothing is truly free from banks, zero moving cost typically comes with higher interest rates or you have to bring in deposit or purchase additional products to compensate for the free moving cost.

Generally, Malaysia  home loan rates are based on the loan amount . As a rule of thumb, it generally differentiated based on these threshold – RM200 K, RM500 K & RM1 M – where the higher loan amount is cheaper.

Local Banks

The most aggressive in term of home loan rates. Campaign rates, special request rates,  goodies, step up rates, higher margin of financing and and zero moving cost. The best time to best special rates is end of the year when they are closing the year end account as they try meet their internal sales target. Housing market is slow this year and you have solid chance to negotiate down your home loan financing rates in the fourth quarter.

Generally speaking the lower your loan amount, the higher interest rate and  below RM200K being the highest. For loan below RM 200K, Hong Leong offers glaringly high interest rate to this non preferred segment of low income group.

Local Bank Mortgage Rates in Malaysia

Islamic Banks

It mirrors conventional local banks structures except it provides additional benefit like 20% discount of loan agreement stamp duty and maximum capping of financing rates should the base rate goes up above the threshold. Customers of any religion, creeds or believe are eligible to take up Islamic Home Loan Financing. However, for some banks that are practicing strict Shariah rulings it will be a red flag if your source of income comes from non-halal source.

Home Loan rates for standalone Islamic banks that does not have a parent company from conventional group generally higher. For example Bank Rakyat,  Bank Islam & MBSB which offer financing rates across all loan amount.

Foreign Banks

Foreign banks provides more sophisticated product offerings. However, they typically scheming the creme where they only want to on-board customers with good financial standing with good financial behavior. They typically avoid celebrities and politician as their customers.  If you are in high net worth category and has potential to buy other products like investment or deposits they will welcome you with open arms and lure you with attractive home loan financing rates.

Foreign Bank Mortgage Rates in Malaysia

*AIA – only offer fixed rate loan

Complete Comparison Summary

Here is the summary of the rates, lock-in & flexi type segregated by type of banks in Malaysia.  At a glance, it is so easy to spot which are the banks that offer best deal such as no lock-in, lower rates and flexi loan.  This should serve as first level of analysis and you should dig deeper into product summary sheet and loan agreement to know more about the mortgage products.

Maybank Islamic and Kuwait Finance House probably offers the best products with flexi option, 4.6% or below financing rate and no-lock-in. However, our analysis is based on published rates there are some banks that offer aggressive campaign rates from time to time. Other factors to consider are:

  • margin of financing,
  • service level
  • free moving cost,
  • online facility
  • default penalty rate
  • online facility
  • nearest location of their branch
  • discount on loan agreement fees
  • discount on valuation fees
  • gifts
  • loan redemption penalty

Generally speaking Islamic local banks have higher lock-in period and higher interest rate. Are they the bank of “the last resort” of which they accept customers with poorer credit, loyal group of customers that are willing to pay for higher rates or simply because they have higher cost of funds that they cannot lend competitively?



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Condominium Mortgage

Malaysia Mortgage For Residential Property

Charts below shows total balance of housing loan lent out by Commercial & Islamic bank in Malaysia. The data was taken from the central bank of Malaysia website.

For the last 20 years Malaysia mortgage market has seen phenomenal growth in tandem with a booming property sales.  Presuming the numbers reported correctly by Bank Negara, the reported loan amount increased to nearly 10 folds in the span of 2 decade.

Malaysia Mortgage Loan

From a loan approval perspective, the growth is experiencing a softening period since early 2015. Since the introduction of responsible lending act by Bank Negara, lenders has been tightening their lending rules and dampens the mortgage growth.

Malaysia Mortgage Loan Approval

Loan Approved by banking System in Malaysia


We have taken indicator Malaysia Bank Lending Rate reported by to show bank lending rate movement for the past 2 decades as plotted below. Generally, Malaysia bank lending rate was in the in declining period since 1998 and  continue to decline till recent past years and only starts to show upward pressure in 2018.