The "best home loan in Malaysia" does not exist. There is only the best home loan for your specific situation — and that situation changes dramatically depending on whether you are buying to live in or buying to rent out. An owner-occupier and an investor sitting in the same bank branch should walk out with completely different loan structures. Most walk out with the same one, because nobody told them the difference mattered.
This guide compares the six largest home loan providers in Malaysia across the factors that actually affect your total cost and cashflow. Not just the interest rate. The interest rate is only one of eight variables that determine how much a loan truly costs you.
Why "Best Rate" Is the Wrong Question
Every comparison site ranks home loans by effective interest rate. That is incomplete to the point of being misleading.
Consider two loans:
- Loan A: 4.47% effective rate, 5-year lock-in, no flexi feature, no legal fee absorption
- Loan B: 4.55% effective rate, 3-year lock-in, full flexi feature, legal fees absorbed
Loan A looks cheaper. It is not. The flexi feature on Loan B lets an investor park rental income in the loan account, reducing daily interest. On a RM500K loan with RM2,000/month parked, that flexi feature effectively saves 0.15-0.20% in interest — wiping out Loan A's rate advantage entirely. The shorter lock-in gives you refinancing flexibility two years earlier. And the absorbed legal fees save RM5,000-8,000 upfront.
Total cost over 10 years: Loan B wins by RM18,000+.
Rate is one input. The full picture requires eight.
The Full Comparison: 6 Banks, 8 Factors
Here is how Malaysia's six largest mortgage lenders compare across every factor that affects your total cost and cashflow. Data as of February 2026.
| Factor | Maybank HouzKEY | CIMB FlexiOwn | Public Bank | Hong Leong Bank | RHB Bank | Bank Islam |
|---|---|---|---|---|---|---|
| Effective Rate | ~4.30% | ~4.35% | ~4.22% | ~4.28% | ~4.32% | ~4.30% |
| Max Margin | 90% | 90% | 90% | 90% | 90% | 90% |
| Max Tenure | 35 years | 35 years | 35 years | 35 years | 35 years | 35 years |
| Lock-in Period | 3 years | 3-5 years | 3 years | 3 years | 3 years | 5 years |
| Flexi Feature | Yes (flexi package) | Yes (FlexiOwn) | Semi-flexi | Yes | Yes | Limited |
| Legal Fee Absorption | Partial (campaigns) | Yes (selected projects) | No | Partial | Yes (refinancing) | No |
| Cashback | Up to 1% (campaigns) | Up to 0.5% | No | Up to 0.5% | Up to 1% (refinancing) | No |
| Islamic Option | Maybank Islamic (MM) | CIMB Islamic (Tawarruq) | No dedicated Islamic | Hong Leong Islamic | RHB Islamic | Fully Islamic |
Reading the table: Lower rate is better. Shorter lock-in is better. Full flexi is better than semi-flexi or none. Legal fee absorption and cashback reduce your upfront cost.
Key takeaway: Public Bank has the lowest rate at approximately 4.22%. But CIMB FlexiOwn and RHB offer better total packages for investors when you factor in flexi features, legal fee absorption, and cashback. Do not optimize for rate alone. Note: all banks now share the same Standardised Base Rate (SBR) of 2.75%, pegged to the OPR — so the difference in effective rate comes entirely from each bank's spread.
For Investors: Flexi Loan Is King
If you are buying property as an investment, the flexi loan feature matters more than a 0.10% rate difference. Here is why.
A flexi loan lets you deposit and withdraw money from your loan account freely. Any money sitting in the account offsets your outstanding principal for daily interest calculation.
Worked example:
You have a RM500,000 loan at 4.30%. Your tenant pays RM2,200/month in rent. With a standard loan, that rent goes into your savings account earning 0.50%. With a flexi loan, you park the rent in your loan account.
| Scenario | Interest Saved/Earned | Net Benefit |
|---|---|---|
| Rent in savings account (0.50%) | +RM11/month earned | RM11/month |
| Rent parked in flexi loan (4.30% offset) | -RM78/month interest saved | RM78/month |
| Difference | RM67/month = RM804/year |
Over 10 years, that RM72/month compounds significantly as your parked balance grows. The total benefit can exceed RM15,000 — from a feature that costs nothing to activate.
Which banks offer full flexi?
- CIMB FlexiOwn — Full flexi with ATM card access to the loan account. The most convenient implementation.
- Maybank — Full flexi available as a package upgrade. Slightly higher spread (+0.10%) for the flexi version.
- Hong Leong — Full flexi. Clean implementation.
- RHB — Full flexi. Often bundled with refinancing cashback.
- Public Bank — Semi-flexi only. You can make excess payments, but withdrawal requires a written application and takes days. Not practical for parking rental income.
- Bank Islam — Limited flexi under Islamic structure. The Musharakah Mutanaqisah contract has structural constraints on flexible drawdowns.
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The Lock-In Period Trap
The lock-in period is the duration during which you cannot fully settle or refinance your loan without paying a penalty — typically 2-3% of the outstanding amount.
On a RM500,000 loan, a 3% early settlement penalty is RM15,000. That is not a rounding error.
Here is why the lock-in period matters:
Scenario: You take a loan at 4.60% (CIMB) with a 5-year lock-in. Two years later, the OPR drops 0.50% and Public Bank is offering 3.97%. You want to refinance. You cannot — not without paying RM15,000.
The cost of being locked in:
| Lock-in remaining | Rate difference | Monthly overpayment | Total cost of being locked in |
|---|---|---|---|
| 3 years | 0.63% | RM165/month | RM5,940 |
| 2 years | 0.63% | RM165/month | RM3,960 |
| 1 year | 0.63% | RM165/month | RM1,980 |
In this scenario, the penalty (RM15,000) exceeds the overpayment cost for remaining lock-in periods of less than 5 years. It makes mathematical sense to wait out the lock-in rather than pay the penalty — but you are still paying more than you should every single month.
The rule: Shorter lock-in is always preferable. A 3-year lock-in gives you refinancing optionality two years earlier than a 5-year lock-in. In a falling rate environment, that optionality is worth thousands.
Bank Islam's 5-year lock-in is a significant disadvantage for investors. CIMB's variable 3-5 year lock-in depends on the package — always negotiate for 3 years.
For the mechanics of how lock-in penalties interact with OPR changes, see our OPR and mortgage guide.
Legal Fee Absorption: Hidden Savings
When you take a home loan, you pay legal fees for the loan agreement (separate from the SPA legal fees). These typically run RM5,000-10,000 depending on the loan amount.
Some banks absorb these costs partially or fully. This is not charity — it is a customer acquisition cost baked into their margins. But for you, the buyer, it reduces your upfront cash requirement.
Which banks absorb legal fees?
| Bank | Legal Fee Absorption | Conditions |
|---|---|---|
| CIMB | Full absorption | Selected developer projects, campaign periods |
| RHB | Full absorption | Refinancing packages specifically |
| Maybank | Partial absorption | During campaign periods (Chinese New Year, Merdeka sales) |
| Hong Leong | Partial absorption | Case-by-case negotiation on large loans |
| Public Bank | No | Never offers absorption |
| Bank Islam | No | Never offers absorption |
Investor implication: If you are purchasing a subsale property (no developer campaign tie-in), RHB's refinancing absorption is the most reliable source of legal fee savings. If you are buying from a developer, CIMB frequently runs absorption campaigns on selected projects.
Public Bank's lowest rate loses some of its shine when you add RM8,000 in legal fees that CIMB or RHB would have covered.
Islamic vs Conventional: What Investors Need to Know
Malaysia offers both Islamic and conventional home financing. For investors, the practical question is: does it affect my monthly payment and total cost?
Short answer: Monthly payments are nearly identical. Total cost over full tenure is within 1-2% of each other. The structure is different. The cashflow impact is similar.
| Feature | Conventional Loan | Islamic Financing |
|---|---|---|
| Structure | Interest on principal | Profit rate on cost-plus or partnership |
| Rate basis | SBR + spread | Base financing rate + spread |
| Monthly payment (RM500K/30yr) | ~RM2,476 | ~RM2,482 |
| Early settlement | Pay remaining principal only | May include unearned profit (ibra rebate) |
| Rate movement | Tracks OPR directly | Tracks OPR (most products are variable rate) |
| Stamp duty | On loan amount | On property value (can be higher) |
The meaningful differences for investors:
1. Stamp duty. Islamic financing agreements are stamped on the property sale price, not the financing amount. For a RM500K property with 90% financing, conventional stamp duty is calculated on RM450K. Islamic stamp duty may be calculated on RM500K. The difference is small but real. BNM has pushed for parity and stamp duty exemptions periodically neutralize this gap.
2. Early settlement. Conventional loans charge you the remaining principal. Islamic products technically include unearned profit in the settlement figure, but banks grant ibra (rebate) that reduces this to near-parity. In practice, early settlement costs are similar. But "in practice" is not "guaranteed" — read your contract.
3. Flexi limitations. Some Islamic products restrict the flexi feature due to Shariah compliance requirements. Bank Islam's offerings are more constrained than Maybank Islamic or CIMB Islamic on this front.
For a comprehensive breakdown of all six Islamic financing structures, read our Islamic vs conventional comparison. If you are a foreign buyer considering Islamic financing, see our Islamic financing for foreign investors guide.
Key takeaway: For most investors, the choice between Islamic and conventional comes down to personal preference and flexi feature availability. The monthly cashflow impact is nearly identical. Do not overthink this decision — focus on the eight factors in the comparison table above.
When to Switch Banks: The Refinancing Decision
Refinancing means paying off your existing loan with a new loan from a different bank, usually to get a lower rate or better features. It is not free. Here is how to calculate whether it makes sense.
Costs of refinancing:
| Cost Item | Typical Amount |
|---|---|
| Early settlement penalty (if within lock-in) | 2-3% of outstanding |
| New loan legal fees | RM5,000-8,000 |
| Valuation fee | RM1,000-2,000 |
| Stamp duty on new loan | 0.5% of loan amount |
| Miscellaneous (discharge fee, etc.) | RM500-1,000 |
| Total (outside lock-in period) | RM9,000-13,500 |
Break-even formula:
Break-even months = Total refinancing cost / Monthly savings
Worked example:
You are refinancing from CIMB (4.60%) to Public Bank (4.47%) on a RM500K loan with 25 years remaining. Lock-in has expired.
- Current monthly payment at 4.60%: RM2,809
- New monthly payment at 4.47%: RM2,774
- Monthly savings: RM35
- Refinancing cost (no penalty): RM10,000
Break-even: RM10,000 / RM35 = 286 months (23.8 years)
That break-even is terrible. A 0.13% rate reduction on RM500K does not justify refinancing costs. The math only works if:
- The rate gap is 0.30% or more (monthly savings of ~RM80+, break-even under 10 years)
- The new bank absorbs legal fees (RHB refinancing packages do this, cutting your cost to ~RM4,000)
- You are also gaining a flexi feature you did not have (which adds RM50-80/month in effective savings)
The rule of thumb: Refinance when your total monthly benefit (rate savings + flexi benefit + any cashback amortized) exceeds RM100/month and your break-even is under 5 years. Below that threshold, the hassle and upfront cost are not worth it.
For calculating your exact loan payments under different rate scenarios, use our cashflow calculator or follow the walkthrough in our home loan calculator guide.
Our Ranking: Best Home Loan by Use Case
Best for Owner-Occupiers
1. Public Bank — Lowest rate at approximately 4.22%. If you are buying to live in and do not need flexi features, this is the cheapest option. The semi-flexi is sufficient for occasional lump sum prepayments.
2. Hong Leong Bank — ~4.28% with full flexi and reasonable lock-in. Good middle ground between rate and features.
3. Maybank — ~4.30% with the largest branch network and straightforward approval process. Reliable if not exciting.
Best for Property Investors
1. CIMB FlexiOwn — Full flexi with ATM access, legal fee absorption on selected projects, and 3-year lock-in (negotiate this). The ~4.35% rate is the highest among the six, but the total package cost is often the lowest once you factor in flexi savings and absorbed fees.
2. RHB Bank — ~4.32% with full flexi and strong refinancing packages. If you are switching from another bank, RHB's legal fee absorption and cashback for refinancing make it compelling. They want your business and they pay for it.
3. Hong Leong Bank — ~4.28% with full flexi. No gimmicks, clean execution. The second-lowest rate among full-flexi lenders.
Best Islamic Option
1. Maybank Islamic — Musharakah Mutanaqisah structure with full flexi feature. The most complete Islamic offering for investors. Rates track conventional Maybank closely.
2. CIMB Islamic — Tawarruq structure with FlexiOwn feature. Good for investors who want Islamic financing without sacrificing the flexi benefit.
3. Bank Islam — Fully Islamic institution with deep Shariah expertise. But the 5-year lock-in and limited flexi are dealbreakers for most investors. Better suited to owner-occupiers who value the institution's Islamic credentials.
The Decision Framework
Stop comparing interest rates in isolation. Use this framework:
Step 1: Determine your use case — owner-occupier or investor.
Step 2: If investor, eliminate any bank without a full flexi feature (Public Bank and Bank Islam drop out).
Step 3: Compare remaining banks on effective rate + lock-in period + legal fee absorption.
Step 4: Run a 10-year total cost calculation including: total interest paid, flexi offset savings, legal fees (absorbed or not), and cashback. Use our cashflow calculator for the payment math.
Step 5: Apply at 2-3 banks simultaneously. Approval rates vary. Having multiple approvals gives you leverage to negotiate spreads down.
For current interest rate data and how OPR changes would affect each bank's effective rate, see our home loan interest rate Malaysia 2026 guide.
The best home loan is the one where total cost — not headline rate — is lowest for your specific situation. For most investors in 2026, that means a full flexi loan from CIMB, RHB, or Hong Leong. For owner-occupiers, Public Bank's rate advantage is hard to beat. Know what you are optimizing for before you walk into the bank.