Most home loan calculators tell you how much you will pay the bank. That is the wrong question. The right question is: how much will you have left after the bank takes its cut and a tenant pays rent?
Total interest over 30 years is a vanity number. It scares people into shorter tenures and higher monthly payments — which destroys the one metric that keeps an investment property alive: monthly cashflow. Here is how loan structure actually affects your returns as a Malaysian property investor.
The Home Loan Formula
Every bank in Malaysia uses the same amortization formula to calculate your monthly installment:
M = P × [r(1+r)^n] / [(1+r)^n - 1]
Where:
- M = monthly repayment
- P = loan principal (purchase price × margin of financing)
- r = monthly interest rate (annual rate ÷ 12)
- n = total number of monthly payments (years × 12)
This formula applies to both conventional loans and Islamic financing (Musharakah Mutanaqisah). The terminology differs — "profit rate" replaces "interest rate" — but the math is identical.
Quick example: RM500,000 loan at 4.75% for 30 years.
- r = 0.0475 ÷ 12 = 0.003958
- n = 30 × 12 = 360
M = 500,000 × [0.003958 × (1.003958)^360] / [(1.003958)^360 - 1]
M = RM2,608/month
That single number determines whether your property is cashflow-positive or cashflow-negative. Everything else — total interest, amortization schedule, principal-to-interest ratio — is secondary.
Current Rates: OPR + Bank Spread
Your mortgage rate is not a number the bank invents. It is built from two components:
Your rate = Bank's Base Rate (BR) + Spread
Since August 2022, BNM requires banks to use the Standardised Base Rate (SBR) — which is pegged directly to the Overnight Policy Rate (OPR), currently at 2.75% (reduced from 3.00% in July 2025). The spread is the bank's margin for lending to you — fixed at loan signing, typically ranging from 1.50% to 2.00% depending on your credit profile and property type.
| Component | Typical Range |
|---|---|
| OPR / SBR (BNM) | 2.75% |
| Bank spread | +1.50% to +2.00% |
| Effective rate | 4.25% to 4.75% |
Most borrowers with clean CCRIS records and stable income land between 4.25% and 4.50%. First-time buyers may get promotional rates as low as 4.00% from banks like Maybank, CIMB, or Public Bank during campaign periods.
For a deep dive on how OPR changes flow through to your monthly payment, see our OPR and mortgage rate explainer.
Monthly Repayment Table: 30-Year Tenure
This is the table you actually need. Monthly installment for common loan amounts at current market rates.
| Loan Amount | 4.25% | 4.50% | 4.75% | 5.00% |
|---|---|---|---|---|
| RM300,000 | RM1,476 | RM1,520 | RM1,565 | RM1,610 |
| RM500,000 | RM2,460 | RM2,533 | RM2,608 | RM2,684 |
| RM700,000 | RM3,444 | RM3,547 | RM3,652 | RM3,758 |
| RM1,000,000 | RM4,919 | RM5,067 | RM5,216 | RM5,368 |
Monthly Repayment Table: 35-Year Tenure
Extending to 35 years reduces the monthly payment but increases total interest. For investors, the lower monthly number is often the correct choice — it maximizes cashflow today.
| Loan Amount | 4.25% | 4.50% | 4.75% | 5.00% |
|---|---|---|---|---|
| RM300,000 | RM1,374 | RM1,420 | RM1,467 | RM1,514 |
| RM500,000 | RM2,289 | RM2,366 | RM2,444 | RM2,523 |
| RM700,000 | RM3,205 | RM3,313 | RM3,422 | RM3,533 |
| RM1,000,000 | RM4,579 | RM4,733 | RM4,889 | RM5,047 |
The difference between 30 and 35 years on a RM500,000 loan at 4.75% is RM164/month. That is RM164 that stays in your pocket every month for 30 years. For an investment property on thin margins, RM164 can be the difference between positive and negative cashflow.
Want the full data? The PropCashflow Ebook includes cashflow-positive property listings with side-by-side conventional and Islamic financing analysis. Get Instant Access — SGD 999 →
How 0.25% Compounds Over 30 Years
A quarter-percent rate difference sounds trivial. It is not.
| Rate | Monthly (RM500K) | Total Interest (30yr) | vs 4.25% |
|---|---|---|---|
| 4.25% | RM2,460 | RM385,492 | Baseline |
| 4.50% | RM2,533 | RM412,034 | +RM26,542 |
| 4.75% | RM2,608 | RM438,965 | +RM53,473 |
| 5.00% | RM2,684 | RM466,279 | +RM80,787 |
Each 0.25% step adds roughly RM75/month and RM27,000 in total interest. Over the full 30-year life of the loan, the gap between 4.25% and 5.00% is RM80,787. That is a real number — but it is spread across 360 months.
The monthly difference between 4.25% and 5.00% is RM224. That is the number that matters for investment decisions, because it directly affects your cashflow every single month.
Why Investors Should Ignore Total Interest
This is counterintuitive, so let's be explicit.
A homeowner who plans to live in the property for 30 years should care about total interest. They are paying every ringgit of that number out of their own salary.
An investor is not paying the loan. The tenant is. The investor's job is to ensure monthly rent exceeds monthly costs. Total interest is irrelevant if the property is cashflow-positive — the tenant absorbs it over time.
The investor's hierarchy:
- Monthly repayment — must sit below rental income minus operating costs
- Rate sensitivity — how much does a 0.25-0.50% rate hike shift your monthly number?
- Tenure choice — longer tenure = lower monthly payment = better cashflow
- Total interest — a number you look at once, then forget
Financial advisors who tell you to "pay off your loan faster" are giving homeowner advice. Investors who follow it destroy their cashflow to save on interest the tenant was going to pay anyway.
For the full framework on evaluating cashflow vs yield, see our gross yield vs net cashflow analysis.
DSR: How Banks Decide Your Loan Eligibility
Before you compare repayments to rental income, you need to qualify for the loan. Banks use the Debt Service Ratio (DSR) to determine how much they will lend you.
DSR = Total Monthly Debt Obligations ÷ Net Monthly Income
Most Malaysian banks cap DSR at 60-70% depending on your income bracket, in line with BNM's responsible financing guidelines. Higher earners (above RM10,000/month) may qualify at 70%. Below that, expect 60%.
How banks calculate your income:
| Income Source | How Banks Count It |
|---|---|
| Fixed salary | 100% of net (after EPF, SOCSO) |
| Variable income (commission, OT) | 50-70% average over 6-12 months |
| Existing rental income | 70% of gross rent (30% haircut for vacancy/costs) |
| Business income | Per tax returns, often with further haircuts |
The 70% rental income rule matters for investors buying a second or third property. If your existing rental brings in RM1,800/month, the bank counts only RM1,260 toward your income. This limits how many properties you can stack before hitting the DSR ceiling.
Worked example:
- Gross salary: RM8,000/month
- Existing rental income: RM1,800/month (bank counts 70%: RM1,260)
- Total income for DSR: RM9,260
- DSR limit at 70%: RM6,482
- Existing car loan: RM800/month
- Available for new mortgage: RM5,682/month
That RM5,682 ceiling comfortably covers a RM450,000 loan at 4.75% for 30 years (RM2,347/month), putting total DSR at 34%. Plenty of room. But add a second investment property at RM2,347/month and DSR climbs to 59% — right at the boundary.
Worked Example: RM500K Cheras Condo
Let's run the numbers on a real-world scenario. A RM500,000 condo in Cheras — one of KL's most popular investment corridors for the price bracket.
Assumptions:
| Input | Value |
|---|---|
| Purchase price | RM500,000 |
| Margin of financing | 90% |
| Loan amount | RM450,000 |
| Interest rate | 4.75% |
| Tenure | 30 years |
| Monthly rental | RM1,800 |
Monthly repayment: RM2,347
Now compare to income:
| Line Item | Amount |
|---|---|
| Gross rental income | +RM1,800 |
| Loan repayment | -RM2,347 |
| Maintenance + sinking fund | -RM308 |
| Assessment tax (prorated) | -RM55 |
| Insurance (prorated) | -RM45 |
| Net monthly cashflow | -RM955 |
This property is deeply cashflow-negative. The RM1,800 rent does not even cover the loan installment, let alone operating costs.
What would make it work?
Option A — Higher rent: You need RM2,800/month to break even. That is a 56% premium over RM1,800 — unrealistic for Cheras at this price point.
Option B — Larger down payment: A 20% deposit (RM100,000) reduces the loan to RM400,000 and the monthly installment to RM2,086. Still negative by RM694.
Option C — Extend to 35 years: Monthly drops to RM2,200, saving RM147/month. Cashflow improves to -RM808. Still negative.
Option D — Lower purchase price: At RM350,000 with 90% financing (RM315,000 loan), the installment drops to RM1,643. With the same RM1,800 rent, you are marginally negative at -RM251 — closer, but still red.
This is why running the numbers before signing the SPA is non-negotiable. A RM500K condo at RM1,800/month rent has a gross yield of 4.3%. That is below the financing rate. No amount of financial engineering fixes a property where the yield sits below the cost of debt.
The minimum gross yield for cashflow viability at 4.75% financing with 90% LTV and 30-year tenure is approximately 5.8-6.0%. Below that, the math does not work unless you bring significantly more equity.
For a step-by-step framework to run this calculation on any property, see our cashflow calculator guide or use the PropCashflow calculator directly.
Flexi Loan vs Term Loan for Investors
Malaysian banks offer two main home loan structures. The choice matters more for investors than homeowners.
Term Loan
- Fixed monthly payment based on the full outstanding principal
- Any extra payments reduce principal but do not reduce your monthly installment (they shorten tenure instead)
- Lower interest rate — typically 0.10-0.20% cheaper than flexi
- You cannot withdraw extra payments once made
Flexi Loan
- Functions like a current account linked to your loan
- Any money you deposit into the flexi account offsets the principal for interest calculation
- You can withdraw the deposited money at any time
- Monthly installment stays the same, but more of it goes to principal (less interest)
- Slightly higher rate — the flexibility premium
Why flexi loans suit investors:
A flexi loan lets you park rental income in the linked account. That money reduces the principal on which interest is calculated — without committing it permanently.
Example: RM450,000 loan at 4.75%. You accumulate RM50,000 in the flexi account over two years from rental collections and savings.
- Interest is now calculated on RM400,000 (RM450,000 - RM50,000)
- Monthly interest saving: approximately RM198/month
- Annual saving: RM2,375
- The RM50,000 remains fully liquid — you can pull it out for a renovation, another down payment, or an emergency
With a term loan, that same RM50,000 paid as extra principal is gone. You shorten the loan by roughly 3 years but cannot access the money again without refinancing.
For portfolio investors holding multiple properties, the flexi structure acts as a cash management tool. Rental income flows in, offsets interest, and remains accessible. The term loan structure is rigid — suitable for homeowners who want to pay down debt aggressively, but counterproductive for investors who need liquidity.
The rate difference between flexi and term (0.10-0.20%) is almost always worth paying. On a RM450,000 loan, 0.15% extra costs roughly RM56/month. If you maintain even RM20,000 in the flexi account, the interest offset saves more than that.
The flexi loan is the investor's loan. It gives you optionality — the ability to reduce interest costs without sacrificing liquidity. Term loans are for people paying off their own home as fast as possible. Investors are not those people.
30-Year vs 35-Year Tenure: The Investor's Choice
Here is the trade-off on a RM450,000 loan at 4.75%:
| 30 Years | 35 Years | Difference | |
|---|---|---|---|
| Monthly repayment | RM2,347 | RM2,200 | RM147/month |
| Total interest paid | RM395,069 | RM473,939 | +RM78,870 |
| Total amount paid | RM845,069 | RM923,939 | +RM78,870 |
The 35-year tenure costs RM78,870 more in total interest. But it frees RM147/month in cashflow for the first 30 years.
If that RM147 is the difference between cashflow-positive and cashflow-negative, take the 35-year tenure. A property that bleeds RM147/month for 30 years costs you RM52,920. A cashflow-positive property that earns even RM50/month after extending to 35 years puts RM18,000 in your pocket over the same period. The swing is RM70,920 in your favor — far exceeding the extra interest.
This is the math that financial literacy posts miss. They optimize for total cost to the borrower. Investors optimize for monthly margin — because monthly margin determines whether the property survives or gets sold at a loss.
What to Do Next
Three steps, in order:
-
Check your DSR ceiling. Pull your CCRIS report from Bank Negara (free via eCCRIS/iCCRIS). Calculate your current DSR. Know exactly how much monthly commitment you can take on before you start property hunting.
-
Run the cashflow calculation. Use our cashflow calculator to model any property with your actual financing terms, operating costs, and rental estimate. The tool shows you the net monthly number — not gross yield, not total interest, but the cash that hits your account.
-
Filter by yield, not price. Properties where gross yield exceeds the financing rate by at least 1.5% are your starting universe. Below that threshold, the numbers rarely work after operating costs. Our rent vs mortgage breakeven analysis shows exactly where those properties cluster across every Malaysian state.
The home loan calculator tells you what the bank takes. The cashflow calculator tells you what you keep. Only one of those numbers determines whether you are building wealth or subsidizing a tenant's housing.