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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