Standardised housing loan agreements help consumers

KUALA LUMPUR: The standardised documentation adopted by banks for housing loan agreements with effect from Jan 1 will enable consumers to make more direct comparison of financial products and services offered.

Association of Banks in Malaysia (ABM) executive director Chuah Mei Lin said 13 local members of the association had adopted the standardised template from Jan 1 while five other foreign banks were expected to roll out the standardised template by the first quarter.

The 13 council banks of the ABM have also adopted a standardised template for the description of key terms and conditions in respect of housing loans or home financing agreements for individuals involving RM500,000 and below.

The standardisation initiative is a collaborative effort between Bank Negara, Special Task Force to Facilitate Business, ABM and commercial banks to enhance the efficiency of the banking industry.

“With standardisation, commercial banks aim to present key terms in a manner which is consistent, clear and easy to understand,” Chuah said during a media briefing yesterday.

She said the key aspects of the standardised template encompassed principal sum/loan amount, description of property, payment and calculation of interest, interest and lock-in-period, repayment and prepayment, conditions precedent, security documents and events and consequences of default.

“For the purpose of determining the principal sum of RM500,000 and the applicability of the standardised template, only the loan amount to be applied towards the purchase price of the residential property is to be taken into account,” she said.

The loan or financing, she said, could be extended to cover renovation costs, mortage reducing term assurance or other such insurance premium as might be permitted by the banking institution and legal fees incurred in connection with the purchase of the property.

“Based on a survey conducted last year on ABM's 13 council banks, 80% of the banks' straight-forward housing/mortgage portfolio are RM500,000 and below,” she said.

On the approximate number of days required to process a straight-forward housing loan application of an individual with a good track record, she said that depending on the bank, a good turn-around time barring any unavoidable delays would be 55 days from the day the application was made to disbursement. - Bernama