Housing Loan Interest Rate (% p.a.)

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Total Interest (RM): 0
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Housing Loan Interest Rate

Housing loan interest rate is the cost you pay for borrowing money from a bank to purchase a home, expressed as a percentage of the principal loan amount. It influences your monthly repayments and the total cost of the loan over its tenure in Malaysia.

What Are the Types of Housing Loans Available in Malaysia?

Housing loans in Malaysia come in three main types: basic term loans, semi-flexi loans, and full-flexi loans. Basic term loans have a fixed repayment schedule, meaning your monthly installment remains constant throughout the loan tenure. They do not allow for reducing the outstanding balance through advance payments. Semi-flexi loans also have a fixed repayment schedule but allow you to make advance payments, which can reduce the principal and, subsequently, the interest charged. Finally, full-flexi loans offer the most flexibility, as they come with a linked current account, enabling you to deposit extra funds to reduce the principal balance and withdraw them anytime without extra charges.

How Do Interest Rates Affect Housing Loans?

Interest rates determine how much extra you will pay over the life of the loan. They are influenced by the bank’s Base Lending Rate (BLR) and the Overnight Policy Rate (OPR) set by Bank Negara Malaysia. Interest rates can be fixed or variable. Fixed rates remain constant throughout the loan tenure, providing stability in monthly payments but no savings from advance payments. Variable rates fluctuate based on the Base Rate (BR), which can cause monthly payments to vary but can offer savings when rates decrease.

What Is the Current Range of Housing Loan Interest Rates in Malaysia?

Housing loan interest rates in Malaysia vary slightly among banks. For instance, Maybank Islamic HouzKEY offers one of the lowest profit rates starting from 2.88% p.a., while AIA Fixed Rate Home Loan Package 2 has a rate starting at 5.39% p.a.. Even seemingly small differences in rates can lead to significant variations in total interest paid over the loan’s life, making it essential to find the best available rate.

How Does the Margin of Finance (MOF) Influence Your Housing Loan?

The Margin of Finance (MOF) is the percentage of the property value that the bank is willing to finance. For first-time home buyers, it can be as high as 90%, depending on factors like the property’s type, location, and the buyer’s credit health. Some banks, like Standard Chartered, may offer up to 90% financing through products like MortgageOneā„¢, while others may provide less based on their risk assessment. Rent-to-own schemes, such as Maybank Islamic HouzKEY, might offer up to 100% financing for specific properties.

When taking a housing loan in Malaysia, several fees and charges apply, such as legal fees for the Sale and Purchase Agreement (SPA) and loan agreement, stamp duty fees, legal disbursement fees, and the bank’s processing fee. For example, SPA legal fees start at 1% for the first RM500,000 and decrease for higher amounts. Stamp duty is typically 0.5% of the loan amount. Understanding these costs is essential for budgeting your home purchase.

Is Mortgage Insurance Necessary for Your Housing Loan?

While not compulsory, mortgage insurance like Mortgage Reducing Term Assurance (MRTA) or Mortgage Level Term Assurance (MLTA) can protect your family from the financial burden of your housing loan in the event of death or total permanent disability. MRTA reduces in coverage over time, matching the outstanding loan balance, while MLTA offers a fixed coverage amount and can be transferred to another loan. The costs and benefits differ, so choose based on your needs.

How Can You Improve Your Chances of Housing Loan Approval?

To increase your housing loan approval chances, maintain a good credit score, have a stable employment history, and calculate your debt-service-ratio (DSR) to ensure it falls within the ideal range of 30% to 40%. Banks assess your ability to repay based on these factors, so demonstrating financial stability is crucial.

How to Use a Housing Loan Calculator Effectively?

A housing loan calculator helps determine your loan eligibility and monthly repayments by inputting the property price, financing amount, interest rate, tenure, and down payment. This tool provides a clear picture of your financial commitment and helps in comparing various loan options.

List of Home Loan Interest Rates

Below is the details of housing loan interest rates by banks: