Sourcing
Financing Your Property
The process of selecting your home can be an enjoyable yet tiresome experience - especially if you are new to Malaysia and its cities. But the question at the back of your mind probably is: "How much can I afford for a new home andhow much am I eligible to borrow (for the purchase of the property)?"
The Mortgage selection process is a diffrerent experience altogether.Property financing in Malaysia is a very competitive business and as soon as youhave made your purchase,you may begin "hunting" for the best package. This process may take several weeks as you search for the best rate, highest margin and the most convenient way to bank.Applying for a Mortgage in Malaysia is in no way different from applying for the same in your home country.
But how do you go about the whole thing and what do you look for?
The first thing to look at is the Margin of Financing (MOF). For Malaysians, the MOF is 90% (but Bank Negara Malaysia has proposed a cap of 80% that has yet to be confirmed). For expats, the MOF is divided into 2 categories - those residing in Malaysia (with a Work Permit,MM2H Visa, Spouse Visa, etc) and those who reside abroad. For those who reside in Malaysia, the MOF starts at 70% and may go up to 85% depending on income documentation and the location of property.However, it is important toknow that all loans come with a bank valuation of the property. The MOF is based on the Purchase Price or the Valuation - whichever is lower.
The MOF for Commercial Properties is normally 10% lower compared to Residential Properties.
The next thing to look into is the Interest Rate. For many, this is the most important feature of the Mortgage.However, there are many other features that should be taken into account before deciding. Interest rates in banks are computed on a Daily Rest Basis (interest is calculated on the outstanding amount of the Principal at the end of that day - as the loan amortizes over time) as opposed to a Monthly Rest Basis calculation. Interest Rates are determined by the Base Lending Rate (BLR); which is set by Bank Negara Malaysia as the cost of funds plus administrative charges for the bank. Due to the competition, interest charged for mortgages, for the moment, is below the BLR. Loans with Fixed Rates are also available should you prefer not to deoendon the BLR.
There are, of course, other features of a Mortgage to consider such as the Lock-In Period (the minimum period of the loan one would have to service), Facility Type(Term Loan,Flexible Loan,or OverdraftFacility), Repayment Terms and so forth. These features vary from bank to bank and make up an important part of the Mortgage selection process.
The key criteria (from a bank's point of view) to approving a mortgage is
income of the borrower(s). Income can be devided into two categories; the first being those who are salary-earners and being those who are salary-earners and the second,self-employed.Deriving income for salary-earners is normally quite straight forward. Those who are self-employed, though, would require company documents along with bank statements to "derive" income; as inbusinesses,income varies from month tomonth, year to year. Additional income like Tenancy Agreements (stamped), Fixed Deposits, Dividends from Equity,Yield from Bonds and Pensions can be used to justify income.
The approval of the Mortgage by the bank takes anywhere from 3 to 10 days, depending on the documents and complexity of the application. Upon approval, a Letter of Offer comprising the borrower's details, property details, interest rate, margin of financing andother terms and conditions will be issued. Upon acceptance (the signing of the Letter of Offer),the borrowers proceed to the bank's panel lawyer to sign the Facilities Agreement (a contract between the borrowers and Bank). The disbursement of the funds would normally take from 10 to 12 weeks after signing the Facilities Agreement.
First Capital Solution Sdn Bhd is a Mortgage Broking company offering financial services such as Residential
and Commercial Mortgages among other.With our alliances to several banks, we are able to offer the client a menu of packages for them from which to choose,without having to trouble themselves shopping around. We also provide value-added services for our clients.Our services are au gratis. For more information, call 03-7722 2211 or email hareshvh@firstcapital.com.my
