Who wouldn’t want to own a piece of property in Malaysia? Living abroad is great, but there’s no place quite like home. Are you one of the millions of Malaysians overseas missing the vibrant city lights of Kuala Lumpur’s KLCC?
Perhaps hunger is driving the way, and you’re tempted by the island food haven of Penang? Or maybe, it’s the breath-taking beauty of Pahang’s Genting Highlands that stirs your heart? This is a country with so much to love.
If you’re wondering whether you can access and apply for home loans to acquire the property of your dreams… the great news is – yes, you can!
There are some important questions you need to ask yourself first, and that the banks will ask too, so hold onto your hats, and get ready to explore the question of a home loan for property for Malaysian nationals overseas.
Can I apply and what do I need to know?
Nationality is critical, and an important part of your eligibility. An NRIC/MyKad showing your place of birth in Malaysia is the clearest proof of nationality. A Malaysian passport is an alternative option which banks should accept as proof of identity too.
It’s worth pointing out that a foreigner already living in Malaysia is equally able to apply for home loans to purchase property in our country.
But for today, we’re going to focus on the Malaysians who’ve left, and are now looking longingly back at property in their birthplace!
Am I restricted in the loans I can apply for?
No, not directly. You’re eligible to apply for the same type of financing that a Malaysian in Malaysia can apply for.
There are, of course, certain assessment criteria which could make it more challenging for you to be approved, and we’ll explore that a little more later.
The important thing here is, that you can apply for the same Malaysian loan as the rest of the locals!
Need to work out what you can afford? Why not check out PropertyGuru’s housing loan calculator here!
How am I going to handle everything from abroad?
Don’t you worry about that! First up, PropertyGuru has you covered when it comes to home loans. You can easily compare the various interest rates in Malaysia, thanks to our handy home loan comparison tool.
Next up, it’s always important to engage an accredited property agent when it comes to supporting you in the purchasing process involving something as important as property. That’s perhaps even more crucial when you’re undertaking the activity from overseas.
These qualified professionals have the inside scoop on local market conditions, as well as the expertise to match up your expectations and desires with property in particular areas.
That can also include sharing their extensive experience on the home loan application processes. It may be that as a Malaysian, you’ve got friends or family that can recommend just the right agent for you!
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What’s different when applying from overseas?
So we’ve talked about your eligibility to apply, but that doesn’t always mean the same thing as chances of approval.
There are certain technical challenges when it comes to applying from overseas. Communication and opportunity to assess properties can be a big one to start with.
Simply connecting with an agent across time zones, and finding a way to somehow assess properties when it’s nearly impossible to physically visit them, are both big hurdles.
Connecting with a bank or your agent to iron out any paperwork snags can also be a big challenge with a global property deal.
That’s not to say they can’t be overcome through a great property agent whom you trust, potential trips home, as well as good planning and administration around clear communication.
A more technical hurdle comes from banks trying to assess your financial situation in regards to the risk of offering you a loan.
If you work for a big, well-known Malaysian company, with a track record of payslips, banks have a much better grasp on your employment stability and income.
This is compared to their ability to assess you if you have three payslips written in Arabic from a small family business in Dubai that they’ve never heard of.
It’s easy for banks to undertake a CCRIS credit check for residents based in Malaysia. This gives them a comprehensive understanding of your risk profile. Now, it’s a lot harder to do when you’re overseas.
It’s for this reason that housing loan applications in this country require at least one verifiable financial commitment in Malaysia.
That means, regardless of your Malaysian nationality, you’ll require a financial commitment such as an existing personal loan, credit card, or home loan.
This is an important part of banks being able to assess your credit risk. However, there are different factors which can contribute to your risk assessment.
If you’re working for a major multinational company, or recognised Malaysian company with offices overseas, then you’re much more likely to have acceptable financial information than that family business in Dubai we mentioned earlier.
Your current nation of residence will also factor into that risk. First of all, it’s much easier for Malaysian banks to understand the financial circumstances in a neighbouring country like Singapore, than it is in one like Mexico.
The financial links between the countries make it much easier to analyse and assess credit risk. It’s also important to consider the overall stability of a country as part of that risk.
Nations with high political or social risk, or recent history of war/instability, represent far riskier prospects in terms of a housing loan than a stable (and well-to-do!) neighbour like Singapore.
What else do you need to know about your finances?
Banks will assess your debt service ratio (DSR) as a crucial part of understanding your credit risk, and whether you can afford the value of the loan that you’re applying for. This measure checks your total monthly income against your fixed expenses.
Different banks have different limits and assessments on your DSR, but a good rule of thumb is that a majority of banks won’t go over 70%.
That might change if, for example, you already own a multi-million Ringgit mansion in KL that you’re keeping as security against your loan. However, there’s not a lot of people who can show off that kind of security.
That means if you’re working abroad, you need to be able to show both your guaranteed income, and demonstrate a history of your monthly expenses.
We’re sure most already know this, but we’ll say it anyway – always keep your financial records up to date, and appropriately managed!
Is there a best loan for people overseas?
Picking the right home loan is a major decision. Each individual’s financial situation is unique, from the deposit amount they’ve got saved, right through to their employment circumstances. That means there’s no single loan which is ‘best’ for everyone.
You need to look at the types of loans available, and whether you want basic term, semi-flexi, or full-flexi loan terms.
In addition, there’s a need to assess how each of those terms match your own investment criteria, as well as the value of the property you’re looking to buy.
If in doubt, you should always speak to a professional to help inform your decision. A great place to start building that understanding is with PropertyGuru’s guide on Everything You Need To Know About Home Loans In Malaysia.
What do I need in order to apply for a loan?
Let’s get into the terrifying detail of paperwork! You’re going to need some important pieces of documentation to secure your home loan in Malaysia. Don’t worry, it’s not as tough as it sounds. You’ll need:
- NRIC/Passport/Official ID
- Foreign employment documentation
- Proof of employment income
- Official evidence of income history in payslips (at least 3 months)
- Details of any foreign bank where salary is paid
- Income tax returns completed in foreign country
- Financial statements of any further income, liabilities, or assets
- Evidence of at least one demonstrable financial commitment in Malaysia
How else can I improve my chances of approval?
There are, of course, many ways you can further improve your chances of approval for a housing loan while living overseas:
- Malaysian co-applicant – Applying for a joint loan with a Malaysian co-applicant will potentially enhance your chances, as it means the loan liability is shared with a local individual who has a more easily understood risk assessment.
- Guarantor – A guarantor with significant financial assets and a good credit score will definitely boost your chances of being approved for a home loan.
- Enhanced down payment – The minimum down payment amount in Malaysia is 10% of the total loan amount. If you’re able to contribute a larger upfront amount, your total loan value will be lower, and thus your assessed risk rating will be improved. It also demonstrates a previous record of good financial management.
- Existing assets – If you have existing assets such as a current Malaysian property to offer as security, your financial risk can be balanced more easily, meaning less risks for the bank.
- Healthy credit score – Now, no matter what country you happen to be based in, they would have their own version of the CCRIS or even CTOS. If you’re able to get your credit rating evaluated beforehand from the country that you’re currently working and living in, you can also submit that as proof (especially if it’s a good score!) that you’re someone who’s responsible and creditworthy. For example, in the UK, banks will calculate your score using information from credit reference agencies like Experian, Equifax and TransUnion.
Thinking of taking the next step towards a housing loan in Malaysia? Here’s a handy guide to What You Should Know Before Applying For A Housing Loan In Malaysia.
Disclaimer: The information is provided for general information only. PropertyGuru International (Malaysia) Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.