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SIMPLE HOME LOAN GUIDE FOR BEGINNERS 
What is the best time to own a property? 

Hey all 💚

As we all remembered, on 16 March 2020, the Prime Minister of Malaysia, had announced the imposition of a 14 days movement control order (MCO) from 18 March to 31 March 2020 nationwide to curb the spread of the COVID-19 infection in Malaysia. Subsequently on 25 March 2020, the Prime Minister further announced that the MCO is to be extended to 14 April 2020.

This MCO is enforced under the Control and Prevention of Infectious Diseases Act 1988 and the Police Act 1967, and encompasses, among others, the closure of all government and private premises except those involved in essential services 

Being said that, the word Covid-19 is now synonym to many people around the world for hardship and suffering nearly every day. You’ll read or hear about people losing their jobs, companies closing down, pay cuts and so on. 

Most of us are forced to adapt to the ‘new normal’ and accept the fact that things are not going to be the same anymore. Along with every other country, Malaysia is trying its best to make the best out of the current situation.

So how does this affect the property market? Will people remain motivated to purchase a property of their own?

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, I have compiled a short guide to explain how a home loan works, and what you need to know before you apply for a mortgage. 

Here's a guide on how housing loan process in Malaysia works. 

Do you know what a Home Loan means?

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%, 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 HERE 

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.

How to use a Housing Loan Calculator?

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.

You can check all the home loan interest rates and fill in the home loan application in the home loan calculator below. Though this might be created to cater to the UK market, but it should work for most any market in the world .

MortgageCalculator.uk Logo.

Powered by Mortgage Calculator UK widget


Base Rate & Other Loan Terms

Base Rate (BR):

Base Rate 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 amount.

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 RM50,000.

Foreclosure:

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.

Prepayment (of house loan):

Fully or partially paying off your (home) loan before it is due.
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:
  • Type of property
  • Location of property
  • Age of the borrower
  • 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.

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:

Stamp duties: 

Sale & Purchase Agreement (0.5% to 1.0%), Loan Agreement (0.5%) and Transfer of Title (1.0% to 2.0%)

Disbursement Fees: 

Varies by state, land office and type of property


Processing Fees: 

One time charge by the lenders (up to a few hundred ringgit).

Remember to use an experienced banker or consultant when it comes to loan submission during this time. It can save you a lot of money, hassle and may also increase your chances for loan approval. The ultimate moral of the story here is to be prepared during these uncertain times and be extra vigilant with your financials and preparation. 

All the best guys  and stay safe ! Let's hope that this pandemic will end soon and we'll get back to our normal life. 

Well that's all for now ! Thanks for reading my blog !! I hope you've enjoyed it !

Have a wonderful day and always be happy!! 

THANKS FOR BEING APART OF MY READERS  💕🥰

Love and rise up , 

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Zazasters a.k.a MamaMonsta👻

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