Key factors in evaluating home loan applications

March 17, 2017
Kuala Lumpur, Friday, 17 March 2017:- The Association of Banks in Malaysia would like to clarify a recent comment regarding the different statistics on housing loan rejection rates as reported by the banks and developers. Such differences may be due to differing statistical approaches used by each industry. For banks, the approval rate in 2016 is high at 73.8%. The approval rate takes into account housing loans approved by banks and accepted by the borrowers as well as housing loans approved by banks but subsequently cancelled by the borrowers. Banks also generally do not include applications with incomplete documents when calculating the approval/rejection rate.

As with other loans, one of the key factors that banks will consider is the capability of the applicant to repay the loan. Applicants that meet the bank’s criteria will not be rejected.

A borrower will have a higher chance of success in his/ her application by:

  • knowing how much he/she is eligible to borrow to purchase a property, based on his/her existing income, expenses and other loan repayment commitments, by checking with the bank.
  • ensuring that he/she is not over-leverage and have the ability to prove financial capability to make monthly repayments. As a general rule, the monthly home loan instalments and other debt commitments such as hire purchase financing should not exceed 40% of the gross income.
  • having a good credit record by keeping all payments up to date on existing credit facilities/ liabilities.
  • fully and accurately disclosing all material information with regard to his/her financial position when applying for a home loan.
Banks are constantly improving their products and services to ensure they are able to cater to evolving customers’ needs. With a wide range of home loan products available in the market, it is crucial therefore that when customers are shopping around for a loan, they must identify the loan features which are important to them. Home buyers must also be aware of the factors that banks take into account in evaluating a housing loan application, which may include the location of the property, the applicant’s credit rating, conduct of existing loan accounts and capability to service the debt.

For first time home buyers, there are financing options such as Government schemes including “Skim Rumah Pertamaku” (SRP) which offer assistance in their property purchase. They may also want to consider applying for projects under “Perbadanan PR1MA Malaysia” which offer the opportunity for middle-income households to own a home in key urban centres. There are also rent-to-own schemes available under PR1MA.

Members of the public who may have enquiries or complaints related to housing loan matters are welcomed to contact us at our ABMConnect hotline by dialing 1-300-88-9980, or emailing us at eABMConnect by logging on to our website,
ABMConnect | Toll-free on 1300-88-9980

ABMConnect provides an avenue for consumers to clarify any doubts and verify information on conventional banking issues.