Getting loan approval is crucial for real estate investors, especially those who plan to use leverage, as well as for home buyers.
Based on my professional and personal experience, here are some tips on how to increase your chances of getting a loan approved in Malaysia!
1. Have a good credit score
Your credit score is based on how well you repay your debts.
You might not know this, but banks have access to your credit information. They can check how much debt you have in Malaysia and whether you have been making your payments on time.
You might think, “I don’t have any debt, so I should be fine.”
Unfortunately, having no credit history can also work against you.
Having no credit records means there is insufficient evidence for banks to assess whether you are reliable when it comes to repaying debt.
Hence, if you have no credit history yet, consider getting a credit card and paying your bills on time to build a good credit record.
2. Have a stable income, preferably from a big firm
You might think that having a high net worth and owning a company will guarantee you a loan.
No.
Banks generally prefer stable and verifiable income, particularly income from established companies such as multinational corporations.
For business owners, income such as director’s fees or dividends may not be treated the same way as regular employment income, depending on the bank’s assessment.
For those who have reached FIRE (Financial Independence, Retire Early), think carefully before quitting your job if you are planning to apply for a loan in the future.
3. Stay with your company as long as possible (ideally 3 years)
Job hopping may give banks the impression that you have an unstable income or employment history.
If possible, stay with your company for at least three years before applying for a loan.
Of course, this is not a strict requirement, and banks may consider other factors such as your income, industry, credit history and overall financial profile.
4. For non-Malaysians, obtain your visa first
For non-Malaysians, banks may want to understand why you are buying a property in Malaysia and your connection to the country.
Obtaining an MM2H or work visa first can provide additional evidence of your connection to Malaysia and the reason for purchasing a property here, which may help increase your chances of getting a loan approved.
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