8 Types Of Mortgage Loans in Malaysia

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Mortgage Loans in Malaysia

The prospect of owning a home is exciting, but before you can see your dream come true, you’ll need to figure out how to get the money you’ll need to close the transaction!

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In Malaysia, every young person’s desire is to own a home. However, times are tough, and aside from looking for the ideal house within their budget and learning how to acquire a property, they must also learn how to manage their finances.

There will also be a slew of questions to be answered, ranging from how to qualify for a home loan to what adjudication in a real estate transaction entails.

This tutorial will teach our readers the fundamentals of property acquisition. It will teach you the fundamentals of how to apply for a home loan, including what paperwork you’ll need and how long you’ll have to wait.

There will also be an explanation of the various forms of property loans available, ranging from the most frequent (Term Loans, Islamic Loans, and Flexi Loans) to the less common (Overdraft).

The Various Types Of Property Loans Available On The Market

You’ll need to know what your property loan alternatives are once you’ve decided on a house to buy and know what paperwork you’ll need to prepare.

  1. Term Loan

The term loan is one of the most prevalent types of loans available. The interest rates are budged simultaneously with the principle payment in monthly instalments, and the maximum term is often 35 years.

There are no advantages to paying early or making extra installments. There will be a penalty if you pay off the loan during the first 3 to 5 years.

  1. Fixed Rate Loans

Fixed Rate Loans offer a fixed monthly payment, same like Term Loans. This is the safest plan for people who are concerned about the occasional adjustments in the Base Lending Rate (BLR).

  1. Overdraft

The overdraft is the most uncommon loan on the market, and it is only offered by a few institutions these days. The Overdraft is unique in that the borrower is only responsible for the loan’s interest.

This loan has no fixed term, and the buyer might opt to pay more to lower the principal loan when making monthly interest payments.

The interest rates on this loan are higher than average, which is a negative.

  1. Flexi


The Flexi Loan is popular with people who have extra cash in their bank account. It’s a hybrid of a Term Loan and an Overdraft Loan.

Those who receive this loan will benefit from lower interest rates when they deposit more money into their current account, and they will still be able to withdraw money from their current account at any time.

Withdrawing money from the Current Account, on the other hand, will cause interest rates to rise again until the borrower replenishes the Current Account.

  1. Islamic Loans

Islamic loans are a completely other ballgame, and anyone can apply for them. This loan, which complies with Syariah law, is popular among short-term property investors because there are normally no penalties if the loan is terminated early.

However, because different banks have different terms, the terms and conditions must be thoroughly reviewed before signing the paper.

Among the more popular Islamic Loans on the market are the Al-Bai’ Bithaman Ajil loan, Al-Ijarah / Ijarah Muntahiyah Bittamlik, Musharakah Mutanaqisah, and Murabahah.

  1. Refinancing

Refinancing isn’t quite the same as a loan; it’s more like receiving a loan on a property that already has one.

This type of loan is typically used by homeowners who can no longer afford their monthly property payments and need to refinance with a bank that can offer them better rates, or by property investors who wish to profit from their property’s increased worth over time.

Refinancing a property that has appreciated in value can provide the borrowers with “cash back,” which they can use to start a new business or invest in other areas.

Property experts have put together a comprehensive guide to refinancing.

  1. Government Housing Loans

This loan is self-evident: it is a loan for government employees.

There are strict requirements for this property loan, including the ability to apply for a government loan from just one office, even if they hold positions in two other offices, and the ability to take a government housing loan only twice in their lives.

They are also permitted to utilize just the government housing loan to fund specified items, such as the acquisition of land, a house, renovations to the property, and the repayment of other loans in order to purchase any of the aforementioned items.

There are seven different forms of government housing loans, and two of them, Treasury’s Housing Land Scheme and Islamic Housing Loan Scheme, follow the Al-Bai Bithamin ‘Ajil principle.

  1. Third Party Housing Loan

A third-party housing loan is designed for people who cannot afford to buy a home on their own owing to a lack of income or a poor credit history.

In these situations, the borrower can hunt for someone with a better salary or a good credit history to join the loan agreement. A parent, sibling, or spouse is frequently the responsible party.

The co-borrower usually has no claim on the property once the payment is made, and the primary borrower is responsible for making monthly payments on schedule without harming the co-borrower.

However, all of these provisions are negotiable and are contingent on both parties’ agreement.

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