|Date: 28 November 2019||Published by: IBN|
If you have decided to purchase a home in Malaysia, the next step is most likely to get yourself a home loan. We are here to provide a concise introduction to the home loan application process for foreigners.
To purchase a home in Malaysia, you must either have all the up-front savings (you must convert your country’s currency to MYR for any purchase purposes) or you need to apply for mortgage loan with a bank in Malaysia. Malaysia offers easy access to a wide array of local and foreign banks. The four largest banks are Maybank, CIMB Bank, Public Bank and Industrial Bank. All assets can be offered as collateral in your loan application, and the value of each asset differs from one another despite being in the same category. You should also check if your country’s national bank has a branch in Malaysia. Some of the foreign banks with branches in Malaysia are HSBC, Deutsche Bank and Bank of America.
Before you apply for a house loan, you need to determine which mortgage best suit your needs and financial circumstances. The application process typically involves heavy paperwork and requires you to physically visit the bank to get the relevant approval. Each bank has different operating business model and we recommend you to contact the bank and set up an appointment (if required) before you visit the bank. You should request to have an English-speaking staff to help you to translate in case it is needed. Technically, it is better if you determine how much you can borrow from your mortgage loan and then look for properties that are available in the market so that you can understand your financial capability better and help save time.
In Malaysia, the deposit for house purchase is set at 10% and they are typically paid in two tranches. The first tranche of 2-3% deposit is paid after the purchaser and developer has signed the Letter of Intent to Purchase; the second tranche of remaining 7-8% is to be paid after signing of SPA, which needs to be completed within 14 days from signing of the Offer/Acceptance Letter. The remaining property price needs to be paid within 3 months after the deposit has been fully paid. You are required to make conversion and remittance for your payment if you choose to pay from overseas country.
Malaysia property price is relatively low as compared to properties in European countries. Most of the additional expenses are calculated based on the selling price of the property. The additional cost of purchasing properties is only about 4% of its selling price and these fees/taxes are comprised of:
|1||Stamp duty (to be paid by buyer): 1-3% of property selling price|
|2.||Legal fee: Generally the fee is 0.4-1% of the property selling price (differs from case to case)|
|3.||Other administration cost: Approximately USD 49 (covers the search cost and other expenses)|
|4.||Property agent fees: A maximum of 3% of property selling price and it is subjected to the property price. This fee can be paid by either the seller or the buyer.|