The margin of financing determines how much a Malaysian bank will lend you relative to the property value. Get it wrong and you could face a larger-than-expected cash payment at the last minute. Here are the rules, exceptions and how to plan your down payment.
BNM Margin of Financing Rules
| Property | Max Loan (% of Value) | Min Down Payment |
|---|---|---|
| 1st property | 90% | 10% |
| 2nd property | 90% | 10% |
| 3rd property onwards | 70% | 30% |
| Properties priced above RM1M (non-primary) | 70% | 30% |
Bank Negara enforces a 70% cap on the 3rd property and above to cool property speculation.
Loan-to-Value vs Margin of Financing
These terms are used interchangeably in Malaysia. Both refer to (Loan Amount รท Property Value) ร 100. Banks lend based on either the purchase price or the bank's valuation โ whichever is lower. If you overpay, the gap is your problem. Use our ๐ Mortgage Calculator to plan your down payment precisely.
What Counts as Your "First" Property?
Your count includes all properties currently in your name, including inherited properties or properties gifted via Hibah. Properties with outstanding loans registered in your name count. If you own a property with your spouse under joint tenancy, it counts as 1 property for both of you.
Strategies for 3rd Property Buyers
- Consider putting the property under spouse's name if this is their 1st or 2nd property
- Use a company (Sdn Bhd) structure โ different rules apply but RPGT implications differ too
- If cash allows, buy outright or pay down an existing loan to change your property count