The loan margin you receive determines how much cash you need upfront. Not your salary. Not your credit score. The single biggest factor in whether you can afford the downpayment is the loan-to-value ratio the bank offers — and that ratio is largely dictated by Bank Negara Malaysia regulations, not by your negotiation skills. A 90% margin on a RM500,000 property means RM50,000 cash. A 70% margin means RM150,000. Same property, same buyer, three times the cash requirement — simply because you already own two properties.
This guide explains how loan margin works in Malaysia, the BNM guidelines that govern it, how much cash you actually need at each margin level, strategies to secure higher margins, developer schemes that circumvent margin limits, and when lower margin is actually better for investors.
What Is Loan Margin (LTV)?
Loan margin — also called Loan-to-Value (LTV) ratio — is the percentage of the property's value that the bank will finance.
Loan Margin (%) = Loan Amount / Property Value x 100%
If a bank offers you 90% margin on a RM500,000 property, they lend you RM450,000. You pay the remaining RM50,000 (10%) as downpayment from your own funds.
The "value" in LTV is the lower of:
- The purchase price (as per the Sale & Purchase Agreement), or
- The bank's valuation of the property
If you buy at RM500,000 but the bank's valuer assesses the property at RM480,000, your loan is based on RM480,000. You get 90% of RM480,000 = RM432,000 and must cover the RM68,000 difference yourself.
BNM Guidelines on Loan Margin
Bank Negara Malaysia (BNM) sets the regulatory framework for loan margins through its Guidelines on Responsible Financing. The key rules:
| Property Sequence | Maximum Loan Margin | BNM Regulation |
|---|---|---|
| 1st property | Up to 90% | Market practice; no BNM cap for first two |
| 2nd property | Up to 90% | Market practice; no BNM cap for first two |
| 3rd property and beyond | Maximum 70% | BNM policy imposed November 2010 |
Critical detail: The 70% cap applies to the third and subsequent housing loan from the same borrower. It counts by number of outstanding housing loans on CCRIS, not by number of properties owned. If you owned a property, fully settled the loan, and now have zero outstanding housing loans, your next purchase is counted as a "first" loan again.
What counts as a housing loan:
- Conventional home loans (term loan, flexi, semi-flexi)
- Islamic home financing (MM, Tawarruq, BBA)
- Loans classified as "housing loan" in CCRIS
What does NOT count:
- Fully settled housing loans (zeroed out in CCRIS)
- Commercial property loans (shop lots, offices — different category)
- Land loans without a residential structure
Key takeaway: The 70% margin rule kicks in on your third outstanding housing loan. If you settle one of your first two loans before applying for a third property, you reset the count. This is a legitimate planning strategy for multi-property investors.
Cash Required at Each Margin Level
The downpayment is only part of the cash you need. Transaction costs add another 3-5% of property price. Here is the full picture.
| Item | 90% Margin | 85% Margin | 80% Margin | 70% Margin |
|---|---|---|---|---|
| Property price | RM500,000 | RM500,000 | RM500,000 | RM500,000 |
| Loan amount | RM450,000 | RM425,000 | RM400,000 | RM350,000 |
| Downpayment | RM50,000 | RM75,000 | RM100,000 | RM150,000 |
| Legal fees (SPA) | ~RM7,500 | ~RM7,500 | ~RM7,500 | ~RM7,500 |
| Legal fees (loan) | ~RM5,500 | ~RM5,200 | ~RM5,000 | ~RM4,500 |
| Stamp duty (SPA) | ~RM9,000 | ~RM9,000 | ~RM9,000 | ~RM9,000 |
| Stamp duty (loan) | ~RM2,250 | ~RM2,125 | ~RM2,000 | ~RM1,750 |
| Valuation fee | ~RM1,000 | ~RM1,000 | ~RM1,000 | ~RM1,000 |
| Total cash needed | ~RM75,250 | ~RM99,825 | ~RM124,500 | ~RM173,750 |
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The jump from 90% to 70% margin nearly doubles your cash requirement for the same property — from RM75,250 to RM173,750. For a third-property investor, this means you need approximately RM100,000 more in liquid cash compared to a first-time buyer.
Cash needed across different property prices (90% vs 70% margin):
| Property Price | Cash at 90% Margin (incl. costs) | Cash at 70% Margin (incl. costs) | Difference |
|---|---|---|---|
| RM300,000 | ~RM47,000 | ~RM108,000 | RM61,000 |
| RM400,000 | ~RM61,000 | ~RM141,000 | RM80,000 |
| RM500,000 | ~RM75,000 | ~RM174,000 | RM99,000 |
| RM600,000 | ~RM90,000 | ~RM207,000 | RM117,000 |
| RM700,000 | ~RM105,000 | ~RM241,000 | RM136,000 |
| RM800,000 | ~RM120,000 | ~RM275,000 | RM155,000 |
| RM1,000,000 | ~RM150,000 | ~RM342,000 | RM192,000 |
What Determines Your Actual Margin
The BNM guidelines set the ceiling. Your actual margin may be lower depending on several factors.
Factors that increase your chance of getting maximum margin:
| Factor | Impact | Detail |
|---|---|---|
| Clean CCRIS record | High | Zero late payments in 12 months |
| Stable employment (2+ years) | High | Permanent position preferred |
| Strong DSR (below 50%) | Medium | Shows buffer capacity |
| Property in good location | Medium | KL, PJ, established areas get better margins |
| Freehold title | Medium | Leasehold with short tenure gets lower margin |
| Relationship with bank | Medium | Existing salary account, fixed deposits |
| Joint application with spouse | Medium | Combined income improves risk profile |
| Property type: landed/condo | Low-Medium | Standard residential gets best margins |
Factors that reduce your margin:
| Factor | Impact | Typical Margin Reduction |
|---|---|---|
| Self-employed applicant | High | 80-85% instead of 90% |
| Leasehold <60 years remaining | High | 70-80% regardless of property count |
| Service apartment / SoHo (some banks) | Medium | 80-85% |
| Property value significantly above bank valuation | High | Margin based on valuation, not price |
| Short employment history (<6 months) | Medium | 80-85% |
| Variable income (commission-based) | Medium | 80-85% |
| Rural or low-demand location | Medium | 80-85% |
| 3rd+ outstanding housing loan | Regulatory | Maximum 70% (BNM rule) |
Strategies for Getting Higher Margin
If the default margin offered is below what you need, here are proven strategies:
1. Apply to the right bank. Not all banks are equally generous with margins. Some banks have more appetite for residential property lending. Public Bank, Maybank, and CIMB are generally the most aggressive on margin for good borrowers. Apply to 2-3 banks simultaneously — you lose nothing and gain negotiating power. See the best home loan comparison for current rates and margin policies by bank.
2. Strengthen your DSR position. Pay down or settle small debts before applying. Cancel unused credit cards. Reduce credit card limits. Every reduction in existing commitments improves your DSR, which improves the bank's confidence in offering higher margin.
3. Use joint application strategically. Adding a co-borrower with clean credit and stable income can push a borderline 85% case to 90%. The co-borrower's income improves the combined DSR.
4. Offer additional collateral. If you own an existing property with significant equity, some banks allow you to offer it as additional security to increase the margin on the new purchase. This is more common in private banking or relationship-managed accounts.
5. Move your salary account. Some banks offer preferential margin to borrowers who credit their salary into the bank. CIMB, for example, has historically been more flexible on margin for salary account holders.
6. Negotiate based on tenure. Requesting a shorter tenure (e.g., 25 years instead of 35) shows the bank you intend to repay faster. Some banks are more willing to offer 90% margin on shorter tenures because their risk window is shorter.
7. Request BNM exemption (for specific cases). The 70% cap on 3rd+ properties has limited exemptions. Properties priced below RM500,000 may qualify for exemption in certain states under affordable housing provisions. This is not widely publicised and varies by bank.
Developer Schemes That Bypass Margin Limits
Several developer schemes effectively provide 100% financing or reduce the buyer's upfront cash need.
DIBS (Developer Interest Bearing Scheme): The developer absorbs the loan interest during the construction period. This does not change the loan margin, but it eliminates the need for progressive interest payments during construction — which can be RM500-RM2,000/month depending on construction stage and loan size.
Low downpayment schemes: Some developers offer to pay part of the downpayment through various rebate structures:
- 5% booking fee only, developer subsidises the remaining 5% downpayment
- Cash rebate equal to the downpayment (you pay 10%, developer refunds 5-10%)
- Zero downpayment schemes (rare, usually developer absorbs via inflated pricing)
Bumi discount: Bumiputera buyers typically receive a 5-7% discount on new launches. On a RM500,000 property, that is RM25,000-RM35,000 off — effectively reducing the downpayment requirement.
Warning on developer schemes: Many developer schemes that promise "100% financing" achieve this by inflating the property price. If a property is valued at RM500,000 but the developer sells it at RM550,000 with a RM55,000 "rebate," you are borrowing RM495,000 on a property worth RM500,000 (99% LTV). The bank is technically lending 90% of the inflated price. You start with negative equity. This matters if you need to sell in the first few years.
When Lower Margin Is Better for Investors
Counter-intuitive but true: for rental property investors, a lower margin can sometimes improve your investment.
The math:
| Metric | 90% Margin | 70% Margin |
|---|---|---|
| Property price | RM500,000 | RM500,000 |
| Loan amount | RM450,000 | RM350,000 |
| Monthly instalment (35yr, 4.75%) | RM3,352 | RM2,607 |
| Monthly rent received | RM2,000 | RM2,000 |
| Monthly cashflow (rent - instalment) | -RM1,352 | -RM607 |
| Other monthly costs (maintenance, insurance, tax) | -RM500 | -RM500 |
| Net monthly cashflow | -RM1,852 | -RM1,107 |
With 90% margin, you bleed RM1,852/month. With 70% margin, you bleed RM1,107/month. Neither is cashflow positive, but the 70% margin scenario is RM745/month less painful.
For properties that are already close to cashflow neutral:
| Metric | 90% Margin | 80% Margin | 70% Margin |
|---|---|---|---|
| Property price | RM400,000 | RM400,000 | RM400,000 |
| Loan amount | RM360,000 | RM320,000 | RM280,000 |
| Monthly instalment (35yr, 4.75%) | RM2,682 | RM2,384 | RM2,086 |
| Monthly rent | RM2,200 | RM2,200 | RM2,200 |
| Monthly cashflow before costs | -RM482 | -RM184 | +RM114 |
At 70% margin, this property is cashflow positive. At 90%, it is RM482/month negative. The lower margin converted a losing investment into a winning one.
Key takeaway: Higher margin means higher leverage, higher monthly payments, and harder-to-achieve cashflow positive status. If you have the cash for a larger downpayment, the investor math often favours putting more money down — especially in today's rate environment.
When high margin IS better for investors:
- When you have limited cash and need to deploy it across multiple properties (diversification play)
- When you expect rapid capital appreciation that exceeds the cost of higher leverage
- When the property is strongly cashflow positive even at 90% margin (rare in KL/Selangor, more common in secondary cities)
New to property investing? The beginner's guide to Malaysian property investment explains how to evaluate margin, yield, and cashflow together.
Islamic Financing and Loan Margin
The BNM loan margin rules apply equally to Islamic home financing. Whether your loan is conventional or Islamic:
- 1st and 2nd property: up to 90%
- 3rd and beyond: maximum 70%
Islamic banks follow the same BNM Guidelines on Responsible Financing. The margin determination process is identical — property valuation, borrower assessment, CCRIS check, DSR calculation.
One practical difference: some Islamic banks are slightly more conservative on margin for certain property types (SoHos, service apartments) due to Shariah compliance considerations regarding the property's permissible usage. This is not a BNM rule but an individual bank policy.
Margin for Foreigners
Foreign buyers face different margin rules:
| Buyer Type | Typical Margin | Notes |
|---|---|---|
| Malaysian citizen (1st/2nd property) | Up to 90% | Standard |
| Malaysian citizen (3rd+ property) | Maximum 70% | BNM policy |
| Malaysian PR (1st/2nd property) | Up to 85-90% | Bank-dependent; some treat like citizen |
| Malaysian PR (3rd+ property) | Maximum 70% | BNM policy applies |
| Foreigner (MM2H holder) | 60-70% | Most banks cap at 70% |
| Foreigner (non-MM2H) | 50-60% | Limited bank options; some banks decline entirely |
Foreigners also face minimum purchase price thresholds (RM1 million in most states, varies by state) and may only be able to borrow from select banks. See the foreigner property guide for full details.
Practical Checklist: Before Applying
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Count your outstanding housing loans. Check CCRIS. Fully settled loans do not count. If you have 2 outstanding, you still get up to 90% on the next one. If you have 2 outstanding and do not settle either, the third is capped at 70%.
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Get a pre-qualification. Most banks offer free preliminary assessment. They will tell you the indicative margin before you commit to a property. Do this with 2-3 banks.
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Order a private valuation if concerned. If you suspect the property price might exceed the bank's valuation (common for subsale properties priced above market), get an independent valuation first. Cost is RM300-RM800.
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Calculate total cash needed, not just downpayment. Use the tables above. The legal fees, stamp duty, and valuation fee add 3-5% on top of the downpayment.
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Time your EPF withdrawal. EPF Account 2 (Akaun Sejahtera) can be used for downpayment and other eligible property purchase costs. Apply early — EPF processing takes 2-4 weeks.
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If 3rd property, plan the structure. Consider settling one existing loan first (if feasible). Consider buying under a different entity (Sdn Bhd — though this has its own complications). Consider joint application where the co-borrower has fewer outstanding loans.
The Margin-Cashflow Relationship
For investors, the relationship between margin and cashflow is inverse and linear:
Every 10% reduction in margin reduces monthly instalment by approximately:
RM500,000 property: ~RM373/month
RM400,000 property: ~RM298/month
RM300,000 property: ~RM224/month
This is a useful rule of thumb. If your property is RM400/month cashflow-negative at 90% margin, putting down 20% instead of 10% (80% margin) would make it approximately RM100/month cashflow-positive. The question is whether deploying that extra RM40,000 in downpayment is better than investing it elsewhere.
For help calculating DSR and loan eligibility, see the DSR guide. To model different margin scenarios, use the home loan calculator guide or the cashflow calculator. First-time buyers should start with the first-time buyer guide.