Malaysia is one of the top spots for retirees and investors alike. It’s not strange, buying a property here is fairly easy and the process comparatively transparent. You’ll also enjoy a great quality of life with costs that are surprisingly low. It’s not strange why Malaysia has been ranked as one of the best places to retire in the world.
A commonly asked question is how easy it is, or if it’s even possible, to get a local property loan as a resident or non-resident foreigner. I decided to do research on the matter and have presented the results in this guide.
Let’s have a look.
How can I obtain a property loan as a foreigner?
Malaysia has some of the most generous and favorable ownership regulations for foreigners in Southeast Asia (it’s basically the only country that allows foreigners to buy land, as I don’t count Singapore). Still, banks can be a bit restrictive handing out loans, this is mainly due to the current economic climate and the recession which hit hard after 2008.
I’ve personally been in contact with a number of big banks in Malaysia, and I can see a clear pattern: be locally employed, a permanent resident or an MM2H visa holder, and things will become remarkably easier. The same it goes in Hong Kong, where your source of income should preferably be in Hong Kong, to increase your chances of getting a loan.
If you haven’t heard about the MM2H visa before, you can find more exhaustive information by reading this interview with Andy Davison.
Simply put, the MM2H visa is a government backed visa program which allows foreigners to stay in Malaysia for up to 10 years. There are a few countries that offer similar visas in the region, a strong proof that Malaysia welcomes foreign investors.
To qualify for an MM2H, you simply need to deposit RM 300,000 (if you’re under 50 years old) in a local bank account. If you’re over 50 years old, the amount is set to RM 150,000. The benefits are worth taking notes on. Not only will you be allowed to buy remarkably cheaper properties in most states, as the Malaysian government has introduced minimum investment requirements to protect local buyers.
You’ll also notice that it’s significantly easier to get a local property loan from local banks.
Keep in mind that some banks might require that you visit a local branch in person, for them to make a personal evaluation. You’ll also need to provide a number of documents, such as proof of income, employment letter, bank statements, passport and more to make a complete assessment (more about documents needed later in this article).
How much can I get?
As mentioned above, banks have become more restrictive due to the economic climate and since the financial crisis in 2008. The same as it goes in Singapore, non-resident foreigners will be subject to lower LTV ratios (Loan To Value) that normally range between 50-60%. The LTV is simply a rate in percentage, showing how much the bank will pay, when multiplied by the purchase price, or valuation price, whichever is lower.
If you’re an MM2H holder or a permanent resident, which is a requirement from some banks, the rates will be higher and sometimes reach up to 70%.
Your source of income, residential status, age and whether you have existing loans will have a big impact if the bank will grant you a loan, and the loan amount.
Process when applying for a property loan
The application process is very similar between locals and foreigners, something we’ve seen in places like Hong Kong and Singapore. Normally, the following steps are included when applying for a local property loan in Malaysia:
a. Contact a handful of banks and see if they currently offer loans to non-resident foreigners. If you have a work or residence permit in Malaysia, the chances will increase significantly.
b. Be prepared to visit the bank in person, for them to make a personal evaluation. You’ll need to prepare a number of documents before the meeting, for example, employment letter, passport, bank statements and more (see above).
c. Get pre-approved home loan applications, also referred to as In-Principle-Approvals, which will guarantee the maximum loan amounts from banks. It’s important to secure your financing, before making an offer on a property.
d. Select a property and pay a booking fee of 2-3% for established properties. You need to keep the receipt as evidence for the bank to grant you the loan.
e. After signing the SPA, you pay an additional 7-8%. After, you normally have 3 months to finalize your financing with the selected bank. If you work with a developer, it’s common that they appoint you a conveyancing lawyer and a bank.
CIMB property loans for foreigners
As explained in my separate guide about getting an overseas property loan in Malaysia, CIMB was established in 2006 and evolved from Bumiputra-Commerce Holdings Berhad. It’s one of the biggest banks in Malaysia.
CIMB bank offers loans to foreigners, but require that you’re a permanent resident. You’ll also notice that they don’t provide much information over the phone, not in comparison to banks in Singapore or Hong Kong.
According to CIMB’s website, they offer loans with an LTV of up to 90%, with a loan tenure of 35 years (keep in mind that you normally need to be maximum 65 years old when the tenure expires).
You’re capable of buying both established and off-plan property with a home loan from CIMB.
Maybank property loans for foreigners
Maybank was originally established in 1960 and currently operates in Southeast Asia, it’s the biggest Malaysian bank.
According to the verbal information received from Maybank, you need to be a local citizen or permanent resident to get access to their loans. However, according to Maybank’s website, they offer a loan called MaxiHome which is available to non-residents.
The loan margin for the package MaxiHome is up to 95% with a tenure of up to 35 years, where you need to be maximum 70 years old at expiry. In case you’re a non-resident, the rate will probably be significantly lower.
I would recommend that you contact Maybank for a personal assessment and to receive the latest information.
UOB loans for foreigners
UOB is a Singaporean bank, founded in 1935, and one of the biggest banks in Asia.
UOB informed that it’s possible to get a loan as a non-resident foreigner, but it will be comparably difficult. Preferably, you should either work or be under the MM2H visa program explained above (where the same loan conditions apply).
The tenure will in that case be 50-70% with a tenure of 30 years, up to the age of 65 years of the applicant. You’ll also need to open a bank account and visit the bank in person to finalize the loan, which is a common practice for other banks as well.
HSBC loans for foreigners
HSBC was founded in the UK and is one of the biggest banks in the world.
According to verbal information received over the phone, HSBC Malaysia offers loans to non-Malaysian customers. But you need to walk into local branch for more information, they can’t provide information by phone.
If you visit a local bank, be sure to contact them in advance to confirm what supportive documents they need to make an evaluation, for example: Passport, bank statements, proof of employments and more.
In addition to the above mentioned banks, you can find a number of other banks that are worth contacting. Some of the biggest are:
- Standard Chartered
What documents do I need to bring?
According to CIMB’s website, you need to provide the following documents when applying for a loan (salaried applicant):
- Passport photocopy
- Latest 3 months’ salary slip
- Latest 3 months bank statements showing salary crediting
- Sale & Purchase Agreement / Booking form from developer
The SPA will be provided when finalizing the loans. My personal experience is that you also need to provide the following documents (at the minimum).
- Address proof (for example, utility bills)
- Documentation showing existing debt obligations
In case you’re self employed, the following documents should be provided:
- Passport copy
- Business registration
- Latest 6 months business bank statements
- Latest Form B with tax payment receipt
- Sale & Purchase Agreement / Booking form from developer
Confirm with the bank for your own personal assessment.
Malaysia is open to foreign investors, you can buy and own everything from apartments, villas and land (even if some land types are excluded).
Still, it’s somewhat more difficult to apply for property loans in comparison to Hong Kong and Singapore, as Malaysian banks tend to require that the applicant is a permanent resident or have a local work permit. Still, Hong Kong banks focus much on your source of income, which should preferably be in Hong Kong.
The banks can normally offer rates of 50-60% of the purchase price, or valuation price, whichever is lower. It’s important that you contact a handful of banks upfront to get pre-approved mortgages, also referred to as In-Principle-Approvals.