Mortgage LTV Ratio & Margin of Finance for Home Loans

In Malaysia, it is normal to expect 90% LTV ratio for a residential mortgage loan (more commonly known as a housing loan). But Bank Negara closely regulates the LTV ratios for residential mortgage loans to prevent uncontrolled speculation.

  • If a person has 2 or more existing residential mortgage loans, LTV is capped at 70% for the next housing loan

Additionally, there is a My First Home Scheme (Skim Rumah Pertamaku) to help first time home buyers who qualify for the scheme to obtain up to 100% LTV.

Aside from Bank Negara regulations, it is also common for banks to limit the LTV ratio for the following types of home loan applications based on their internal credit policies:

  1. Purchase for investment
  2. More than 1 existing housing loan
  3. Land for custom built houses
  4. Developer projects that have been known to give discounts to customers
Commercial Property Loans

Bank Negara does not impose a LTV cap on commercial property loans. However, it is more common to get only 85% margin of finance as banks are more cautious in financing commercial properties. But 90% margin of finance is still possible.

Do note though that banks tend to be more picky with the types of commercial property being financed, and may curtail the margin based on its usage (E.g. Office / Serviced Apartment / Shop Lot / Shopping Mall).

Foreigners & Nationality

Banks are more cautious with those with less ties to Malaysia. So foreigners tend to have more LTV restrictions on their home loans.

NationalityPlace of Work & ResidenceExepected LTV ratio
MalaysiansAbroadUp to 90%
SingaporeanSingaporeUp to 85%
Other ForeignersMalaysiaUp to 80%
Other ForeignersAbroadUp to 50%
MM2H ApplicationMalaysia My Second HomeUp to 80%
Legal Fee and Valuation Financing

Aside from financing the property, it is common for banks to allow up to 5% additional margin of finance on the loan to finance the borrower’s loan documentation and valuation costs.

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