With the latest ruling from Bank Negara that says that any purchase of 3rd property and above will be subjected to LTV (Loan To Value) of 70%, this news have come as a dismay to many investors and speculators. However, the good news is that this will not affect the first home buyers who can still loan up till 90% from the banks.
And yes, it does not affect those investors that are cash rich of course and there are many around that I can vouch for based on my experience.
One important thing to note about this ruling is that the 70% is based on the value of the house. This means that if you go to bank A and their valuation of the apartment that you want to buy is RM100,000 you are only eligible for 70% loan based on this value regardless of your purchase price which may be higher than this.
- Will refinancing of a house be considered as an additional loan? Yes, that seems to be the case as well.
- What if you bought a house in joint names and the loan is in both names? Yes, that would count as a loan for both of them individually.
- What if you bought a property and has redeemed it? Once redeemed, the loan will not appear in your CRIS report and as such will not be counted.
- Does this 70% LTV apply to commercial properties? No, this new ruling only covers residential properties. However, even though sohos and serviced apartments are under commercial titles, they will be affected as well since they can be used as residential as per ruling from Bank Negara Malaysia.
As this ruling has just been implemented, there will be many areas that will need to be clarified by Bank Negara and the financing banks – as always, there will always be issues that need to be addressed along the way. In the meantime, investors will be hoping that there will be no more “cooling measures” implemented by Bank Negara and the government as many believe that there is actually no property bubble in the making as far as Malaysia is concerned.