KUCHING: Doing away with the documentation fees charged by banks, which range from RM100 to RM600, for housing loan borrowings is been seen as a well-timed move given the current challenging circumstances.
Sarawak Housing and Real Estate Developers’ Association (Sheda) Kuching Branch chairman Dato Sim Kiang Chiok described Bank Negara Malaysia’s recent directive to eliminate the documentation fee as a significant progression for both homebuyers and developers.
“This loan documentation fee, which typically ranges from RM100 to RM600, may seem small in comparison to the overall purchase price of a home, but its removal is still appreciated,” he said on Saturday.
“It helps to reduce the initial cost of purchasing a house, which is usually paid together with the deposit, and makes the home buying process smoother, particularly for those looking for affordable homes.
“The banks can easily absorb this documentation fee to assist with home purchases and related loans.”
But he hoped banks will not replace the current housing loan fee with other charges.
“Bank Negara has to make sure this does not happen,” he pointed out.
Meanwhile, legal officer Getrude Goh said the abolition was timely as the people are grappling with the high cost of living.
“This is great news, especially at this time when the cost of living is high and tough for the people,” she said.
“Definitely it will have a positive impact on customers, given the current economic climate, where every penny counts.
“So this is a very positive step by Bank Negara to help consumers in facing the cost of living issues.”
Another legal officer Jenny said the fee usually was referred to by various names such as ‘loan documentation fees,’ ‘sale of pre-printed forms,’ ‘administration fees,’ or other similar terms.
According to her, the previous practice of charging a documentation fee was actually against the law and “had become a burden for consumers.”
She said the document fee was usually passed on to the borrowers as part of the solicitor’s charges, but in some cases, solicitors are compelled by the banks to absorb these costs.
“This leads to borrowers incurring extra expenses when obtaining a loan from a bank and solicitors receiving minimal compensation for their professional services, particularly those purchasing low-cost, medium-cost, and affordable homes,” she stated.
She agreed that the savings ranging from RM100 to RM600, although modest compared to the total loan amount, will lighten the load for the borrower, particularly for those who have obtained loans for affordable properties with a value less than RM300,000.
For a long time, banks in Malaysia had charged a documentation fee ranging from RM100 to RM600 for housing loans.
However, that fee was eliminated on Feb 1, following a notice of cessation from Bank Negara that was sent to all banks.
