Malaysia Housing Loan Calculator

How home loans work in Malaysia

Home loans use the reducing-balance method: interest is charged only on the outstanding balance, so as you repay, less of each instalment goes to interest. This is far cheaper than the flat rate used for car loans.

Most Malaysian banks finance up to 90% of the property price, so you need at least a 10% down payment, plus legal fees and stamp duty on top.

A worked example

On a RM450,000 home with 10% down, you borrow RM405,000. At 4% over 35 years the instalment is about RM1,793 a month - and you repay roughly RM753,000 in total, of which RM348,000 is interest. Over a long tenure, interest can approach the size of the loan itself.

The tenure trap

Stretching the tenure lowers the monthly instalment but raises the total cost sharply. On that same RM405,000 loan at 4%:

Those five extra years save about RM140 a month but cost roughly RM57,000 more in interest. If you can carry the higher instalment comfortably, the shorter tenure is almost always the better deal.

Things to know

• Tenure can run up to 35 years, or until the borrower reaches about age 70.
• Rates float - most home loans track the bank base rate, so your instalment can change over time.
• Budget for stamp duty on the transfer and the loan agreement as well.
• Overpaying genuinely works. Because interest is charged on the outstanding balance, even small extra payments cut total interest and shorten the loan.
• Your DSR decides approval. Banks weigh all your monthly commitments against income, typically wanting the total below roughly 60-70%.