--- title: "Selling House with Outstanding Housing Loan Malaysia 2026: Redemption" description: "Yes, you can sell a house in Malaysia with a loan still running: the buyer's bank pays your redemption sum at completion. 2026 guide to redemption statements, lock-in penalties, selling costs, RPGT retention and net proceeds, with worked RM examples." datePublished: "2026-07-29" dateModified: "2026-07-29" canonical: "https://www.superhomes.my/resources/selling-house-with-outstanding-housing-loan-malaysia" --- # Selling House with Outstanding Housing Loan Malaysia 2026: Redemption **Selling House with Outstanding Housing Loan Malaysia 2026: Redemption** Yes, you can sell a house in Malaysia while your housing loan is still running. You do not have to clear the loan first. At completion, the buyer's bank (or the buyer, if paying cash) pays your bank the **redemption sum** directly, your bank releases the title and discharges its charge, and you receive whatever is left after the loan, selling costs and the RPGT retention. Most Malaysian owners sell long before a 30- or 35-year loan ends, so this is the normal way a subsale works. The process is called **loan redemption (*penebusan pinjaman*)**, and the document that drives it is the **redemption statement (*penyata penebusan*)** your bank issues to your lawyer. This guide covers the timeline, how to work out your net cash, what the redemption statement contains, lock-in penalties, what happens if you owe more than the sale price, and the RPGT retention sum, with worked examples in ringgit. --- ## At a Glance: Property Selling & Redemption Milestone Matrix | Transaction Stage | Responsible Party | Key Action / Document | Typical Timeframe | | :--- | :--- | :--- | :--- | | **Stage 1: Offer to Purchase** | Buyer & Seller | Sign Letter of Offer; buyer pays the earnest deposit (usually 2% to 3%) | Day 1 | | **Stage 2: SPA Execution** | Lawyers & Parties | Sign Sale & Purchase Agreement; buyer pays the balance of the 10% deposit | Within about 14 days | | **Stage 3: Redemption Request** | Seller's Lawyer | Request the **Bank Redemption Statement** from the seller's bank | Month 1 – 2 | | **Stage 4: Loan Drawdown & Settlement** | Buyer's Bank | Buyer's bank pays the redemption sum directly to the seller's bank | Month 2 – 3 | | **Stage 5: Discharge of Charge (Form 16N)** | Seller's Bank & Lawyer | Original title released; charge discharged at the land office | Month 3 | | **Stage 6: Balance Sum & Handover** | Buyer's Lawyer | Remaining balance released to the seller; keys handed over | Within the completion period (commonly 3 months, plus a 1-month extension with interest) | The completion period and the late-payment interest rate come from your SPA. For subsale property they are contract terms, not statutory ones, so read the SPA before you promise the buyer a handover date. --- ## 1. Net Cash Proceeds Calculation Formula Your cash in hand is the sale price minus everything that has to be paid out of it: `Net cash = Sale price - Redemption sum - Agent commission (+ service tax) - Seller's legal fees (+ service tax) - Lock-in penalty (if any) - RPGT (if any)` The buyer's lawyer also retains part of the price for RPGT (see section 5). That money is held for LHDN, not lost, and you get back whatever exceeds your actual tax. ### Worked Example A condo in [Shah Alam](/area/selangor/shah-alam) sold at **RM369,000**, the median asking price of for-sale listings in Shah Alam on SuperHomes (n=21; SuperHomes listings, Sep 2026). The owner is a Malaysian citizen who bought in 2019, so the sale falls in the sixth year or later and RPGT is 0%. | Line | How it is worked out | Amount (RM) | | :--- | :--- | :--- | | Agreed sale price | SPA price | 369,000 | | Redemption sum | From the bank's redemption statement (balance plus accrued interest) | 273,300 | | Agent commission | 3% of price, the maximum under the Board of Valuers' scale | 11,070 | | Service tax on commission | 8%, if the agency is SST-registered | 886 | | Seller's legal fee | Solicitors' Remuneration Order 2023: 1.25% of the first RM500,000 | 4,613 | | Service tax on legal fee | 8% | 369 | | Discharge and disbursements | Form 16N, searches, courier (varies) | about 800 | | RPGT | 0% for a citizen from the sixth year | 0 | | **Net cash to seller** | Of which RM11,070 (the 3% RPGT retention) arrives only after LHDN processes your return | **about 77,960** | The redemption sum here is roughly what remains on a RM300,000, 35-year loan at 4.0% after six years of instalments. Your own statement will differ. The buyer's lawyer holds 3% of the price (RM11,070) as the RPGT retention until you file your return; because the tax is nil, it is refundable to you. (Sources: Solicitors' Remuneration Order 2023, in force 15 July 2023; Board of Valuers, Appraisers, Estate Agents and Property Managers scale, 3% maximum commission on sale; service tax 8% from 1 March 2024; RPGT Act 1976 Schedule 5 and s.21B; checked 30 Sep 2026.) ### SuperHomes data: selling costs at typical asking prices | Market (SuperHomes for-sale listings, Sep 2026) | Median asking price | Commission 3% + 8% SST | Seller's legal fee + 8% SST | Selling costs before loan and RPGT | Share of price | | :--- | :--- | :--- | :--- | :--- | :--- | | Shah Alam (n=21) | RM369,000 | RM11,956 | RM4,982 | RM16,938 | 4.6% | | Selangor (n=177) | RM375,000 | RM12,150 | RM5,063 | RM17,213 | 4.6% | | Kuala Lumpur (n=137) | RM462,000 | RM14,969 | RM6,237 | RM21,206 | 4.6% | *Median of active, priced for-sale listings on SuperHomes, September 2026. Costs are SuperHomes calculations on the SRO 2023 scale and a 3% commission; a lower negotiated commission, or an agency that is not SST-registered, reduces them. Disbursements are extra.* Plan on about 4.5% to 5% of the price in selling costs before the loan is even touched. Browse comparable listings in [Kuala Lumpur's Cheras district](/area/kuala-lumpur/cheras) or your own area to test your asking price before you commit to a number. --- ## 2. Bank Redemption Statement (*Penyata Penebusan*) The redemption statement is your bank's written figure for closing the loan on a given date. Your lawyer requests it, usually with your written authorisation, once the SPA is signed. It shows: - **Outstanding balance:** principal plus interest accrued to the statement date. - **Daily interest (*per diem*):** added for each day settlement runs past the statement date. Statements are commonly valid for a limited period, often about a month, so a late drawdown needs an updated figure. - **Lock-in penalty:** if you are still inside the lock-in period in your letter of offer, commonly 2% to 3% of the amount redeemed or of the original loan, depending on the wording. - **Other charges:** unpaid instalments, late-payment charges, and any fee the bank charges for the discharge. - **Undertaking terms:** the bank's undertaking to release the original title and a signed discharge (Form 16N) to the buyer's lawyer or bank once the redemption sum is paid. If you have a flexi or semi-flexi loan, any money parked in the linked current account is not automatically netted off. Ask the bank how excess payments are treated in the redemption figure. --- ## 3. Handling Shortfalls (*Differential Sum*) If the sale price is lower than your redemption sum (negative equity), the buyer's money cannot clear the loan on its own: - **Shortfall settlement:** you must pay the **differential sum** in cash, usually to your lawyer before completion, so the full redemption sum reaches your bank. Until it does, the bank will not release the title (*geran*) or sign the discharge. - **If you cannot fund the gap:** talk to your bank before you sign the SPA. Some banks agree to a sale where the shortfall becomes a separate unsecured balance, but that is a negotiation, not a right. Agensi Kaunseling dan Pengurusan Kredit (AKPK) offers free debt counselling if the shortfall is part of wider arrears. > [!WARNING] > **Lock-In Period Penalty Warning** > Always verify your loan's lock-in dates before you set a completion date. On a RM500,000 loan a 2% to 3% penalty is RM10,000 to RM15,000, and it can disappear if redemption falls a few weeks later. The date that usually counts is the redemption date, not the date you sign the SPA, so check the wording in your letter of offer. --- ## 4. Lock-In Period: Sell Now or Wait? Most Malaysian housing loans carry a lock-in of three to five years from first disbursement. Selling inside it does not stop the sale; it only adds the penalty to your redemption sum. | Situation | What to do | | :--- | :--- | | Lock-in ends before the likely redemption date | Nothing extra; confirm the date in writing with the bank | | Lock-in ends within a month or two of redemption | Negotiate a completion date just after expiry; the extension usually costs less than the penalty | | Deep inside the lock-in | Compare the penalty with the price or rent you would give up by waiting | A 3% penalty on a RM273,300 redemption sum is about RM8,200, which at the Shah Alam median price would cut the example's net cash by more than a tenth. --- ## 5. RPGT and the 3% Retention Sum Real Property Gains Tax is charged on your gain, not on the sale price. For Malaysian citizens and permanent residents the rate is 30% within three years, 20% in the fourth year, 15% in the fifth, and 0% from the sixth year of ownership. Companies and foreigners pay 10% from the sixth year. Whatever your rate, the buyer's lawyer must retain part of the price and remit it to LHDN within 60 days of the disposal date: generally **3% of the price** for a citizen or PR seller and **7%** for a seller who is not. You must file the RPGT return (for example Form CKHT 1A) within 60 days of disposal even when no tax is due, and pay any tax within 90 days. If your actual RPGT is lower than the amount retained, LHDN refunds the difference after it processes your return. (Sources: RPGT Act 1976, Schedule 5 rates effective 1 January 2022, s.21B retention; Finance Act 2024 self-assessment provisions, in force 1 January 2025; checked 30 Sep 2026.) Allowable costs reduce the gain: your purchase legal fees and stamp duty, documented renovation that improved the property, and the agent commission and legal fees on the sale. Our [RPGT guide for sellers](/resources/rpgt-seller-malaysia-2026) shows the calculation. --- ## 6. Where the Buyer's Money Goes | Money | Paid by | Held by / paid to | When it reaches you | | :--- | :--- | :--- | :--- | | Earnest deposit (2% to 3%) | Buyer | Usually the agency or your lawyer as stakeholder, per the offer letter | At completion, or earlier if the offer letter allows | | Balance deposit (to make up 10%) | Buyer | Your lawyer, commonly as stakeholder while the property is charged | At completion, or used towards redemption if the SPA says so | | RPGT retention (3% or 7%) | Deducted from the price | Buyer's lawyer, remitted to LHDN | Refund of any excess after LHDN processes your return | | Loan disbursement (up to 90%) | Buyer's bank | Your bank first (redemption sum), then your lawyer | Balance after redemption, at completion | Because the buyer's bank pays your bank before anyone else, the redemption sum always comes off the top. Ask your lawyer for a completion account before the buyer's bank releases its money, so there are no surprises on the day. --- ## 7. Common Mistakes Sellers Make 1. **Quoting a price without a redemption statement.** Your bank's figure, not your last loan statement, decides your net cash. 2. **Setting completion inside the lock-in by a few weeks.** Check the exact expiry date first. 3. **Forgetting service tax.** Commission and legal fees attract 8% service tax where the provider is registered. 4. **Skipping the RPGT return on a 0% sale.** It is still required within 60 days, and your 3% retention is only refunded after LHDN processes it. 5. **Spending the deposit early.** While the property is charged, the balance deposit is usually held as stakeholder, not released to you. 6. **Ignoring flexi account balances.** Money parked in a flexi account may need to be applied separately to reduce the redemption sum. --- ## Frequently Asked Questions (FAQ) ### Q: Can I sell my house if the loan is not fully paid in Malaysia? Yes. The buyer's bank (or a cash buyer) pays your bank the redemption sum at completion, your bank releases the title and discharges the charge with Form 16N, and you receive the balance. You only need to put in cash if the sale price is less than what you owe. ### Q: How long does the bank redemption process take in Malaysia? Once your lawyer requests it, most banks issue the redemption statement within about two to three weeks. The whole sale, from SPA to completion, usually runs about three to four months because the buyer's loan must be approved, documented and disbursed before your bank is paid. ### Q: What is the date of redemption on a mortgage? It is the date your bank receives the full redemption sum and the loan is closed. Interest runs until that date, which is why the redemption statement shows a daily (*per diem*) figure, and it is usually the date your lock-in is measured against. ### Q: Who keeps the buyer's 10% deposit when there is an outstanding loan? It depends on the offer letter and SPA. The earnest deposit is usually held by the agency or your lawyer as stakeholder, and the balance deposit by your lawyer as stakeholder while the property is still charged to your bank. It is released at completion or applied to the redemption if the SPA allows. The separate 3% RPGT retention is held by the buyer's lawyer. ### Q: What happens if the buyer's bank delays paying the redemption sum? The SPA usually gives a completion period (commonly three months) plus an extension (commonly one month) during which the buyer pays late-payment interest, often 8% a year on the unpaid balance. Meanwhile your own loan keeps accruing daily interest, so ask your lawyer to get an updated redemption figure. If the extension also passes, your remedies depend on the SPA. ### Q: Do I pay a penalty for selling within the lock-in period? Yes, if redemption happens before the lock-in expires. The penalty is set in your letter of offer, commonly 2% to 3%. Ask the bank for the exact figure before you accept an offer. ### Q: Can I redeem the property myself and sell it without a loan? Yes, if you have the cash. Paying off the loan first gives you a clean title and can speed up completion, but you lose that cash until the sale completes. Most sellers let the buyer's bank redeem the loan because the result is the same. --- ## Related Resources - **Selling Guide:** Read our [How to Sell House in Malaysia Guide](/resources/how-to-sell-house-malaysia). - **RPGT Calculator:** Explore [RPGT Seller Rates & Exemptions 2026](/resources/rpgt-seller-malaysia-2026). - **Pricing Strategy:** Learn [How to Price Property for Sale Malaysia](/resources/how-to-price-property-malaysia).