Also in: Bahasa Melayu
This is for anyone buying a home in Malaysia whose bank valuation has come back below the price agreed with the seller or developer. The one-line answer: the bank lends a percentage of the lower figure, so the shortfall comes out of your pocket unless you renegotiate, find a bank whose valuer sees more value, or exit under the terms you signed. Below I work through the numbers, the options and the deadlines.
Why valuations come in below the price
A bank’s valuer estimates what the property would fetch on the open market, relying heavily on recorded sales nearby. The two numbers drift apart for several reasons:
- Data lag. Valuers work from transactions recorded by JPPH, the government valuation department. A sale can take three to six months to complete and be compiled, so in a rising area the evidence trails the market.
- Few comparables. In a small estate, or for an unusual unit, there may be only a few recent sales. One cheap sale can drag the figure down.
- You paid for something personal. Buyers sometimes pay extra for a particular house, perhaps near family or a school. A valuer will not price that in.
- Caution. If a loan goes bad, the bank recovers it at auction, and valuers can face negligence claims if their figures prove too high. Neither side wants to stretch.
- New projects. Developers set launch prices themselves, and valuers are not involved in that pricing. When a valuer later compares a new unit with resale evidence nearby, typically at completion, the figure can land below the price you signed for.
How the loan is worked out
Banks apply your margin of financing to whichever is lower: the price in your agreement or their valuation. A valuation above the price does not increase your loan, but one below it cuts the loan straight away.
The margin itself depends on you. Bank Negara has capped the loan-to-value ratio for a third house financing facility at 70% since November 2010. For a first or second home there is no such cap, and the worked examples in the press, including the ones I cite below, use 90%. What a bank actually offers you depends on your income and debt service ratio; if you are unsure you will qualify at all, read my guide on housing loans rejected over DSR first.
Worked example: RM500,000 price, RM470,000 valuation
You agree to buy a subsale home at RM500,000 and plan on a 90% loan. You expect RM450,000 from the bank and set aside RM50,000, the usual 10% deposit. Then the valuation comes back at RM470,000.
| Item | What you planned | After the valuation |
|---|---|---|
| Basis for the loan | RM500,000 (price) | RM470,000 (valuation) |
| Loan at 90% | RM450,000 | RM423,000 |
| Your cash towards the price | RM50,000 | RM77,000 |
| Extra cash needed | None | RM27,000 |
A RM30,000 gap in value becomes RM27,000 of extra cash, because you lose 90% of the gap from the loan.
If this were your third housing loan at 70%, the same valuation would mean a loan of RM329,000 and RM171,000 in cash, against the RM150,000 you planned. Either way, legal fees and stamp duty sit on top; my guide to hidden costs of buying property lists them.
Your options, in the order I usually try them
- Get more than one valuation. Banks use different panel valuers and their figures differ. Loanstreet gives an example of one bank at RM500,000 and another at RM530,000 for the same property. Apply to two or three banks at the same time, not one after another, because the completion clock is already running. You normally cannot choose the valuer yourself.
- Ask for a review with evidence. If there are recent recorded sales of similar units nearby at higher prices, give them to the bank and ask it to look again. Asking prices on listing sites will not count.
- Renegotiate with the seller. A low valuation is the seller’s problem too, because the next buyer’s bank will probably see the same evidence. Meeting halfway is common. At RM485,000 in my example the loan stays at RM423,000, but your cash falls from RM77,000 to RM62,000.
- Top up with cash. If the home is right and you can afford it, pay the difference. Do the sums first and keep an emergency buffer; my home loan calculator helps with the monthly side.
- Walk away, if your agreement allows it. This depends entirely on what you signed, which is the next section.
The SPA loan clause and the deadlines
For a subsale, the usual pattern is an earnest deposit of 2% to 3% when you sign the offer letter, the rest of the 10% deposit when you sign the SPA, and the remaining 90% by the completion date. That date is typically three months from the SPA, or three months from when any required consent is received. Most SPAs give a further extension, often one month, with late interest on the unpaid balance at a rate set in the agreement.
The difference between your loan and that 90% balance, which lawyers call the differential sum, is yours to pay, and the bank will not release its money until you have paid it. Donovan & Ho note it is usually requested within two weeks once your loan amount is known. If you miss the extended deadline, the seller can generally terminate and keep the 10% deposit. That is why the valuation matters before you sign, not after.
How to protect yourself:
- Have the offer letter say the earnest deposit is refundable if you cannot obtain a loan of a stated amount, or if the valuation is too low for it.
- Sign the SPA only once you have a loan approval in principle, and ask your lawyer to put a clear date on the loan condition.
- Read the completion, extension and late interest clauses yourself before you sign.
New projects work differently. Developer sales use the statutory SPA form, and the first 10% is payable when that agreement is signed. The National House Buyers Association points out that collecting booking fees before the SPA is prohibited under Regulation 11(2) of the Housing Development (Control and Licensing) Regulations 1989, yet it is common, and promises to refund the fee if your loan is rejected are often ignored. Get any refund promise in writing. I compare the two routes in new launch vs subsale.
What not to do: inflate the price
Now and then someone suggests writing a higher price into the SPA so the loan covers more, with the extra handed back to the buyer under a side arrangement. Do not do it. Lawyers quoted by iProperty in 2024 describe marking up a loan as illegal and say the parties may be liable for cheating, fraud or abetment under the Penal Code. The bank can cancel the loan and take action against the buyer, and you end up paying stamp duty, legal fees and interest on an inflated figure. I will not take part in one, and no buyer should.
Questions about your situation?
Send me the price, the valuation and the loan margin you were offered, and I will work through the gap and your options with you.
Sources: Loanstreet, “Property Valuation Malaysia: Avoid the Valuation Gap”, April 2026; StarProperty, “The price is right, or is it? What happens when bank valuations are lower than negotiated prices?”, January 2018; EdgeProp, “Valuation needed for new houses — experts”, May 2019; The Edge Malaysia, “BNM: Maximum loan-to-value (LTV) ratio of 70% for 3rd home loan”, November 2010; Donovan & Ho, “Cash Flow & Timing of Sub-Sale Property Purchase in Malaysia”, July 2020, updated March 2024; StarProperty, “How long does it take for a sale and purchase agreement of a property to be completed?”, May 2018; National House Buyers Association (from The Sun), “Understanding an SPA”, December 2006; StarProperty (HBA), “Time to legalise booking fees?”, June 2026; iProperty, “Is It Worth It To ‘Markup’ Your Housing Loan In Malaysia?”, November 2024
Jason Lim, REN 84424, IQI Realty Sdn. Bhd. E (1) 1584/6. General information checked on 12 October 2026, not legal, tax or financial advice.