The Essential To Make House Loan Paperwork Easy

The process of applying for a house loan might seem daunting at first, especially if you’re new to it. However, in Malaysia, it’s actually quite straightforward whether you’re employed locally or overseas.

Our property buying guides cover everything from planning your budget to choosing the right property and signing the necessary documents. Whether you’re buying from a developer or the secondary market, the steps are similar.

The first step is to apply for a loan from the bank with the lowest interest rates, as this will affect your total payments in the long term. Once you’ve chosen a bank, the next step is to gather the required documents.

Compiling the required documents

While the documents needed for house loan are generally similar, they vary based on your employment status, whether you’re an employee, self-employed, a business owner, or working overseas.

Here’s a comprehensive list of documents required for applying a house loan in Malaysia, applicable to both Malaysians and foreigners. But there is a slight differences for Malaysian who are self-employed, you can refer to the table below for a clearer understanding of the differences.

Malaysian (Employee)	Malaysian (Self-employed)
Identification Card – NRIC (copy)	Identification Card – NRIC (copy)
Property Booking Receipt	Property Booking Receipt
Vendor Sales & Purchase Agreement/Title (copy)/New Sales & Purchase Agreement	Vendor Sales & Purchase Agreement/Title (copy)/New Sales & Purchase Agreement
Latest 3 months pay slip (for Basic Salary)/Latest 6 months pay slip (for Basic + Commission Earner)	Latest 6 months Company Bank statement
Latest 3 months personal bank statement (for Basic Salary/Latest 6 months pay slips (for Basic + Commission Earner) which show your salary credited as per pay slip	Latest 6 months Personal Bank statement
Latest EA form	Deposit statement eg. Fixed Deposit, ASB or Bonds (if any) – to show how strong your emergencies fund it is
Latest KWSP statement	Business Registration
Income Tax – Latest Form B/BE with payment receipt acknowledgement
Deposit statement eg. Fixed Deposit, ASB or Bonds (if any) – to show how strong your emergencies fund it is

Understanding Property Terms

After submitting your house loan application to the chosen banks, the next step is waiting for the Letter of Offer, which usually takes about a week. This letter contains important details that you need to understand. Firstly, it outlines the type of loan you’re being offered.

Types of loans available in Malaysia

Standard Home Loan

The standard home loan is the most common type of loan available in the market. It offers borrowers the option of fixed or floating interest rates. With fixed rates, borrowers have stable monthly repayments, unaffected by market fluctuations. In contrast, floating rates may fluctuate with the market, potentially resulting in savings if interest rates decrease.

Flexi Home Loan

A flexi home loan provides borrowers with flexibility in managing their finances. It allows for additional cash deposits into the loan account, reducing the outstanding principal and interest payable. Borrowers can also withdraw excess funds when needed, making it suitable for those with irregular income streams or varying financial needs.

Home/Personal Loan Package

This loan package combines a home loan with a personal loan, offering borrowers additional financing for various purposes. It provides the convenience of managing both home and personal finances under one loan facility. Borrowers can access extra funds for renovations, furnishings, or other personal expenses while enjoying the benefits of a home loan.

Islamic Home Loan

An Islamic home loan adheres to Shariah principles, offering Shariah-compliant financing options for homebuyers. Instead of traditional interest-based loans, Islamic home financing follows the concept of profit-sharing or leasing agreements. The Base Finance Rate (BFR) is used to determine the bank’s profit margin, providing an alternative financing solution for individuals seeking Shariah-compliant options.

Government Housing Loan Schemes:

Various government housing loan schemes, such as PR1MA or the My First Home Scheme, aim to support first-time homebuyers in Malaysia. These schemes offer financial assistance, favorable interest rates, and flexible repayment terms to eligible individuals. They play a crucial role in facilitating homeownership for Malaysians, particularly those facing affordability challenges in the property market.

In the loan offer, key details include the loan amount, specifying how much the borrower can receive, with the remainder paid by them. It also outlines the loan’s purpose, typically for property purchase. Additionally, it describes the property being bought, detailing its type and size. The offer indicates the loan duration, often up to 35 years, affecting monthly payments: shorter terms mean higher payments, and longer terms mean lower ones.

Processing/Set Up Fee

Banks charge processing fees, called setup fees, for house loan applications. These fees are outlined in the Letter of Offer. Additionally, there’s a monthly service charge, usually nominal. The offer specifies the repayment schedule, interest rates, and fixed monthly payments, known as instalments, that borrowers must pay.

MRTA/MLTA

Two common types of housing insurance, Mortgage Reducing Term Assurance (MRTA) and Mortgage Level Term Assurance (MLTA), can be included in house loans. The Letter of Offer outlines the amount and coverage if obtained through the bank. These terms are essential for borrowers to understand as they review the terms and conditions of their Letter of Offer, ensuring they’re aware of the insurance options available and their entitlements.

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