Aneta Janiak-Olejnik

Housing Loan Agreement Legal Fees Malaysia

When taking out a housing loan in Malaysia, one of the fees that may catch borrowers off-guard is the legal fee for the loan agreement. It’s important to have a clear understanding of what this fee entails, as well as how it will affect your overall loan costs.

Firstly, it’s worth noting that legal fees can vary depending on the lender and the complexity of the loan agreement. Generally, legal fees cover the cost of reviewing and preparing the loan documents, including the offer letter, loan agreement, and mortgage deed. They may also include the cost of conducting searches on the property and the borrower’s credit history.

In Malaysia, legal fees for housing loan agreements are regulated by the Solicitors’ Remuneration Order 2005. This order sets out a scale of fees that solicitors are allowed to charge for various legal services, including conveyancing and loan documentation. The scale of fees is based on the loan amount, with higher loan amounts attracting higher legal fees.

For example, if your housing loan is for RM500,000 or less, the legal fees for the loan agreement are capped at 1% of the loan amount. This means that the maximum legal fee you can be charged is RM5,000. If your loan is for more than RM500,000, the scale of fees increases, with legal fees for loans above RM1 million capped at 0.6% of the loan amount.

It’s also worth noting that borrowers may be responsible for paying both their own legal fees as well as the legal fees of the lender. This is because the lender will typically engage their own solicitors to review and prepare the loan documents. The borrower’s solicitors will also need to review the documents and provide advice on any legal issues.

While legal fees for housing loan agreements can add to the overall cost of your loan, they serve an important purpose in ensuring that the loan documents are legally sound and provide adequate protection for both the lender and the borrower. It’s important to budget for these fees when considering your overall loan costs, and to choose a lender and solicitor that are transparent about their fees and charges.

In summary, legal fees for housing loan agreements in Malaysia are regulated by the Solicitors’ Remuneration Order 2005 and are based on the loan amount. Borrowers may be responsible for paying both their own legal fees and the legal fees of the lender. While legal fees can add to the overall cost of your loan, they are an important part of ensuring that the loan documents are legally sound and provide adequate protection for both the lender and the borrower.