Creative Real Estate Financing

creative real estate financing


What can we do when faced with insufficient cash reserve or low margin of finance from bank(s) caused by stringent lending requirements by Bank Negara or short loan tenure due to age factor?

Does this sound familiar to you? Would you think about..

  1. Delaying the purchase until Bank Negara relaxes the lending requirements for banks
  2. Fabricate income for at least 6 months and reapply again(Illegal! Never do this!)
  3. Use creative financing legally

Most people will adopt Option 1, which is basically just – waiting because we will never know when Bank Negara will relax the lending requirements for banks.

In addition, the desired property you have chosen in the right location, right neighborhood and right price would have appreciated to a much higher value (due to inflation) when Bank Negara finally relaxes the lending requirements.

What about Option 2? It sounds like a smart and creative move. but it’s illegal, so don’t even think about it!

What else can the genuine property buyer turn to?

Good news! We can adopt creative financing to solve the above problem.

What does creative financing look like?

There are many ways in using creative financing. We will use a real life story to explain this technique.

Mr Ali (not his real name), 60, lives in Bangsar and has a big family of 8.

Since a number of his children have already started working and will also soon have their own family, he thought it would be a great idea to buy another property in Bangsar for his children so that they can be close to him.

Hence, he went on a search and buy mission. After a few property viewings with his real estate agent, he found a single storey house which had ticked off everything on his list and was just a stone’s throw away from his house.

The house was priced at RM1.2m. To secure his booking, he placed an earnest deposit with the registered estate agent company, and hurried to get his lawyer to prepare the sales and purchase agreement and proceeded to arrange financing for the property.

Since Mr Ali is a prudent investor and buyer, he has consolidated his cash to pay for his purchase.

His initial option was to pay down RM900k from the cash reserve in hand and borrow RM300k over a period of 10 years.

That sounds good and workable but are there better options? Since he is almost 60 years old, the maximum tenure of loan he can obtain is 10 years.

Let us assume the average interest is at 4.2% and the loan tenure is 10 years. The options available are as follow:

  1. Loan sum RM800K: repayment RM8200 per month.
  2. Loan sum RM600K: repayment RM6100 per month
  3. Loan sum RM300K: repayment RM3100 per month.

Should he take option 1 or 2, he will be burdened with heavy monthly repayment and may end up with no disposable cash left from his salary.

If he takes option 3, all his hard earned cash savings would be exhausted leaving him with no excess cash to renovate his property.

With the above challenges in mind, he decided to seek some recommendations and advice from banker and finance savvy friends.

After reviewing his situation above, his banker and finance savvy friends recommended that he takes up a join loan with his son who is 30 years of age. With that the loan tenure is now stretched to 30 years.

Let us assume the average interest at 4.2% and loan tenure 30 years. The NEW options available are as follow:

  1. Loan sum RM800K: repayment RM3900 per month.
  2. Loan sum RM600K: repayment RM2900 per month.
  3. Loan sum RM300K: repayment RM1500 per month.

Now, he has new options to select from. He decided to take option 2. The repayment is manageable with a sizable balance from his salary and he still has RM300k cash reserve for him to enhance and renovate his property.

We have just described one practical and legal approach to assist genuine property buyers when facing the challenges of tightening credit lending by Bank Negara over the last 3 years. There are many ways to finance your property purchase. Should you require further advice on property purchase or investment you can drop us an email at

Like our Facebook page here —–>

Action Real Estate copyrights reserved. Do not reproduce or copy the content of this post without first obtaining our consent. 

About the Author


Sr. KC Law is a Registered Valuer, Estate Agent and Property Manager with The Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVEAP) of Malaysia. KC Law is also an electronic engineer registered with the Board of Engineer Malaysia (BEM) and received his engineering training from Tunku Abdul Rahman College Malaysia and later at Hatfield Polytechnic United Kingdom. In the 1990’s he was involved with the digital transformation of Telecommunication infrastructure for Maxis and Telekom Malaysia. His passion for Real Estate in the 2000s led him to practice as a real estate negotiator in Ace Realty and later valuation and property management in Rahim & Co International. Several years later he founded Action Real Estate and Action Valuers & Property Consultants. His areas of expertise are in Real Estate Agency, Property Valuation, Property Management and Business Valuation. He is Member of The International Association of Certified Valuation Specialists of Canada, Member of Royal Institution of Surveyors Malaysia, Member of Malaysia Institute of Estate Agents and Member of Business Valuers Association of Malaysia.

8 Ways To Save Up For Your Down Payment

saving up for your down payment

In recent years, more and more average income earners are unable to afford buying their own property.

What has contributed to this situation?

Some say it’s because the banks are too stringent with lending, others would argue it’s because of the rising housing cost, there are also some who say that we are just simply not earning enough.

Turning the questions back at oneself, could the reason also be this – The average income earner do not have enough savings for a down payment to begin with?

Here are eight ways you can start saving up for your down payment!

1. Delayed gratification

We’re all guilty of this, the need for instant gratification.

Does this sound familiar?

Going shopping and suddenly seeing something you really want, its so difficult to resist.

Some of us would succumb to using our credit cards just to get our hands on it immediately.

immediate gratification

Why not pause and hold on to that thought of buying that new iPhone/MacBook Pro (or whatever it may be).

Keep asking yourself, do I need this or do I want this?

Can I afford it?

List down at least 3 reasons to justify your purchase. If it’s to make an impression, think again.

Try this: wait for 3 months and see if you still decide to continue with that purchase.

2. Set a standing instruction

Set aside at least 7% of your salary (a fixed amount every month) as savings before spending.

Set a standing instruction into a separate savings account, unit trust fund or whichever investment vehicle you are comfortable with.

Even on days you forget to save, the bank does it for you automatically.

Check the account after 1 year, you’ll be amazed at how much you’ve managed to put aside!


3. Monetize all your skills & hobbies

Do you have extra skills or hobbies?

Photography? Coding skills? Good at a language? Dancing?

freelance writer

Earn extra cash by doing freelance in your free time!

Sell your photos as stock photos, get paid each time it gets downloaded.

Get on or other freelancing sites to offer your web development services, translation services etc.

If you’re a great dancer, how about teaching at a dance studio part time?

Put these skills and hobbies to use and get paid for them!

No skills? Get behind the wheel!

Drive Uber/Grab, pay down your debts faster and earn extra cash!

Driving uber or grab

4. Set a timer for your air conditioner

You and I know how much we LOVE our air conditioner.

We simply cannot live without it.

Try setting a timer to your air conditioner, so that it is only on for a couple of hours when you’re about to enter sleep, and have it automatically off itself.

You will be amazed at how much money you can save on your electric bills!

Here’s an article by, Guess How Much Your Aircond Contribute To Your Electric Bill?

5. Review your monthly expenses

These include your insurance premium, mobile phone data plan, UNIFI, dietary supplements, facial treatment, massage, manicure & pedicure, gym, petrol etc. Things you regularly spend on every month.

Some expenses are necessary, however they can also be reviewed and tweaked once in a while so that your spending is optimized.

You may not even realize that you may be over paying for some things you under utilize.

Are there cheaper or more cost effective alternatives?

Start reviewing them one by one and you may be able to point out where you can cut back on.

Are you one who increase your expenses on weekly/monthly indulgences once you get a raise?

Is your lifestyle undergoing an inflation?

What is “lifestyle inflation”?

Nadia Khan from described what “lifestyle inflation” is and why it’s causing you to struggle.

She also challenged readers to think in the opposite, when you earn more, you save more instead of spending more.

Because logically speaking, if you spend more, you will likely be in greater debt or financial uncertainty than if you were to save more money.

6. Liquidate all your white elephants

Liquidate everything you no longer use in your home such as electronic appliances, furniture etc.

You will be surprised how much money you can get back by getting rid of white elephants in your home.

You can use listing apps such as Carousell to list your items for sale.

By doing so, you get to kill two birds with one stone- get back some money and clear up the  clutter in your home.

Trust me, this is quite therapeutic!

7. File your taxes wisely, accurately and on time

Do you know what are some of the things you can get tax relief?

Some examples are life insurance, books, sports equipment.

It changes every year after the Prime Minister announces the annual budget.

Pay close attention to tax reliefs, what can be tax deducted and file them accurately.

Remember to keep your receipts for at least 7 years.

8. Eat home cooked food

Not only is eating home cooked food healthier, it also saves you money!

Cook a little extra during dinner and pack the remaining for lunch the next day!

Let’s say a home cooked meal (with moderate, ordinary, non-premium ingredients) cost about RM 4-5, and a meal outside cost RM 8-10.

You would save ~RM 5 per meal, RM 15 per day, RM 90 per week (Ok la, maybe one day you eat out), RM 360 per month, RM 4320 per year!!

Why not start being your own cook?


Q: What are some measures you have taken for yourself to ensure you increase your savings for your property down payment?

Share with us your own tips in the comment box below and share this if you agree! 

Action Real Estate copyrights reserved. Do not reproduce or copy the content of this post without first obtaining our consent.