With effect from 1 January 2013, all commercial banking institutions are required to adopt standardised documentation for conventional housing loan and home financing agreements involving a principal sum of RM500,000 and below.

The primary objective of this initiative is to enhance borrowers' understanding and comparability of the key terms and conditions of the loan agreements, including the responsibilities and obligations of borrowers and financiers under such agreements.  This initiative is a collaborative effort between Bank Negara Malaysia, PEMUDAH and the financial industry which aims to promote the efficacy of business processes towards enhancing the quality of service delivery in the financial services sector.

Banking institutions are required to present key terms and conditions in a consistent manner following a template developed by The Association of Banks in Malaysia (ABM) in consultation with Bank Negara Malaysia. The template also describes these key terms and conditions using simplified language. This will assist consumers in making comparisons between banks and reduce the risk of borrowers not fully understanding the contractual terms of their agreements due to variations between banks in the description and placement of key terms and conditions, and the use of language that is unclear or complicated. 

Banking institutions are required to adopt this template for all conventional housing loan and home financing agreements offered to individuals for the financing of residential properties valued at principal sum of RM500,000 and below. The principal sum refers to only the loan amount for the purchase price of the residential property. The loan or financing can however extend to cover renovation costs, Mortgage Reducing Term Assurance (MRTA) or such other insurance premium as may be permitted by the banking institution and legal fees incurred in connection to the purchase of the property.

Members of the public may access the template and frequently asked questions (FAQs) at ABM's website at www.abm.org.my.