Progressive disbursement and interest during construction.
Interest during construction
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Final month interest
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Loan stamp duty
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Fully disbursed
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Interest + duty
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Buying off the plan: what you actually pay before you hold the keys
When you buy a new build in Malaysia under the common sell-then-build model, you do not take a full mortgage on day one. The bank releases your loan in stages tied to construction milestones, the foundation, the structure, the brickwork, the roof, and so on, as set out in the Schedule of Payment of the sale and purchase agreement. You pay interest only on the slice released so far. That interest is not part of your future monthly instalment. It is a separate, growing cost during the build, and most first time buyers underestimate it badly. This tool projects that interest, plus the loan agreement stamp duty, so the cash drain during construction is no surprise.
The calculator asks for the loan amount, the financing rate, and the construction period in months, then lets you choose an even monthly release or a front-loaded schedule where more is drawn early. Real disbursement follows the developer's milestone schedule, so treat the even option as a smoothed estimate. The point is to size the interest, not to predict the exact month each claim is paid.
A RM450,000 loan across a two year build
Take a RM450,000 loan at 4.2 percent, with construction spread evenly over 24 months. Each month the bank releases RM18,750, so the disbursed balance climbs from RM18,750 in month one to the full RM450,000 by month 24. Interest accrues on that running balance at the monthly rate of 0.35 percent, which is 4.2 percent divided by twelve. In the first month the interest is tiny because almost nothing is drawn. By the final month the whole loan is outstanding, so that month alone costs RM1,575. Summed across all 24 months, the interest during construction comes to RM19,687.50. On top of that sits the loan agreement stamp duty, charged at 0.5 percent of the loan, which is RM2,250 here. That brings the construction phase cost to RM21,937.50.
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The shape of that interest is the part worth seeing. It is not flat. It ramps up almost in a straight line as more of the loan is drawn, which is why the back half of the build hurts far more than the front. The chart breaks down how the construction-phase cost is composed.
Front-loaded schedules cost more, not less
It is tempting to assume that pulling money earlier is harmless. It is not. Switch the schedule to front-loaded and the disbursed balance is higher for longer, so the interest total rises. The lesson for buyers is that a developer who claims aggressively, or a project that races through early milestones, increases your holding cost during the build. A stalled or delayed project does the opposite to your wallet in the short run but brings its own grief.
Common questions on under construction financing
Does this construction interest count toward my home loan interest tax relief?
Possibly, but read the conditions. LHDN, the Inland Revenue Board of Malaysia, allows a relief on interest for a first residential home within price limits, and the relief structure this site models caps it at RM7,000 a year for a qualifying purchase. Whether interest paid before the property is completed and occupied qualifies, and in which years of assessment, depends on the rules in force and your loan documents. Confirm the current eligibility and the exact cap with LHDN before assuming you can claim it.
Is the stamp duty here the only one I pay?
No. This tool shows only the 0.5 percent loan agreement stamp duty. You also pay the separate Memorandum of Transfer stamp duty on the property itself, on a tiered 1 to 4 percent scale, plus legal and disbursement fees. For a new build, developers sometimes absorb part of these under a package, and first home buyer exemptions can apply for homes up to certain price ceilings, so check what your specific deal already covers.