BANK – Borrowing in 2016

Mortgage expert, Miichael Yeoh shared his views on the borrowing scene in 2016 and highlighted on mortgage planning for aspiring property buyers.

Sharing the latest report by Bank Negara Malaysia (BNM), Miichael said that out of a total of RM 763.8 billion in home loan applications, only RM359.1 billion worth was approved in the period of January to November 2015. “That translates to less than half, or an approval rate of 47%”, he added.

Gone are the days where submitting your financial documents to the bank means that half the battle is won. With this year said to be a buyers’ market, Miichael described this year’s borrowing scene as the survival of the fittest. Urging everyone to not leave their approvals to chance, he urged potential home buyers to take charge of their financing needs in 2016 and shared his guide on getting your home loan approved.


Miichael explained just as how banks carry out a Know Your Customer (KYC) test in evaluating applications, we must carry out our own Know Yourself (KYS) test to ensure that our loan gets approved. His 3-step guide is as follows:

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1. Check your Credit Tip Of System (CTOS) report

CTOS collates information for summons and bankruptcy  on individuals and companies from various sources found in the public domain. Banks will examine the information provided by CTOS and decide if it is material to your application. It is important to keep track of your CTOS report to ensure there is no incriminating information that would negate your chances of getting a home loan.

2. Check your Central Credit Reference Information System (CCRIS) report

Your CCRIS report displays all of your total credits, interest charges and other outstanding charges for all loans that you have with any banks in Malaysia – everything from a personal loan and credit card to hire purchase and overdrafts. Delay in repayments for any obligation will show up in your report, for instance, payments in arrears for a month will show a record of 1. Different banks have different lending guidelines. However, they will require mostly zeroes as it shows that you are a good paymaster. One plus point is that the CCRIS only shows information from the latest 12 months. Hence, if you have a less than stellar report at the moment, you could strive to improve and ‘correct’ it in the coming 12 months in order to increase your chances of obtaining a home loan.

Loan applicants are in luck as they now can check their credit status online for free instead of having to go to a BNM branch. A new system initiated by Rating Agency Malaysia (RAM) allows you to check your CCRIS and CTOS report at

Besides that, you will be able to see the likelihood of you defaulting bank loan repayments based on their scoring system, i-Score. Most banks would only approve applicants who have a minimum risk grade of 4 (as can be seen in table below).

Hence, an aspiring property buyer who is planning to take up a new bank facility will have to get his/ her CCRIS and CTOS report ‘clean’ before applying to save time, energy and money.

3. Check your current credit standing using Debt Service Ratio (DSR)

Calculating your DSR before submitting your financial documents is imperative as it shows where you stand in the eyes of the bank.

Banks have a maximum DSR cap that they impose on a borrower in order to approve his/her loan application. The formula used is as follows:
DSR = Debt/Net Income X 100

Most banks have a DSR cap of 65%. It is advised to consult a trusted banker to enquire the DSR ratio of various banks so that you will know which bank to apply to. However, a case to case basis applies to certain banks if the applicant is able to prove that his/ her risk of default is low. Miichael shared that he had one client who got his loan approved even though his DSR was 150%.


“2016 might see rising interest rates as more bank mergers are coming up,” Miichael envisioned. If interest rates were to increase, this would either mean an increase in monthly instalments or a longer tenure. For those who do not have a satisfactory RAM report or the minimum DSR ratio, do not despair as Miichael shared that there are a few other ways to obtain financing. Besides individual/joint borrowing, financing vehicles such as Sdn Bhd and Limited Liability Partnership (LLP) could be used.

Miichael concluded by reiterating that planning is imperative and it is important to know what the bank wants from a borrower. As he said,” Always put yourself in the bank’s shoes and ask yourself – will I lend money to this borrower?”



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