Now that you have selected to purchase my apartment for sale Kota Kinabalu you will need to find out how much you are eligible to borrow to complete the purchase.
The Mortgage selection process is a different experience altogether as property financing in Malaysia is a very competitive business and you need to start 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 your home country.
How to start and what to look for
The first thing to look for is the Margin of Finance (MOF). For Malaysians the MOF is M90% (but Bank Negara Malaysia has proposed a cap of 80% that has yet to be confirmed. For Expats the MOF is divided into two 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 rises to 85% depending on income, documentation and location of property. However it is important to know that all loans are based on a bank valuation of the property. The MOF is based on the purchase price or the valuation -whichever is the lower.
The next thing to look into is the Interest Rate, This is the most important feature of the Mortgage. however there are 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 Prinicpal at the end of the day) - as a loan amortises 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 administration charges for the bank. Due to the competition, interest charges for mortgages for the moment is below the BLR. Loans with fixed rates are also available if you prefer not to depend on the BLR.
There are of course other features of a Mortgage to consider such as lock-in period(the minimum period of the loan one has to service), Facility Type(Term Loan, Flexible Loan, or Overdraft Facility),Repayment Terms and so forth. these features vary from bank to bank and make up an important part ofthe Mortgage selection process.
I will deal with he Mortgage process in my next post.