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Refinance Your Home Loan in Malaysia

Refinancing can help you reduce monthly interest payments, or even get you extra cash. Use the calculator below to find your best refinancing option, and click “Apply Now” when you are ready.

Update: Base Lending Rate (BLR) now updated to Base Rate (BR).

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Frequently Asked Questions

Update: As of 2nd January 2015, Base Lending Rate (BLR) now updated to Base Rate (BR) to reflect the recent changes made by Bank Negara Malaysia, and subsequently by major local banks.

Getting a house can be one of the most important and stressful decision that you will need to make. To help guide you through the process, we have prepared a home loan calculator for Malaysia market to help you find the cheapest loan from the banks around you.

What Is A Mortgage?

A mortgage is basically a loan that you take from the bank for the purchase of a property. There are several methods that you can take out a housing loan in Malaysia with the bank:

  • For the purchase of a property
  • Changing from one existing loan to another home loan, maybe to take advantage of lower interest rate or even withdraw some cash for personal consumption (refinance)
  • Putting your own property as collateral for the housing loan (remortgage)

If you already have an existing home 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?

When a housing loan in Malaysia is taken from a bank, you enter into an agreement with the lender (usually a bank) and make a commitment to repay the loan over a period of time (depending on the duration of your home loan).

Housing loan interest rate in Malaysia are mainly quoted based on the Base Rate (BR). For instance, the interest rate quoted is 'BR + 0.5%' (current BR is 4%), the interest rate for your loan will be 4.5%. In the early stages of your home loan, a large portion of your monthly loan repayments goes to repaying the interest; gradually having an increased portion allocated to paying down the principal.

As home loan interest rate in Malaysia is calculated based on the monthly oustanding balance, the interest for your subsequent months will be lower as you pay a little bit extra each month.

How to Use A Home Loan Refinance Calculator?

iMoney's Home Loan Refinance Calculator allows you to calculate your potential monthly savings when you decide to refinance your home loan. To use the calculator, all you need to do is insert your current monthly repayment, outstanding loan amount and how long would you like to refinance it for.

BR & other Loan Terms

Base Rate (BR):
The BR is an interest rate which the bank refers to, to determine the charges for the products that they offer. Cost of operations from the banks is taken into consideration for this rate and it is generally the same among the banks. Housing loan interest rate in Malaysia usually uses the base rate (BR) as a point of reference, with the interest rate charged on you quoted as a percentage above or below the point of reference. This causes the home loan interest rate in Malaysia that you incur to change (increase or decrease) according to the increase or decrease of BR.
Downpayment:

The initial payment made to confirm a buyer's interest in the goods / services (usually transactions that involve a lot of money such as the purchase of a house or car). Downpayments are usually quoted as a percentage of the price (eg. 10% downpayment for a RM400,000 house).

Foreclosure: When a borrower fails to settle their loan (consistent failure to repay loan instalments), the bank will take the property and sell it in order to settle the outstanding loan amount.

Loan Tenure:

This means the loan duration (how long it will take to complete the loan repayment). If the loan tenure that an individual get is 30 years, under the agreed monthly repayment amount; it will take 30 years to finish repaying the loan.

Mortgage Reducing Term Assurance (MRTA): This is a type of insurance for your property (to protect your house in the event that something happens to you, the insurer will clear off your home loan). Protection is provided for your outstanding home loan amount, in the event of death or total permanent disability of the person insured. The sum insured reduces over time in accordance with the outstanding loan amount.

Prepayment (of house loan):
Fully or partially paying off your (home) loan before it is due.

Islamic Vs Conventional Mortgages in Malaysia

The home loans offered by the banks in the comparison table consists of both Islamic and converntional loans. The difference between the loans is that Islamic home loans are Shariah compliant. The borrowing and lending relationship when it comes to loan, is switched to sharing of asset ownership and profit/loss in Islamic finance. Check out the page built specifically for Islamic Home Loans.

Refinancing

Refinancing involves taking a new home loan to replace your existing home loan for various reasons such as to benefit from the lower interest rate, to reduce your monthly loan instalment or to be able to take additional cash for personal use at a low interest rate. You can submit your application the housing loan that you prefer and our mortgage consultants will contact you to assist you with the details.

Check out our page dedicated to Housing Loan Refinancing

Factors to Consider When Choosing A Home Loan in Malaysia

Margin of Financing: Is effectively the percentage of loan amount that you are taking and/or qualify for based on the value of the property. Margin of financing can go as high as 95% (usually involves taking a mortgage insurance together with the home loan), and is assessed on several factors:

  1. Type of property
  2. Location of property
  3. Age of the borrower
  4. Income of the borrower

Early Termination Penalty: Most mortgages in Malaysia come with an early termination penalty whereby if the loan is paid off partially or in full within a specified time period, you will be charged a certain amount of fee (usually a percentage of the loan amount). The charge usually end up with quite a significant amount. This specified time period (which you cannot repay any extra amount as compared to your monthly loan repayment) is refered as the 'lock-in period'.

Fees & Charges: With every housing loan that you take, there are quite a number of costs that you will incur such as professional fees and government charges that you will have to pay when you take out a mortgage in Malaysia. Some common fees and charges you should expect to incur include:

  1. Stamp duties: Sale & Purchase Agreement (0.5% to 1.0%), Loan Agreement (0.5%) and Transfer of Title (1.0% to 2.0%)
  2. Disbursement Fees: varies by state, land office and type of property
  3. Processing Fees: one time charge by the lenders (up to a few hundred ringgit).

Got questions about home loans? Ask in the comment box below.





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