As a property investor, it makes sense to follow the developments taking place in the Bank Negara rulings on loans. The first measure after the property prices sky rocketed was in 2010 where a 70% loan to valuation (LTV) ratio was placed on individual borrowers with more than 2 existing housing loans. Bank Negara also increased capital charges on banks for housing loans which exceed 90% LTV to discourage lending above 90%. I can easily think of all the 5/95 schemes by developers like SP Setia getting affected by this ruling.

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However, many investors got around this ruling by setting up Sdn Bhd to purchase properties. You can even get up to 90% LTV with some banks! In December 2011, Bank Negara caught on and restricted housing loans taken up by non individuals to only 60% LTV, which is not too far from Singapore’s ruling of 50% LTV.

In 2012, …