Buying Property in JB 102

After placing the nominal booking fee of RM1000 (not all developers have the same practice, some require 10% downpayment upfront), the developer gives you about 1 month to get your loan approved.

And so begins the arduous search for the best loan package. After going all out to find my choice property, I have to say I was a little more tardy about the loan package.

There are three types of banks in JB – local, Singapore based and international. You can approach any or all of them to get a loan quotation.

Public Bank
Hong Leong
Affin Bank


Standard Chartered

The list is not exhaustive of course but these are some of the more common banks buyers approach to get their loans. I specifically approached only the local banks as they tend to give better terms and rates.

There are pockets of commercial zones in JB where the banks tend to congregate for ease of public access. Some of them are in city centre Jalan Wong Ah Fook, Taman Molek, Permas Jaya etc. I did my hunting in Permas.

Interest on loans is determined by the publicly available Board Lending Rate (BLR) plus or minus a premium or discount offered by the banks calculated daily rest. Banks will offer better rates for loan amounts exceeding RM 300,000.

Historically the BLR used to be in the excess of 10% but has dropped to close to historical low of 6.6%. Depending on economic outlook, the government may raise or lower it.

Loan tenure is typically up to 30 years or age 70 whichever is earlier. In terms of margin of finance, the maximum banks offer to foreigners is 85% though some banks offer strictly only 70% for the first and second property. However if one of the loan applicant has registered income from Malaysia, the banks may offer even higher MOF.

Lock in period is 3 years so full repayment of loan during this period will incur a penalty fee. However the banks accept partial repayment with no penalties.

There are 3 types of loan packages that one can choose from fixed, semi-flexi and flexi loan. Fixed is the normal loan where borrower pays a fixed monthly repayment over the entire tenure at the slated interest rates.

Flexi loan packages come with an attached current account. Borrower can choose to deposit additional money into this account. What happens is that when computing the interest for the day, they will use the loan balance less current account balance to calculate the principal on which the interest is applied to. This effectively reduces the interest on loan and helps borrower to pay off the debt faster. In addition, the money in the current account can be withdrawn at any time should the need arise. This package requires a RM 200 setup fee and RM10 monthly maintenance fee.

The semi-flexi loan works like the flexi loan except that additional monies deposited goes directly into the loan account to reduce the balance. Everytime borrower decides to withdraw the excess money they have deposited into the account, they have to write to the bank to request for withdrawal. The money will be available for use within one working day. There is no set up or monthly maintenance fee for this package, however every withdrawal incurs a RM50 charge so this will require more cash flow planning.

Another feature of the home loan is taking up the mortgage reducing term assurance or MRTA. Some banks require minimal coverage to get better rates while others don’t require it at all.

What the MRTA does is that in the event of death or permanent incapacity of borrower, the insurance kicks in to pay the bank the share of the borrower’s loan. Any additional amount will then be paid to the borrower. The sum insured should mirror the reducing balance of your loan.

Borrower can choose to be covered for at least 5 years or for the entire loan tenure. Obviously with a shorter term coverage, you will not be fully covered for the loan amount as the sum insured reduces to 0 at a faster rate.

Another thing to consider is whether to buy 100% coverage for each co-borrowers or simply each borrower’s share of loan but the sum total should be equal to 100%. It really depends on your needs.

MRTA premiums for a RM 450,000 loan over 10 years for person aged 30 estimates to be about RM4,500, while a 30 year plan is RM 19,000.

Premiums are paid upfront and can be tagged to your loan if you do not want to pay for it upfront. Should you decide to sell your property or terminate your insurance before expiry, you get a pro-rated refund.

An alternative that one can consider is getting a MRTA from Singapore instead. Premiums are comparative surprisingly and pays to insured in cash instead of the bank direct. This gives you the flexibility to decide what to do with the lump sum payout. In addition, premiums are paid annually and in SGD.

I highly recommend that you take up some form of insurance on your loan. As this is a liability, if you are not around to assume the responsibility, you are unnecessarily saddling your dependants with debt.

Lastly, there is also legal fees attached to the bank loan. This legal fee is separate from the one you may need to pay at the developer’s end to prepare the Sales and Purchase Agreement (SPA).

Make sure you enquire on the estimated legal fee to be paid. This amount is based on your loan quantum and you can also tag it to your loan if you do not want to pay upfront. For a RM450,000 loan, fees estimate to be RM 6,000.

You will need to produce some if not all of the following documents when applying for a loan –

1. 3 months payslip
2. CPF Contribution history
3. Salary bank account for 3 months to verify your pay quantum
4. Tax assessment from IRAS
5. Letter of employment from your employer
6. Credit Bureau records
7. NRIC and passport

You can always make the loan application first as this is essentially just paperwork and non-commital. After submitting the application, be prepared for a grueling wait of 2 – 3 weeks before the bank gets back to you on your loan application.

Given that developer gives you one month to settle the loan, you pretty much have to start submitting loan applications after placing the booking fee.

Once you have received the loan application status, it is then up to you to to choose the package with the best features or meet your needs most. Upon deciding, you will then need to sign the letter of offer, with which the lawyers will use for drafting the SPA.

Will update on the other documentary process again.

17 thoughts on “Buying Property in JB 102

  1. Hi, have you finalise your loan? Which banks will give highest margin and longest tenure (my hubby is almost 50) for Singaporeans? Thanks.

    1. Hi Nora, yes I have finalised my loan. For Singaporeans, the highest margin offered is 85%. In terms of tenure, I think the maximum length is up to age 70. But I am not too sure about this. Are you looking to buy a property in JB too?

    1. Good luck on your search! I signed the booking of the unit in March and am still dealing with the paperwork for the legal matters. And I haven’t even submitted my papers for the state approval yet… what a bummer.

  2. I guess you’re in no hurry since the unit is still under construction. I am looking for a completed unit so that we don’t need to wait for too long. Should have bought 2 years ago so by now it is ready and can save a lot of money since the same unit is cheaper during launching/under construction but once it is almost ready they bring up the price. But it is much safer to buy a completed house coz I heard of too many stories of developers not able to complete the projects and buyers not able to claim back their payment. So there are pros and cons. But I think now, should be better at least I have not heard such case happen anymore.

    1. When I was scouting for property in JB, I shortlisted only those developments from reputable developers. There’s no 100% risk free but since they have several developments going at the same time, it is less likely that they would try something funny.

      I did up a Google map in my blog entry here which list some of the developments by the more reputable developers if it helps. It is no way exhaustive though.

    1. Hi Yen Peng,

      Honestly, I didn’t really do much homework when I was scouting for loan packages. Based on the 5 banks I visited (Public Bank, Hong Leong, Alliance, RHB and CIMB), Public Bank, Hong Leong and RHB provided the better packages for foreigners as they offered higher Loan to Value margins up to 85%.

      I finally settled on RHB because Public Bank didn’t give us a vote of confidence, Hong Leong took a long time coming back even though their offer seemed more attractive while the lady at RHB was pretty efficient in getting our loan approved. So there’s that. Hope this helps a bit.

  3. Hi, just want to check roughly how much cash did you need to come up with after you paid the booking fee of RM1000? And what was the timeline like in terms of payment of cash component?

    1. Hi Joyce,

      After paying the booking fee, developer gave us 1 month to secure a bank loan. Thereafter we went down to sign the SPA, DMC etc. At this point, the 10% downpayment has to be made together with the state consent levy of RM10,000 if you are a foreigner.

      If you are going to incorporate the bank legal fees and MRTA into the loan, then no upfront payment needed. Otherwise you’d have to make them upon approval of bank loan. If your credit approval is fast, then this is payable in about a month.

      The final cash component required is the stamp duties plus legal fees on MOT. Some developers absorb this, otherwise you will need to make this payment which is based on a percentage of your property price. This is payable upon transfer of title which most developers effect after keys are handed over. For me, they decided to bring this forward so I made the payment (about RM12,000) about 3 months after making the booking.

      Hope this helps.

    1. Hi Rosniati,

      No I did have to make the 10% downpayment. But when is dependent on the developer. Some require upfront downpayment when you make a booking. Others only require a token booking fee and then the downpayment to be made when the SPA is signed about a month later.

  4. Thanks for replying! What’s the chance of getting a 90% loan? Heard may be possible with a high enough annual income

    1. As a foreigner with an average income it was easy to get loan up to 85% at certain banks. Not sure about 90% loan though but I’ve heard tt it can be done like as you mentioned with high enough income/net worth.

      Sorry can’t be of much help here.

      By the way, I only needed to pay 10% downpayment because the developer offered a 10% rebate off the purchase price.

    1. Hi bel, if you are a foreigner the best loan to value margin you can get is about 85%, which means a downpayment of RM105K plus another RM30 – 40K of stamp duties, state levy, legal and admin fees.

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