A Comprehensive Guide On Renovation Loans in Malaysia

A renovation loan lets Malaysian homeowners finance major home improvements, whether it’s rewiring an old terrace house, tiling up a wet kitchen, or giving your entire condo a facelift.

Planning to upgrade your kitchen cabinets, fix leaky bathroom tiles, or finally install those built-ins you’ve been putting off? Renovation costs in Malaysia can easily hit RM20,000 to RM100,000, depending on the size and scope. 

That’s where a renovation loan can make all the difference, without draining your savings upfront.

This guide walks you through everything you need to know, from interest rates and eligibility to which banks are offering the best deals for Malaysian borrowers right now. Let’s get to it!

How Do Renovation Loans Work in Malaysia?

In Malaysia, renovation loans are available from most major banks, including Maybank, CIMB, RHB, Public Bank, and Hong Leong. 

These loans are designed to help homeowners pay for structural works, kitchen and bathroom upgrades, tiling, electrical rewiring, and more, without dipping into emergency savings.

How Much Can You Borrow?

The amount you can borrow depends on whether the loan is tied to your housing loan or taken separately.

Bundled Home+Reno Loans

Most banks let you tack on renovation financing to your home loan:

• Up to 30% of the property price/market value can be used for renovation.
• Product caps apply:
  
  • Maybank: Reno portion capped at RM500,000.
  • RHB: High-rise properties capped at RM250,000; landed homes follow the 30% rule.
    
• Tenure can match your home loan, up to 35 years or until age 70.

Why it’s cheaper: Since this is secured against your property, the interest rate is lower, starting from mid-4% p.a. after the July 2025 OPR/SBR cut.

Decoration Add-ons

Some banks also offer “reno-only” add-ons for existing mortgage customers.

Example: Maybank MyDeco

• Loan size: Up to RM250,000
• Tenure: Up to 10 years
• Requires ID/contractor quotation
• Payout may be progressive, with site visits

These are good if you already have a mortgage but want extra financing for works like built-ins or kitchen upgrades.

Unsecured Personal Financing

If you don’t want to tie it to your home loan, you can take a personal loan instead:

• Loan amounts and tenure vary by bank.
• Rates are higher (often 7–13% p.a.).
• Faster approvals and no collateral needed.

Downside: Higher monthly instalments and less favourable long-term cost compared to a bundled renovation loan. We will talk more about this later.

What Banks Look For When Applying for Renovation Loan

• Proof of property ownership
• A detailed contractor quotation
• Possibly an existing home loan with the same bank

What Can You Use a Renovation Loan For?

No, you can’t use it to buy a new sofa set or that fancy fridge from Harvey Norman.

Renovation loans are strictly for fixed, permanent upgrades,not home décor shopping sprees.

That said, they do cover a wide range of essential and structural improvements.

Typical renovation loan coverage includes:

• Kitchen or bathroom overhauls 
• Built-in carpentry like wardrobes, TV consoles, or wet kitchens
• Electrical rewiring and plumbing replacement (especially in older terrace homes)
• Flooring, roofing, and tiling upgrades
• Structural works, such as wall hacking or extensions
• Home security features like alarm systems, auto gates, or CCTV installations

Most banks will ask for itemised contractor quotations, including materials, labour, timelines, and scope. So don’t just WhatsApp your contractor and ask for a “rough estimate.”

Read more: Financial Management: The Secret to Employee Retention in Malaysia

Which Banks Offer Renovation Loans in Malaysia?

Top Malaysian banks offer renovation financing, either standalone or as part of your mortgage.

Notes & Tips

• Progressive payout: Most banks release funds in stages based on renovation progress, not a lump sum upfront.
• Extra costs: Factor in 0.5% stamp duty, legal, valuation, and insurance charges, these can add 1–2% on top of the loan.
• Special tie-ups: Developer packages (like Public Bank x Gamuda) sometimes allow a portion to go towards appliances and fixtures.

Renovation Loan vs Personal Loan: Which Is Better?

Renovation loans are cheaper in the long run, but you’ll need to jump through more hoops to get one.

If you’re deciding between a renovation loan and a personal loan, it really boils down to this: Are you okay with some paperwork in exchange for saving thousands? Or do you prefer fast cash, no questions asked (with higher interest tagging along)?

Here’s a side-by-side to help you decide:

Example Scenario 

Ali borrows RM60,000 for 6 years:

• At 5.2% effective (renovation loan): total interest ~RM9,975
  
• At 9% effective (personal loan): total interest ~RM17,870

That’s a difference of about RM7,895, enough to cover a new set of built-in cabinets or kitchen countertops. Yes, the difference is that big.

Who It’s Best For

• Renovation Loan: Best for major works (kitchen, bathroom, wiring, extensions) where cost runs high and long-term repayment matters.
• Personal Loan: Best for quick, smaller renos or when you don’t have a housing loan.

That said, we don’t recommend you to take a personal loan.

“In 2024, personal loans were the primary cause of youth bankruptcy cases in Malaysia, accounting for 2,776 cases or 46.4% of the total 5,977 declared bankruptcies that year.”- The Star

Read more: IFRS Malaysia: Guide for Businesses Expanding Abroad

Who Is Eligible for a Renovation Loan in Malaysia?

Not everyone who dreams of a Pinterest-worthy kitchen can get a renovation loan.

Banks want proof that you actually own the property, that you can afford the repayments, and that the renovation is properly costed out.

Common Eligibility Criteria

• Age: You must be at least 18, with the loan maturing before age 70.
• Income: For mortgages, banks use an affordability test. For personal loans, product-specific minimums apply (Hong Leong Bank requires RM24k/year).
• Property ownership: You’ll need to show your SPA or property title deed.
• Quotations: An itemised contractor or interior designer quotation is required, banks won’t approve “ballpark” figures.
• Existing loan: Some banks only offer reno financing to existing mortgage customers.

What Documents to Prepare

• MyKad + latest salary slips or EA form
• Sale & Purchase Agreement (SPA) or property title deed
• Detailed renovation quotation with materials and labour clearly stated
• Contractor’s registration/license (sometimes required for larger projects)

Some banks may even request photos of your property before releasing funds, so don’t start tearing down your bathroom walls until the loan is approved.

What Are the Risks or Things to Watch Out For?

Renovation loans can save you money compared to personal loans, but they also come with fine print you shouldn’t ignore. Let’s look at some of them:

Common Risks for Borrowers

• Scope creep
  Renovation budgets almost always run higher than expected. That “RM50k kitchen” can balloon into RM70k if you keep adding extras. Always pad in at least 10–15% contingency.
  
• Staged disbursement
  Banks don’t release the full amount upfront. Instead, money is paid to the contractor in stages after progress claims, and sometimes after a site visit. If your contractor wants a big deposit, you may need to fork out some cash first.
  
• Upfront costs
  Getting the loan approved comes with charges like:
  
  • 0.5% stamp duty on the loan agreement
  • Legal fees (based on SRO 2023 scales)
  • Valuation fees & MRTA/insurance
  • Together, these can easily exceed 1–2% of the loan amount.
    
• Insurance bundling
  Some banks may add MRTA/MLTA or even property insurance into the package. These aren’t always compulsory, so check before signing.

“A renovation loan bundled with your housing loan may raise your monthly instalments, but because it’s a secured facility, the total interest paid over time can actually be lower.”

Conclusion: Should You Get a Renovation Loan in Malaysia?

If you’re planning anything beyond cosmetic upgrades, like tiling, electrical rewiring, or a full kitchen overhaul, a renovation loan is likely your greatest move. 

It’s built for heavy-duty work, offers lower interest than personal loans, and aligns better with long-term planning.

But just like renovation loans give your home a facelift, public relations help brands renovate their visibility. 

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We work with fintechs, law firms, freelancers and SMEs all with one goal in mind, putting your brand first. 

Disclaimer: This article is for general informational purposes only. Always check directly with banks or licensed financial advisors before making loan decisions. Rates, eligibility, and terms may change.