A Guide to Mortgage Plans for Homebuyers in Malaysia

Housing loan checklist documents you need to prepare if youre an employed person

When purchasing a home, most people rely on loans from banks to finance their dream. Just like shopping for a perfect pair of shoes, there are various mortgage options available in Malaysia. To help you choose the best fit, here’s a list of basic mortgage plans and some essential information to consider.

1. Term/Conventional/Fixed-Rate Home Loan

Best for: Those with a fixed monthly income who want predictability and no plans for early repayments.


What: A term loan follows a fixed repayment schedule with consistent monthly installments throughout the loan tenure. The interest rate depends on market conditions at the time of signing the loan agreement.

Advantages: Budgeting is easier as you know exactly how much to pay throughout the tenure. It may offer lower interest rates for consumers.

To note: Early repayments don’t reduce loan interest or principal. Some banks may impose a penalty for early loan settlement.

2. Flexi Home Loan

Best for: Those with extra cash occasionally, wanting flexibility to deposit and withdraw funds from the loan account.

What: A flexi loan is linked to a current account, allowing borrowers to make advance payments to reduce the loan principal.

Advantages: Flexibility in advance payments and withdrawals without additional fees. Reduces loan interest and potentially shortens loan tenure.

To note: Monthly fee around RM5 to RM10 and limited availability in banks.

3. Semi-Flexi Home Loan

Best for: Those expecting a substantial sum for loan reduction and occasional withdrawals.

What: Similar to flexi loans, but not tied to a current account.

Advantages: Reduces principal and interest, allowing early repayment. Withdrawals for emergencies are possible.

To note: Processing fees for withdrawals and potentially higher interest rates.

4. Islamic Home Financing

Best for: Those seeking stability in monthly repayments.

What: Islamic loans work based on buy-and-sell agreements or joint partnerships, offering fixed rates with capped profit margins.

Advantages: Fixed monthly repayments for better budgeting. No lock-in period, and early settlement rebates.

To note: Calculation methods may vary between banks.

Innovative Features in New Mortgage Plans:

Banks are offering more sophisticated mortgage plans to cater to different loan requirements. For instance, AFFIN Bank’s AFFIN Home Step Fast/i offers variable rates, with only interest repayment in the first five years, followed by full monthly installments after the initial period.

Choosing the right mortgage plan is essential, so explore the available options to find one that suits your needs and financial situation. Consider consulting with experts to make an informed decision for your dream home.

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