Housing Loan & Affordability Calculator Malaysia

Most home loans charge interest on the balance still owed, worked out monthly. Each month the interest is the balance times the yearly rate divided by 12, and the rest of the instalment pays down the loan. A RM450,000 loan at 4% over 35 years is RM1,992.49 a month: in the first month RM1,500.00 is interest and RM492.49 reduces the loan. Over the 35 years the interest adds up to RM386,844.26.

DSR, the debt service ratio, is all your monthly loan repayments, including the new home loan, divided by your take-home pay after tax, EPF and SOCSO. Bank Negara does not set a limit; each bank decides. As a guide, under 40% is usually approved, 40% to 60% is likely, 60% to 70% is borderline and above 70% is usually rejected. Lower incomes often face a lower limit.

If RM5,000 is your take-home pay, you have no other loans and the bank allows a 60% DSR, you can pay up to RM3,000 a month. At 4% over 35 years that supports a loan of about RM677,545, or a RM752,000 house with a 90% loan. With RM1,000 of car and other repayments, it drops to about RM451,697. Put in your own income and commitments above.

A lot, because every extra ringgit cuts the balance that interest is charged on. On a RM450,000 loan at 4% over 35 years, paying RM500 more each month clears it in about 23 years and saves about RM147,155 of interest. Check that your loan allows extra payments without a fee, and that the bank reduces the balance (flexi or semi-flexi loans do).

Thirty-five years, a Bank Negara rule since July 2013. Most banks also want the loan finished by age 70, so at 40 you would usually get 30 years. Your third housing loan is limited to 70% of the price; for the first two, banks usually lend up to 90%.