Those who don’t buy a lot of property may not know this, but Bank Negara has implemented a new rule saying that if you buy your 3rd residential property, you can only get 70% financing. Watch the video embedded below for more explanation.

Let me explain how you might be able avoid this.

In Malaysia, let’s say you buy your first house at RM100,000. For the first house, you can get a 90% loan from the bank. Then you buy your second house at RM200,000. Even though you still have your loan for the first house, you can still get a 90% loan from the bank. This means you only have to pay the 10% down payment or RM200,000 in this case.

If you want to buy a third house or more, you can only get a maximum loan of 70%. This is the rule.

I already bought three houses before I got the fourth one, joint-name with my wife – this is before the new rule. So, we, kind of, used up our entire quota. I went to our bank and asked the marketing official, “I only have 60% left to pay for this property, and 50% for the other property. Can I get a 90% loan for the third one?” The answer is “No.” As long as you have two outstanding loans, even if only by 10%, you will not be able to get a 90% loan on the third house. The only way around this and get 90% is to settle one of your loans, then show the Loan Settlement Letter to the bank that is going to finance your new house purchase.

Some banks are quite stringent. Like for my case, all of the houses are of joint ownership between my wife and me. So, I go to our bank and asked, “Hey, the S&P agreement has my name and my wife’s name on it. Can I refinance this loan with only my name so that my wife isn’t associated with the loan?” This means I refinance the first two houses with only my name so that my wife can get the third house for herself and get a 90% loan. In this case, the S&P will have both me and my wife, but only one of us will be the borrower. You’ve got to be careful with choosing the bank because not all banks can do this, although most banks can.

What if instead of husband and wife, it is brother and sister? You have to check with the bank, as in the case of brother and sister only some banks can accommodate this. I think OCBC can, but you have to check with them.

This arrangement will be based on trust. For example, the sister sells her portion to the brother, and the brother is now the sole owner of the house. But, if the sister paid for half of the property, she would also want to be named as an owner, right? You can always check with your banker on how and if it’s possible to do this.

Let’s say you buy your first house, and then you buy your second house, and want to get a third house and still get a 90% loan. There is, in fact, another solution. There is a body called the MBSB or Malaysia Building Society Berhad, which can give you a loan above 80% even if it’s your third property. I think they can give up to 85% or something, if not 90%. The disadvantage here is that their interest is higher than the banks, normally like BLR-1% or something. You can check with MBSB.

Another trick is to find commercial properties as the rule only applies to residential properties. If you can find a commercial property with a better yield, you can switch your portfolio – sell your residential property, and get a commercial property. Commercial properties don’t have the same restrictions.

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Personal finance author and trainer

    226 replies to "How to Avoid 70% Financing Rule on the Third Residential Property Purchase"

    • vivi

      Hi KC,

      may i know if i have my 1st house under 90%housing loan. and im planning to buy second house with cash. May i know in future if i want to buy 3rd house, am i still able to loan it at 90% quota? thank you

      • KCLau

        In your scenario, you only have one mortgage.
        So the 2nd mortgage (regardless of 3rd house, 10th house or even 1000th house) can still get 90% LTV for residential loan.

    • Keith

      Hi KC

      I already have 2 loans. I wish to buy a 3rd house.
      Understanding that bank will only give 70% loan, how about AIA home loan?
      It will give 90% loan?
      Thank you.

      • KCLau

        I am not sure. You can give it a try.

    • Zee

      Hi KC, this is my situation:

      1st house – joint name with my brother (both loan and SPA)
      2nd house – loan under my wife (spa under my wife and I)

      In this case, am I still eligible for a 90% loan?

      • KCLau

        I think you can still eligible for a 90% loan, provided that your DSR allows that.

    • Jesu dass

      Mr lau, if my 1st loan settlement completed and 2nd house joint loan with my brother how much bank can ofer me?. If the the house value 700k.

      • KCLau

        In your case, that is considered 2nd residential loan. It will be 90% LTV if your DSR is still good.

    • Low

      Hi Mr KC,

      Hope you are well there. I would like your professional advise on my situation.

      I have 2 unit house.
      1. 1 unit joint loan with mother.
      2. 1 unit joint loan with father.

      Do you any suggestion for me on how can I have the 3rd house loan with less than 30% deposit?
      I think 30% is a big amount to pay as deposit.

      Thank you very much. Appreciated.

      • KCLau

        Hi Low, for the 3rd loan, it is subjected 70% LTV, unless the property is over RM600k if not mistaken.
        Or the loan is not considered residential housing loan, then it is not counted as 70% LTV only apply to residential properties.

    • Elizabeth

      Hello, i already have 2 mortgage loans currently:
      1) 16% loan
      2) 30% loan

      Ive 1 property fully paid up and fetching rental income, 1 joint name property also fully paid up.

      Now i would like to purchase a 3rd property with a friend, she currently has a mortgage loan of 90% but only repayment is only 1/3 of her pay.

      Question: would it be possible for me to get 90% loan for my 3rd property?

      • KCLau

        If your DRS qualify for the 3rd loan, it will still be subjected to LTV 70%, if it is the 3rd housing loan that hasn’t been payoff.
        You can first payoff the 1st loan of remaining 16% outstanding only.
        Or if your 3rd mortgage is for property priced above RM600k, under the Penjana incentives the LTV70% is waived.

    • Sew

      Hi KC,
      Currently, I own:
      A house (joint name with husband, loan)
      A shop (joint name with siblings, loan)
      A investment land (joint name with sibling, no loan from bank).

      1. My husband plans to buy a second house loan with his single name and SNP join name with me. In this case, will he eligible for 90% loan from bank?

      2. If he wants to get 90% loan while to secure my name in his second house, what could we do?

      Pls advice.



      • KCLau

        1. As your husband only have one residential property mortgage, the new application is considered the 2nd, still entitled for 90% LTV if he his income qualifies.
        2. You can have both your name and joint buyer of the property, but use his name only for the loan. Some banks might require both buyers as loan applicants. But there are banks that is fine with that. So choose wisely.

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