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A Step-by-Step Guide to Home Refinancing in Malaysia

If you’re looking to save up for the future, home refinancing in Malaysia can be a strategic move. However, you need to do it right!

Here’s a quick guide to refinancing your home loan in Malaysia to fully understand how it works.

What is Home Refinancing

What is Home Refinancing

Home refinancing in Malaysia involves borrowing money from a bank under a new loan to settle the debt you owe in your current home loan account. It also allows you to pay lesser interest on your property and free up cash.

Here’s an example of how it works. Let’s say your home’s original value is RM500,000, and the amount you currently owe on your home loan is RM400,000.

After consulting a property valuer, your home is valued to be RM600,000. If you refinance your home for 80% of its current value, you will receive RM80,000 to use for other purposes, such as saving up for your retirement.

Your home is an investment, and refinancing is one way you can use your home to leverage that investment. There are many reasons for home refinancing in Malaysia, such as:

  • To obtain a lower interest rate
  • To shorten the term of your current mortgage
  • To raise funds to deal with a financial emergency, finance a large purchase, or consolidate debt

Refinancing is a strategic move. Therefore, many elements come into play when determining whether you maximise the benefits.

If you plan on refinancing your property, we’ve prepared a step-by-step guide on home refinancing in Malaysia for you.

Read More: Renovation Loan Malaysia: What Is It and Should You Apply for It?

1. Value Your Property

The first step to home refinancing in Malaysia is to value your property. Choose your preferred property valuer and prepare the necessary documents, such as the Sales and Purchase Agreement (SPA), before they commence the property inspection.

Once you’ve passed the documents, the property valuers will physically visit and inspect your property.

After that, they will work with a bank to prepare the property valuation report. You will have to pay the balance amount in order to receive the report.

To get the most out of your property, it is recommended that you consult a panel of various property valuers to know the average to the highest value of your property.

  • Loan Agency & Property Valuation
    • A key fact that homeowners should know when obtaining a property valuation report is that they are required to pay a valuation fee. It is typically 0.3% of the property’s market value.
    • However, homeowners can also evaluate their property with a loan agency like Bluebricks. We first obtain the necessary information from our clients, such as their name and address, along with their desired house and land size and type.
    • We will then contact the valuation firm designated by the bank (the bank will arrange which value firm to use according to the customer’s surname) on behalf of our client.

2. Check Your CCRIS Statement

A Central Credit Reference Information System (CCRIS) statement is essential in getting your home refinancing loan approved in Malaysia.

You can obtain your CCRIS report from credit reporting agencies registered by the Ministry of Finance under the Credit Reporting Agencies Act 2010. Examples include CTOS, Credit Bureau Malaysia and Experian.

Financial institutions use the report to assess if you are capable of returning the money you have borrowed from them. It includes your credit card debts, house loans, car loans, personal loans, and more.

Different banks and financial institutions assess loan applications differently. However, they tend to look negatively at a credit card or bank loan at its maximum limit, as it shows poor financial management.

Ultimately, the result of a loan application depends on the individual assessment criteria used by the bank you are applying from. If the outcome is positive, your loan will be approved.

However, it’s worth noting that being rejected from a loan application will be recorded on any further CCRIS reports requested in the next 12 months.

3. Loan Application Essentials

If you’re a fixed-income earner, applying for a house refinancing loan in Malaysia is relatively easier than someone self-employed or freelancing. You would need to prepare:

  • Your payslips
  • Your EPF statements
  • Your bank statements
  • A copy of your MyKad
  • Your proof of funds

If you’re a self-employed business owner, whether of an enterprise or a private limited company (Sdn Bhd), you would have to prepare the following documents:

  • A copy of your MyKad
  • The latest 6 months of your company bank statement
  • The latest 2 years of income tax with payment receipt
  • The latest 2 years of your audit reports
  • Your latest management accounts
  • A copy of your property’s SNP agreement (the first and last 5 pages)
  • A copy of your land title (Geran)
  • Your tax assessment (Cukai Taksiran)

The only document that is different would be the SSM document. Enterprise owners would need to prepare their latest SSM document, whereas a private limited company owner would need to prepare their latest SSM Form 9, 24 and 49.

4. Submit Your Documents To The Bank

On average, financial institutions take about one to two weeks to approve your loan application, and it only begins when you supply all the documents required.

However, if the bank is concerned about your ability to repay, they may request additional documents from you. This will further delay your home loan approval process.  

5. Wait For Your Loan Application Results

Unfortunately, if your loan application is rejected, you will have to wait for another 3 to 6 months before submitting another application.    

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

6. Sign The Letter Of Offer If The Application Is Approved

Before signing the Letter Of Offer from the bank, thoroughly read through it to ensure your personal details and the approved loan amount are correct.

7. Sign The Loan Agreement With A Panel Loan Lawyer

Every institution, whether it is financial, regulatory, policy-making or educational, needs a lawyer.

A panel lawyer of a banking or financial institution must be well versed in banking and commercial laws. These in-house lawyers are expected to provide legal advice and are responsible for instructing and managing external legal counsel.  

8. Wait For The Loan Drawdown

A loan drawdown is when funds are released under an agreement with a lender. It means you are using the money the lender provided to buy your desired property.  

9. Collect Your Loan Amount

Once the loan application process is finalised, you can either visit a lawyer to collect the cheque or directly transfer the amount to your bank account.

How Bluebricks Can Help You

There are times when you would have to refinance your home loan to adapt to your current financial situation. However, refinancing can be a complicated process, especially if you have a low credit score.

If you do not know where to begin, Bluebricks can help you with your home refinancing journey.

With our refinance housing loan rejected services, we provide consultation and efficient solutions to get your refinancing loan application approved.

Refinance Housing Loan Rejected Services

Bluebricks is an experienced loan specialist with the knowledge and expertise to help you select the loan that best suits your situation. We provide loan consultancy and refinancing solutions to strengthen future applications and help you qualify for the funds you need.

If it is your first time with Bluebricks, you can enjoy FREE consultations, CTOS and CCRIS reports. We also do not charge any upfront fees for our services until your loan has been approved.  

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

Loan Rejected Services

Refinancing your home is a costly decision. However, if your loan application to the bank was rejected, funding your refinancing journey can be difficult.

At Bluebricks, we’re able to help. As a licensed loan agency in Malaysia, we offer extensive loan rejected services to help our customers get their applications approved!

Home Refinancing in Malaysia – FAQs

If you want to know more before carrying on with the refinancing process, below are some popular questions to help you better understand home refinancing in Malaysia.

When should I refinance my home?

The best time to refinance a home is different according to the person. Your individual circumstances, financial situation, and current mortgage rates should inform your decision.

But ultimately, refinancing is worthwhile if it helps you save you money. For example, if you have an emergency cost to cover, you can apply for a cash-out refinance to tap into your property’s equity to cover your emergency cost.

Is it worth it to refinance my home?

Refinancing isn’t a simple decision. You should be aware of the pros and cons of refinancing before committing to it. One advantage of refinancing is that you will have a shorter loan term. This means you pay off your loan quicker, build up equity faster, and spend less on interest over time.

However, these savings may not be worth it if they are minimal. On top of that, your monthly payment has a chance of increasing if you shorten the repayment period. Because of these potential disadvantages, it’s important to decide when you want to refinance your loan carefully.

Do I lose my home equity when I refinance?

Your home equity remains intact when you refinance your home with a new loan. However, you should be cautious of fluctuating home equity value. Several factors impact your home equity, for example, unemployment levels, interest rates, crime rates and more.

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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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