Policy Measures

Measures to Promote Sustainability of the Property Market

LTV Ratio

Key features of the Guidelines and the related FAQs are as follows:

Effective Date: 15 November 2013
Objective: Aimed at ensuring a stable domestic property market and promoting the continued affordability of homes for the general public as well as promote financial prudence by borrowers.

  1. For individuals: 70% loan to value (LTV) ratio for third property or above.
  2. For non-individuals: 60% LTV ratio for 3rd properties or above.
  3. Ban of developers’ interest bearing scheme (DIBS)

Frequently Asked Questions (FAQs)

  1. What is the normal expected LTV ratio in Malaysia?
    • Here in Malaysia, home buyers normally expect 90 percent LTV ratio for a housing loan. Previously, there are special programs from Malaysia Government such as Skim Rumah Pertamaku that offer a 100% LTV ratio for eligible first-time home buyers.
    • However, start from 1 April 2023, this program is no longer active and first time house buyers are required to prepare 10% for the down payment.
  2. How to Calculate Your LTV?
    • The loan-to-value (LTV) ratio is influenced primarily by three factors: the down payment, the sales price after any discounts (net sales price), and the appraised value of the property. To achieve a lower LTV ratio, making a larger down payment and securing a lower sales price are effective strategies. However, be aware that some banks have fixed minimum down payment requirements, which you might need to discuss and potentially negotiate.
  3. Why Banks May Limit LTV Ratios?
    • In addition to regulations set by Bank Negara Malaysia (BNM), banks may also set limits on the loan-to-value (LTV) ratio based on their own internal credit policies. It’s a good idea to check with several banks to understand their specific policies, and compare them to find the best fit for your needs.
    • If you already have one or more housing loans, banks may use a Combined LTV ratio, which takes into account both your primary mortgage and any additional home equity loans you might have.

Related posts

Guidelines on Responsible Financing


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