Whether you are purchasing a developer or sub sale unit, the requirements are similar.

The first step to procuring a loan is to first apply for it. When you apply for a loan, there’s a chance the bank might reject your application, and that’s not something you want to hear when you’re that close to getting your dream home.

While you can’t be certain that the bank will approve your application for a housing loan, you can significantly increase your chances by following these guideline:

1. Healthy Credit Reports

One of the first things a bank will check on when you apply for a housing loan in Malaysia is what your credit reports look like and they’ll refer to the information provided by credit reporting services such as CCRIS and CTOS, which tells them if you’re in good financial standing or not. CTOS stands for Credit Tip-Off Service, and it’s different from CCRIS because CTOS a privately-owned company while CCRIS is governed by BNM.

CCRIS stands for Central Credit Reference Information System. It’s a system created by the Credit Bureau of Bank Negara Malaysia (BNM), that provides standardised credit reports on a potential borrower. BNM is provided with updates every month from other banks, insurance providers, and utility companies to compile the information that comprises your CCRIS report.

A CCRIS report consists of information such as:

• Outstanding Credit(s): This is a summary of all your outstanding loans and credits. including those related to joint borrowing, and relevant business or commercial loans.
• Special Attention Account(s): These are impaired loans that have been flagged by a financial institution for special monitoring due to fallen creditworthiness of the borrower. This means that special measures have to be taken in order to recover that loan.
• Application(s) for Credit: All of your pending credit applications, whether approved or rejected in the past 12 months.

All outstanding monthly instalments will be recorded in column N that says “Installment in Arrears for Last 12 Months”.

To get your CCRIS report, you may either:

• Request in person – You can request a copy of your credit report in person at the BNM Head Office and BNM Regional Offices.

• You must present an application formalong with a copy of your MyKad and requested supporting documents such as driving licence or passport. Alternatively you can access this report automatically using a kiosk at participating BNM branches. Simply insert your MyKad into the credit kiosk, provide your thumbprint, and once your identity has been verified, you can print a CCRIS report.

• Request by correspondence – You can mail, e-mail, or fax your request for a report to BNM TELELINK, Bank Negara Malaysia.

• It’s important to check that you’ve attached all requested documentsas part of your correspondence.

• Get it via online – It’s now possible to view your CCRIS report online via the eCCRIS service.

• This helpful online platform provides simple, secure access to your CCRIS report whenever you need it. The service is free to use, but requires initial registration in person at any branch of BNM Malaysia. Once you’re registered, you can check your CCRIS report at your leisure through the dedicated online eCCRIS portal.

CTOS provides a credit report that’s widely used by banks and other financial institutions in Malaysia your repayment capabilities and creditworthiness. Financial institutions usually use multiple credit reports to determine your financial health, and CTOS is one of the most widely used reports in conjunction with CCRIS.

CTOS derives information about you from various public sources, such as the Malaysian Department of Insolvency (MDI), Registrar of Societies(ROS), Companies Commission of Malaysia (CCM), and more.

The information contained in a CTOS report includes:

• Verification of your identity: Your name, IC number, and company registration number
• Directorships and Business Interests: Your holdings in incorporated companies
• Legal Actions Against: Whether anyone has taken legal action against you, or whether you have filed for bankruptcy
• Trade Referees and Subject Comments: This section is where you can leave your own comments regarding your financial status.

Out of all complicated sections, section 4 which says “CTOS score” matters most. It shows a score that takes into account of all credit information. It works the exact opposite as CCRIS. For CTOS, a higher credit score indicates better creditworthiness. To get your CTOS report, you’ll just have to create an account on the official website of CTOS and access your report online.

It’s important to remember that neither CTOS nor CCRIS would blacklist individuals with bad financial records, and they don’t form any sort of opinion on your financial status. They merely provide factual information regarding your creditworthiness.

Make Sure Your Documentation Is Airtight

1) Preparing The Required Documents

While the required documents are all approximately the same, they do differ whether you are an employee, self-employed, running a business or working abroad.

Below is a complete list of documents that an individual will need to prepare when purchasing a property in Malaysia, whether they are Malaysian or a foreigner. Banks require paperwork from you when you apply for a loan. The basic list includes:

1.1 Malaysians Working In Malaysia – Employee

Malaysian employees will only need to prepare personal documents to show their credit-worthiness, whether they are a fixed income earner or earn on commission basis.

• Identification Card – NRIC (copy)
• Property Booking Receipt
• Vendor Sales & Purchase Agreement/Title (copy)/New Sales & Purchase Agreement
• Latest 3 months pay slip (for Basic Salary)/Latest 6 months pay slip (for Basic + Commission Earner)
• Latest 3 months personal bank statement (for Basic Salary/Latest 6 months pay slips (for Basic + Commission Earner) which show your salary credited as per pay slip
• Latest EA form
• Latest KWSP statement
• Income Tax – Latest Form B/BE with payment receipt acknowledgement
• Deposit statement eg. Fixed Deposit, ASB or Bonds (if any) – to show how strong your emergencies fund it is

1.2 Malaysians Working In Malaysia – Self Employed

Self employed individuals are usually those who are running their own business. These individuals will also need to show their proof of credit-worthiness.

• Identification Card – NRIC (copy)
• Property Booking Receipt
• Vendor Sales & Purchase Agreement/Title (copy)/New Sales & Purchase Agreement
• Latest 6 months Company Bank statement
• Latest 6 months Personal Bank statement
• Deposit statement eg. Fixed Deposit, ASB or Bonds (if any) – to show how strong your emergencies fund it is
• Business Registration

• A completed loan application form
• A clear copy of your NRIC
• A copy of the Sale and Purchase Agreement (SPA), booking form, or letter of receipt from the seller or developer
• A copy of the individual title (where required)
• Your income statement (3 to 6 months worth of payslips, salary crediting statements, etc.)
• Your EA form (a yearly Remuneration Statement that states your income for the previous year.)
• Your KWSP statement
• Your income tax statement
• Your deposit statement (Fixed Deposit, ASB or Bonds that shows details of your emergency finances)

Note that income documentation is one of the most common things that may cause an application to get denied.

Different banks have different requirements for income documentation, and uses different methods to derive your income from the documents submitted.

This means that the same document can result in a variance of up to 50% from bank to bank.

2) Getting Familiar With Property Terms

Upon submitting your loan application to your desired banks, the next step would be to await the Letter of Offer.

This will typically take at least a week. Among some of the more technical terms that the purchaser will encounter which they should familiarise themselves with first, are as below:

2.1 Type Of Loan

There are a few different types of mortgage loans, depending on what your requirements are (Standard Home Loan, Flexi Home Loan, Home/Personal Loan Package and the Islamic Home Loan).

• Standard Home Loan

The Standard Home Loan is the most common type of loan in the market, as indicated by its name. The loan’s interest rates are calculated based on either fixed or floating interest rates. The advantage of fixed interest rates are that the borrower will not be affected by the market’s fluctuations; however, the floating interest rates have its own advantages too. For example if the market rate were to drop, the interest rates would also reduce.

• Flexi Home Loan

Flexi Home Loans are a favourite of those with extra cash. These individuals can choose to put in additional cash into their mortgage loan account, which will in turn mitigate their interest rates. The cash can however be withdrawn out at any given time, giving them the flexibility to use the funds as they wish – hence the loan’s name Flexi Home Loan.

• Islamic Home Loan

The Islamic Home Loan is similar to the Standard Home Loan, except that it utilises the Base Finance Rate (BFR) to determine how much the bank earns from lending out the money.

2.2 Amount Of Loan

The amount of loan that is mentioned in the Letter of Offer is very important, as it will state how much loan the purchaser is entitled to from the finance institution. The remainder of the money for the property will have to paid for by the purchaser.

The Letter of Offer will also state the description of the property that the purchaser is buying, whether it is a single storey terrace house, single storey superlink or so forth. The description of the property will be stated in detail, up to the land area and size of the property. The longest term for a property loan is 35 years. The Letter of Offer will state how long is the bank giving the purchaser to make their repayment.

3) Processing/Set Up Fee

As with all legal documents, a bank loan also requires processing fees which are also known as set up fees. The Letter of Offer will state clearly how much the bank will be charging for setting up the loan. The banks will also charge a small fee monthly, known as the Monthly Service Charge, and this amount is usually not high. Also stated clearly in the Letter of Offer will be the repayment schedule, and the interest rates that the customer will have to pay.

4) Security Documents

For residential properties with title, the security documents that need to be furnished are the Charge Annexure, Facility Agreement and Charge instrument in Form 16A. On the other hand, properties without a title will require the security documents of Power of Attorney, Deed of Assignment and the Facility Agreement. In lieu of a weak financial background, the banks may require additional security documents. Such examples of additional documents include an assignment of rental proceeds, guarantors or a charge over the fixed deposit.

5) Prepayments

This occurs when the borrower makes an excess payment. The Letter of Offer will state what the additional payment is entitled to. Typically in a Flexi Home Loan, the interest rate of the property will decrease accordingly. For a Standard Home Loan, the borrower will need to check if they are entitled to any benefits if they were to partially or fully settle their outstanding loan early.

6) MRTA/MLTA

These two are among the most common housing insurance. Borrowers can opt to make them part of their mortgage loan if they wish. The above terms are among some of the most commonly used terms in a Letter of Offer, and are also the ones that a property buyer should pay attention to when going through the terms and conditions of their Letter of Offer.