Guide to Getting Loans in Malaysia for Foreigners | Loan Options, Requirements

Getting a Loan as a Foreigner in Malaysia

Malaysia has attracted many foreigners to live, work, and invest in the country over the past few decades. With a robust economy, low cost of living, favourable retirement policies, and cultural diversity, Malaysia offers an appealing lifestyle for expatriates. However, navigating Malaysia's financial system can be challenging for foreigners. One common financial need for expats is securing a loan, whether for purchasing property, financing a business, or consolidating debt. Here is an overview of the loan options available for foreigners in Malaysia.

Types of Loans Available to Foreigners

Several types of loans are available to foreigners in Malaysia:

• Mortgage Loan - Foreigners may apply for a mortgage to finance the purchase of Malaysian property. Approval is subject to financial criteria and banks typically require a larger down payment from foreign buyers.
• Foreign Currency Loan - Some banks offer loans in major foreign currencies like US Dollars and UK Pounds for foreigners earning income in those currencies.
• Business Loan - Foreign-owned businesses registered in Malaysia may apply for loans to finance operations, expansion plans, and working capital needs.
• Personal Loan - Unsecured personal loans up to RM150,000 are available from some lenders to meet general expenses and debt consolidation.

Eligibility Criteria for Foreigners

To qualify for a loan in Malaysia as a foreigner, typical requirements include:

• Valid long-term visa - MM2H, employment pass, etc.
• Good credit history
• Stable income and adequate debt serviceability
• Lower loan-to-value ratio on mortgages (up to 70%)
• Higher interest rates compared to Malaysian citizens

Having a Malaysian co-borrower or guarantor may improve chances of loan approval and get better terms.

Documents Required

Foreigners need to prepare the following documents when applying for a loan in Malaysia:

• Passport and visa copy
• Proof of local and foreign income
• Prior years' tax returns and bank statements
• Tenancy agreement or property purchase documents
• Business registration certificate and financials (for business loans)

Documents may need to be notarized or translated into English or Bahasa Malaysia in some cases.

Top Banks for Foreigner Loans

Major Malaysian banks that offer loans to foreigners include:

• Maybank - Malaysia's largest bank has mortgage financing options for MM2H visa holders.
• CIMB - CIMB offers personal loans and foreign currency loans to expats.
• RHB Bank - RHB has mortgage products for foreigners earning ringgit and non-ringgit income.
• HSBC - HSBC provides financing for property purchase and SMEs operated by foreigners.
• Standard Chartered - SCB offers personal loans and credit cards to expatriates in Malaysia.

Alternatives to Traditional Loans

Foreigners who fail to qualify for conventional bank financing do have some other options:

• Peer-to-peer Lending - Platforms like Funding Societies allow individuals to borrow from a pool of investors.
• Credit Cards - Many banks issue credit cards to foreigners which can help meet short term financing needs.
• Company Loan - Employees may be able to secure a low interest loan from their Malaysian employer.
• Property Developer Financing - Some developers offer financing schemes and deferred payment plans for property buyers.

Tips for Foreigners Seeking Loans

Here are some tips for expats to improve their chances of getting approved for a Malaysia loan:

• Shop around with various banks to compare loan products and rates.
• Opt for a lower loan amount with a shorter tenure to reduce risk.
• Have a Malaysian co-borrower or guarantor if possible.
• Maintain a good credit history by responsibly managing credit cards and loans.
• Extend employment pass and visas well in advance of expiry to show continuity.
• Keep income declarations conservative and have supporting documents ready.

While procedures can be lengthy, foreigners should find it possible to obtain a Malaysian bank loan if they prepare thoroughly and meet qualification criteria. Consult qualified advisors to navigate the loan process.

FAQs

What are the main types of loans available to foreigners in Malaysia?

The main loans available to foreigners in Malaysia are mortgage loans to finance property purchases, foreign currency loans in USD/GBP, business loans, and personal loans for expenses and debt consolidation.

What visa do I need to be eligible for a loan in Malaysia?

Banks typically require foreigners to have a valid long term visa such as an Employment Pass, MM2H visa, Retirement Visa, or other long-term resident visa in order to apply for a loan.

What credit score do I need to qualify for a loan as a foreigner?

There is no specific minimum credit score, but a good credit history is required. Many banks will review foreign credit reports when assessing expatriate applicants.

Can I get a 100% mortgage as a foreigner in Malaysia?

No, banks limit lending to foreigners to around 70-80% loan-to-value ratio. A 20-30% down payment is typically required for expat mortgage borrowers.

Are the interest rates higher for foreigners compared to Malaysians?

Yes, interest rates are usually 0.5 to 2 percent higher for foreign borrowers based on prevailing base lending rates and higher risk perception.