Investment Finance In Malaysia
You will need to examine the various financial options available to you for your Malaysian property investment. Below is an overview of the products and financial schemes that are currently available.
Brokers and property purchasers in Malaysia confirm that Malaysian banks are eager to issue mortgages to overseas citizens. Repayment mortgages are generally issued up front and local terms are often very liberal when compared with other countries.
Interest rates are currently amongst the lowest in Asia, with the current base lending rate at 6.75% (Sept. 2008), and mortgages available from 4.75%. Despite Malaysian inflation now hitting 8.5% (Sept. 2008), the central Bank Negara will not be raising interest rates.
The recent financial turmoil of the giant American International Group Inc. (AIG) will not be affecting its Malaysian operations, AIA, due to the fact that they are a locally incorporated company and assets are invested locally. Meanwhile a spokesman for Bank Negara reassures: “we will closely monitor all financial institutions under our review and take all the necessary actions to maintain the stability of our banking and insurance industry”.
Up to 80% LTV Malaysian Ringetts mortgages are granted on the proviso that the property value is MYR 100,000 or more. Depending on the lender, terms can range from 5 to 30 years, or up to 60 or 65 years of age. Interest rates can be fixed, capped but mostly variable.
The mortgage application process for foreigners can take approximately 2 to 3 weeks but it sometimes takes longer and you would be well advised to extend the three month period from your initial deposit payment to final signature of the Sale and Purchase Agreement, to allow for normal delays in obtaining your Malaysian loan.
Non-status/ self-certification mortgage facilities are not available in Malaysia; therefore, you will need to prove your income:
- Employed borrowers - last six months payslips; P60; employer’s reference; and your last 6 months personal bank statements.
- Self-employed borrowers - copies of your audited accounts; last 12 months business and 6 months personal bank statements.
Cost: the banks typically charge an arrangement fee of 2% and your repayments are on a capital and interest basis or interest only.
Some off-plan developmentsin Malaysia offer finance options and installment plans.The charges applicable vary according to developer and repayments are usually indexed. Sometimes the developer can often offer the most competitive finance options to investors and these are certainly worth considering when looking at mortgage alternatives to those from their own countries.
As always, before making a commitment, we recommend you discuss your investment strategy with a lawyer, a reputable property agent with experience in the area and even a financial advisor.
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Put simply, equity release is a method of releasing cash from the home without having to sell up and move house. If you are in your mid-50s or older and own your own home, you may be able to get a cash lump sum, a regular income, or both, by using an equity release scheme based on the value of your property. These schemes can be helpful in certain circumstances to raise money for a mortgage to finance your Malaysian property investment.
Not everybody falls into a category and some investors will need to raise finance in an alternative fashion to equity release or mortgage options. We can inform you of other borrowing facilities available to investors of Malaysian property, while taking into account your individual circumstances.
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