How do Overseas Malaysians differ from local applicants?
Local applicants are taxpaying citizens of Malaysia who hold an Employee Provident Fund (EPF) earning in local currency in a company located in Malaysia, unlike Overseas Malaysians who reside and earn income in foreign countries.
What are the types of loans that Overseas Malaysian can apply for in Malaysia?
Overseas Malaysians can apply for the same loans that are available to local Malaysians. You’re welcome to try any available loans offered in Malaysia, so feel free to do your research on the best loans available through loanstreet’s home loan and personal loan comparison pages. You can even commit to credit cards or loan refinancing as long as you meet the banks’ criteria.
What documents do an Overseas Malaysian require to qualify for a local loan?
Before applying for any loans, first you must make sure you have the following documents:
- NRIC no. to prove you are 21 years old or above
- Provide identification of your foreign employment pass and offer letter to prove you are a jobholder and that you have a stable earning source
- Your foreign payslips for the past 3 months as evidence of your income history
- Name of your foreign bank where your salary is credited along with bank statements (if required)
- Income tax returns in foreign country
- All the necessary documentation regarding your income and liabilities to assess your current loan commitments
- Must have at least one commitment in Malaysia in the form of either loan or credit card
Why does an Overseas Malaysian need an existing commitment in Malaysia to take a local loan?
It’s easy for banks to access information on locals for a background check, however the same cannot be said for Overseas Malaysians. It can be difficult for banks to ensure that you are a legitimate client instead of someone who is indulging in fraudulent activity if you have no credit history or background in Malaysia to speak of. By having an existing commitment in Malaysia, banks will be able to verify your eligibility, legitimacy, and whether or not you are capable of repaying the loan.
Does it matter in which overseas country I am residing?
Banks prefer if you are residing in a neighbouring country like Singapore, but if you are staying in somewhere much further, say, China, Qatar or Dubai then they will consider the economic stability of that country.
Does the type of company I work at affect my likelihood of obtaining a local loan?
If you are working in a multinational company (MNC) then your chances of getting your loan approved by the bank will definitely be higher than if you work for a foreign company that the bank has never heard of. Banks tend to trust employees of reputable company more as they believe it indicates that you are a skilled employee and that there is less chance for you to lose your job.
What should be my minimum income level to apply for a loan?
You should be earning at least an equivalent of RM 3,000 per month before you think about applying for a loan
What should be my debt servicing ratio (DSR) for my loan to be granted?
The banks will look at how much income you spend on your daily household expenditures and how much on existing commitments. The maximum DSR allowed by banks is 70% out of which 30% should be household expense and 40% on other debt commitments. The lower the DSR the more favourable it is.
What are the additional requirements for a home loan?
To apply for a home loan, the bank will consider what type of land you plan to purchase. They will also demand that your existing commitment in Malaysia should be in the form of a loan existing for at least 3 years so that the bank is assured that you will service your loan instalments on time. Also, paying your booking fee upfront goes a long way in influencing the banks to accept your loan request. Additionally, it is favourable if you have a co-applicant in Malaysia, so that they have someone to go to in case of loan default.
What are the additional requirements for a personal loan?
It will suffice for you to have owned a Malaysian credit card for the past 6 months as your existing commitment in Malaysia. If you have savings in your account, that will also help in the approval of your loan application.
How much loan amount will I be granted by the bank?
In case of home loan, you will be granted a maximum of RM 400,000-500,000. As for personal loan, the amount depends on your monthly income. Suppose, if you earn RM 5,000 per month then you can get up to 5 times the amount of your salary.
Can I apply to different banks for loans?
It is not necessary that you apply for your current loan in the bank where your existing commitment is. In fact, it may be a good idea to choose a different bank if you are offered more favourable interest rate or terms and conditions there. This is true if you are looking to apply for credit cards, personal or home loan. However, for refinancing a loan, you should stick to the same bank as all the terms and conditions for refinancing will be completely different elsewhere.
So just because you are staying or working overseas, it doesn’t mean that you can’t take a loan back in Malaysia. We hope that we have managed to answer your questions and that you leave this article wiser and more well-prepared to effectively plan your loan venture without any confusion.