• Getting an Overseas Property Loan in Malaysia: A Complete Guide

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    Buying an overseas property in markets that perform better than the one in Malaysia is the preferred choice for many investors. Often, these investors are high-net individuals who don’t want to input a big chunk of their money into one project, hence they want to get some backing financially.

    One solution for this is to apply for a so called overseas property loan. Personally, I believe that overseas property loans will get more and more popular as we become more globalized and tend to move around.

    I’ve dedicated this whole article to explain how it works when you apply for an overseas property loan in Malaysia, which banks that offer the loans, what requirements that apply and more. Let’s have a look.

    What is an overseas property loan?

    Overseas property loans are designed for Malaysian citizens or residents who wish to finance a property overseas. As mentioned, when the local market performs worse compared to an overseas ditto, the preferred choice for many investors is to look outside the borders.

    Stricter requirements normally apply, but you will find a handful of banks in Malaysia who offer overseas property loans.

    Often, you can only get a loan if you’re a high-net individual and if the property is located in a prime location. Why? Because properties in such areas generally generate higher rental incomes and have a higher resale value. This is standard for similar loans in Singapore and Hong Kong as well.

    Which banks offer overseas property loans in Malaysia?

    So, not all banks offer the loans. It’s simple as that. I’ve already written two articles about how to get overseas property loans in Singapore and Hong Kong, as some of the multinational banks don’t provide this type of loans in these places, you won’t be able to get one in Malaysia either. After some screening, I’ve decided to not include the banks in this article, for example, Citibank.

    CIMB Bank

    CIMB is originally from Malaysia and was founded in 2006. The reason why it’s not that old is because the bank evolved from Bumiputra-Commerce Holdings Berhad. The bank is one of the most transparent and generous when it comes to overseas property loans.

    Countries and cities served

    -Australia: Melbourne and Sydney.

    -The UK: London, zone 1, 2 and 3. For more information regarding the different zones in London, you can check this link.

    Property types

    -Sydney and Melbourne: Completed, and properties under construction. Worth mentioning is that non-resident foreigners are generally not allowed to buy established properties, but need to stick with under-construction properties, also referred to as off-plan).

    -London: Completed, and properties under construction.

    Financing

    -Melbourne and Sydney: Minimum RM 300,000, Maximum 70% (only RM available).

    -London: Minimum RM 800,000 / GBP 200,000, Maximum 70% (RM or GBP).

    Loan tenure

    When applying for a loan, you can only keep the loan for a limited period of time. Let’s have a look at the conditions that apply at CIMB Bank.

    -If financing in GBP: Up to 25 years or until you’re 65 years old, the one that is earlier.

    -If financing in RM: Up to 30 years or until you’re 70 years old, the one that’s earlier. This condition applies to both the UK and Australia in case you’re financing your property in RM (Malaysian Ringgit).

    Just giving you an example, if you’re 45 years old when applying for a loan you can have a loan tenure of 20 years, if the property is financed in GBP (45 + 20 = 65).

    Age of the applicant

    18 – 65 years old.

    Other requirements

    Malaysian citizens or permanent residents only. You should also be a Private Wealth Customer and Preferred Banking Customer.

    In order to qualify to be a Private Wealth Customer, you need to have at least RM 1,000,000 as assets under management (AUM) at CIMB Bank.

    Maybank

    Maybe you’ve not heard about Maybank as it mainly operates in Malaysia and Southeast Asia. Still, it’s the biggest bank in Malaysia with offices in a number of foreign countries like the UK, United States and more. The bank established in 1960.

    The same as it goes with CIMB Bank, Maybank actively promote overseas property loans to locals and permanent resident foreigners in Malaysia. Below I’ve included the general conditions that apply.

    Countries and cities served

    -Australia: Melbourne, Sydney and Perth. The property may be located within a 15km radius of the Central Business District (CBD).

    -The UK: London zones 1, 2 and 3.

    -Singapore

    Property types

    -Melbourne, Sydney and Perth: Completed or under-construction residential properties. You must buy the property directly from a developer. In addition, you need to buy the property for investment purposes or to reside in yourself, you can’t buy a property to let your children live there while studying in Australia for example.

    -London: Residential and commercial property, that will be used for investment purposes or owner occupation.

    -Singapore: Completed or soon-to-be developed residential properties for investment or dwelling purposes.

    Financing

    -Melbourne, Perth and Sydney: Up to 75% of the property value, in Ringgit (RM).
    -London: Up to 75% of the property value, in Ringgit (RM).
    -Singapore: Not mentioned.

    Loan tenure

    For both Australia, Singapore and London, you can borrow money with a tenure of up to 30 years, or if you’re up to 70 years old, whatever is earlier. For example, if you’re 40 years old, you can enjoy a maximum tenure of up to 30 years.

    Age of the applicant

    18-70 years old

    OCBC

    OCBC is a Singaporean bank that and founded in 1932. It mainly operates in Singapore and other Southeast Asian countries but also has offices in the UK, Australia and the US. It’s currently one of the biggest banks in Asia and famous for offering overseas mortgages to high-net individuals who wish to buy properties in countries like Australia.

    Countries and cities served

    -The UK and Australia.

    Property types

    Residential properties, investments only, not for dwelling purposes. The building can be completed or under construction.

    Financing

    There’s no minimum amount set for neither the UK nor Australia and you can borrow up to 70% of the property value.

    Loan tenure

    The repayment period is generous and up to 35 years. You can be maximum 70 years old when the loan tenure expires, whichever is earlier.

    Age of the applicant

    18 – 70 years old.

    RHB Bank

    RHB Bank is headquartered in Kuala Lumpur and established in 1994 under the name of DCB Holdings Berhad. It’s one of the biggest banks in Malaysia with almost 300 local branches in Kuala Lumpur itself. Other cities and countries served include Singapore, Vietnam, Thailand, Cambodia, Brunei, Indonesia, Laos and Hong Kong.

    Unfortunately, RHB Bank only offers overseas property loans to Singaporean citizens or permanent residents who want to buy property in Malaysia.

    What documents do I need when applying?

    Different requirements might apply depending on banks and regulations update frequently, therefore, I recommend you to contact your chosen bank to confirm what documents you need to prepare. The following documents are required by CIMB Bank when you apply for their overseas property loan:

    • Filled in application form (signed)
    • Copy of passport or identity card
    • Latest 3 months payslip/ BE or B form/ EA form/ EPF statement
    • Booking receipt or contract of sale
    • Last 6 months bank statements
    • In case you’re self employed, the latest 2 years audited financial statements and 6 months company’s bank statements

    What happens if the valuation report shows a lower amount than the purchase price?

    If the valuation report shows a lower value than the purchase price, the loan amount needs to be reduced according to the value in the valuation report. This is a normal practice when applying for an overseas property loan.

    Can I use my loan for valuation and legal fees?

    Some banks, for example Maybank, let you use the property loan to pay for valuation fees and legal services which is highly beneficial to avoid paying a Conveyancing lawyer or Valuer a with your own money.

    When will my bank pay the developer?

    Normally, the money is disbursed to the developer’s solicitors when the project has been successfully completed, the title is available for registration and the developer can provide a Certificate of Completion.

    Process when applying for an overseas property loan

    First and foremost, you need to find a property and make sure that you get a so called In-Principal-Approval from a bank. This will assure that you’re covered financially and can afford to pay for the property. When contacting a bank, they will ask you questions to know more about you, to understand how much you need to get in loans and where you want to buy.

    After, you will get in touch with the bank’s office in the country where you intend to buy the property, for example in the UK or Australia. When you’ve secured the loan, you can continue and sign the SPA (Sales & Purchase Agreement) with the seller, you should get help from a local Malaysian conveyancing lawyer during this process. He or she should also help you to perform a title search and to register the property in your name, beforehand.

    Conclusion

    Overseas mortgages are designed for local citizens or PR holders who wish to buy properties overseas, often in the UK or Australia. You can normally buy property in cities like Sydney, Melbourne, Perth with a max radius of 1.5km from the Central Business Districts.

    In London, areas are restricted to zone 1,2 and 3. This is to assure that you can earn greater rental incomes and that the property value will be kept high, as these are prime areas.

    The loans are mostly dedicated to high-net individuals who need to deposit a higher amount of cash in the bank, in the case of CIMB Bank, you need to have at least RM 1 million (around USD 250,000) as Assets Under Management (AUM).

    As regulations change frequently, I recommend that you contact each bank individually for up to date information.

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