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Best Bank for Refinance: How to Choose the Right Bank for You

Alternative Title: Best Bank for Refinance: What to Consider

Since you’re researching how to choose the best bank for refinance, we trust that you have done your due diligence to determine if mortgage refinancing will truly benefit you.

After all, lower monthly instalments are not the be-all and end-all, if you end up paying more in the long run due to the accumulated interest in an extended loan tenure.

But are low interest rates the only criteria for choosing the best bank for refinance? Keep reading to discover the answer to this question and more in our quick guide below.

Types of Banks in Malaysia

Types of Banks in Malaysia

Before we jump right in, let’s explore a little about Malaysian banks in general. All the banks in the country can be grouped into a few categories: commercial, investment, Islamic, and non-bank financial institutions.

However, the most common types of banks are commercial banks and Islamic banks. There are about 27 commercial banks, including 19 licensed foreign banks, and 18 Islamic banks in Malaysia.

Given that there are so many banks with different packages and loan types to choose from, it can be challenging to determine which bank would suit your needs best.

But don’t worry! We’ve compiled a list of things you should consider when choosing the best bank for refinance so you can get the most out of your mortgage refinancing. Here are the five factors to help you determine which bank is right for you.

How to Choose Which Bank for Refinancing

1. Refinancing Amount

If your ultimate goal for refinancing is the get the highest loan amount possible, you should pay special attention to two things when choosing a suitable bank.

(a) Loan Valuation

First, compare the banks and see which has given you the highest loan valuation.

Since banks tend to have different criteria and ways to measure income and commitments, you can afford to look around and find one that will consider you a low-risk borrower.

In other words, you could still get a high refinancing amount despite not fitting a particular bank’s minimum requirement.

A common way banks assess if you can repay a loan is through the debt service ratio (DSR). A DSR rate is calculated by taking your total commitments divided by your total income multiplied by 100.

Considering how banks differ in how they calculate repayment ability, you can go for one with a higher DSR cap to have a better chance of getting approved.

Here’s an example:

 Bank ABank B
Gross Monthly Income Below RM5,000DSR 60%DSR 60%
Gross Monthly Income Above RM5,000DSR 70%DSR 80%

Let’s assume that your monthly income is more than RM5,000, and you have a DSR rate of over 60%.

In this example, it makes sense to choose Bank B to secure loan approval. That’s because Bank B would accept your application even if you have a DSR rate of 80%, as opposed to Bank A.

(b) Approved Loan Margin

The second thing to compare is the approved loan margins of the different banks. The best bank for refinance is one that offers the maximum approved loan margin: about 80% of your property’s value.

Read More: Building an Education Fund in Malaysia by Refinancing Your Mortgage

2. Refinancing Interest Rate

On the other hand, you may be refinancing your mortgage primarily to score lower interest rates.

Check to see if the bank you’re eyeing offers an interest rate at least 0.75% to 1% lower than your current mortgage’s interest rate. It may seem insignificant, but a tiny slash in interest rate can result in massive savings in the long run.

That said, mortgages with lower interest rates tend to have shorter tenures, which usually means higher monthly repayments. Additionally, the best bank for refinance may offer lower interest rates, but they can also be extremely picky.

You’ll find that these banks have stricter requirements for approving loans. They incur fewer risks by lending money only to applicants with excellent credit history, good credit scores, and high monthly salaries.

So, make sure you have adequate savings and impeccable credit scores before pursuing a bank offering lower interest rates to increase your chances of loan approval.

3. Convenience

A crucial factor to consider when deciding which bank is the best for refinance is accessibility.

Make sure the bank you choose has sufficient ATMs and branches where you can easily deposit money or visit to sort out any banking issues. Moreover, you may need to visit the bank branch to get your loan statement, appeal mortgage rates and make other special requests.

Having mobile and online banking access are also vital as most people are accustomed to completing their tasks online.

4. Loan Type and Terms

How to Choose Which Bank for Refinancing

Refinancing loans are divided into flexi, semi-flexi, or term loans, each with its own advantages and disadvantages. While most banks offer these loan types, a vital aspect to take note of is the terms in the loan letter offer.

Here are some questions you should ask the bank before applying for a loan:

  • How long is the grace period before the payment is considered overdue?
  • For a late payment, how much interest will be added?
  • How long is the loan lock-in period?
  • How much is the penalty?
  • Do I need to purchase MRTA before the bank offers a lower interest rate?
  • Do I need to pledge a fixed deposit (FD) to get the loan?

Whichever loan type you prefer, choosing a bank that offers a loan with ideal terms is also key to finding a bank for refinance that’s right for you.

Read More: Business Investment Tips Malaysia: 5 Essential Steps to Consider When Refinancing for Business

How Bluebricks Can Help You

If you are still unsure about which bank you should choose, Bluebricks is ready to help. As a loan specialist, Bluebricks can guide you in choosing the best bank for refinance and secure loan approval to meet your financial goals.

Due to our strong relationship with various banks across Malaysia, we can identify a suitable bank that meets your requirements. Bluebricks will connect you with a bank that will give you the highest loan amount or the lowest interest rate possible, depending on what you seek.

Leading Loan Agency Company in Malaysia

Bluebricks is a financial consultancy company that has helped numerous clients solve a wide range of complex challenges related to their loan applications. We provide loan consultancy and loan rejected services to clients of all backgrounds and situations.

If you’re submitting an application for the first time, we offer you FREE consultations, CTOS and CCRIS reports. Furthermore, we won’t charge any upfront fees for our services until you receive your loan. Work with Bluebricks to get the most out of your mortgage refinancing process.

Loan Rejected Services

As a leading loan rejected service provider, Bluebricks offer comprehensive and effective loan rejected services. We have a decade of experience helping clients with complicated issues achieve their dream of securing an ideal loan.

We can identify the reasons why your application was rejected and increase your chances of approval through proven strategies. Find out how Bluebricks’ refinancing loan rejected services can help you with your loan applications now!

Best Bank for Refinance – FAQs

If you require more information about refinancing with banks, we have just the thing you need. Here are some of the top questions and answers that you may find useful in your mortgage refinancing journey.

Is it better to refinance with a different bank?

Your current bank may offer you a better deal to get you to stick with them, so you could use that to your advantage. But it is still advisable to compare a few different banks to identify the best bank for refinance.

Can a bank refuse to refinance my mortgage?

Yes, the bank can reject your mortgage refinancing application for numerous reasons. For instance, if you have issues with your income documents (no stable income, no payslips, high commitment, etc.), face issues with your credit report (AKPK status, blacklisted, bankruptcy, etc.) or have a track record of making late payments.

However, a loan specialist like Bluebricks can help you overcome even the most challenging loan application issues.

How many times can I refinance my mortgage?

You can refinance a mortgage as many times as you wish. Although refinancing can save you money, you should only do it for the right reasons and if it makes sense for your financial situation.

Plus, you need to factor in the moving costs and other fees to calculate your overall savings from refinancing.

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Picture of Wilson Wai Kit

Wilson Wai Kit

Senior Consultant

With extensive banking experience, notably as a mortgage sales officer at UOB Bank, Wilson leverages his understanding of loan applications and approvals to offer financial insights and support to empower individuals to make informed decisions regarding their financial futures.

Feel free to contact him for assistance with your financial needs!

I want to know about bank loans
Picture of Wilson Wai Kit

Wilson Wai Kit

Senior Consultant

With extensive banking experience, notably as a mortgage sales officer at UOB Bank, Wilson leverages his understanding of loan applications and approvals to offer financial insights and support to empower individuals to make informed decisions regarding their financial futures.

Feel free to contact him for assistance with your financial needs!

I want to know about bank loans



About Bluebricks

BlueBricks Holding is one of the top ten leading loan agency companies in Malaysia in terms of loan approval rates. As a leading loan agency company, we have extensive knowledge and experience in mortgage, personal loans, and business loans, and this enables us to help our customers to get the deal that is best suitable to them.

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