Why Legal Fees Matter
When you take a housing loan in Malaysia, the legal fees are a mandatory cost. They cover the solicitor’s work in preparing and executing your loan agreement. Unlike stamp duty or valuation fees, these charges are regulated under the Legal Profession Act and follow a standard fee scale.
Understanding how legal fees are calculated helps you budget accurately before signing a loan agreement.
What Are Legal Fees for Housing Loans?
Legal fees are professional charges paid to the lawyer handling your loan agreement (LA). Banks require this document to be prepared and stamped before disbursing the loan.
These fees are separate from:
- Stamp duty (on the loan agreement and MOT), and
- Disbursement charges (search fees, SST, registration).
Legal Fee Structure in Malaysia
The scale of fees is standard across all law firms in Malaysia.
| Loan Amount (RM) | Rate Charged | Example Cost |
|---|---|---|
| First RM500,000 | 1.0% | RM5,000 |
| Next RM500,000 (RM500k–1m) | 0.8% | RM4,000 |
| Next RM2,000,000 | 0.7% | RM14,000 |
| Next RM2,000,000 | 0.6% | RM12,000 |
| Above RM5,000,000 | Negotiable, ≤0.5% | Varies |
Note: Some firms may charge a minimum of RM500 even for smaller loans.
Disbursement Charges Explained
Besides legal fees, borrowers also pay disbursements—miscellaneous charges incurred during the legal process. Common items include:
- Search fees (title and bankruptcy checks)
- Land office registration
- SST (6% on legal fees)
- Courier and printing charges
- Valuation report fee
Worked Example: RM500,000 Loan
Let’s say you are taking a RM500,000 housing loan:
- Legal fee: 1% = RM5,000
- SST (6%): RM300
- Disbursements: ~RM1,000
- Stamp duty (on LA): 0.5% = RM2,500
Total upfront legal-related cost: ~RM8,800
SEE MORE: Malaysia Income Eligibility For First-Time Home Buyer Loans
Legal Fees vs Stamp Duty – What’s the Difference?
- Legal fees go to your solicitor for preparing the loan agreement.
- Stamp duty is a government tax on legal documents (SPA, loan agreement, MOT).
Many first-time buyers confuse the two. Both are payable, but they serve different purposes.
Are There Exemptions or Discounts?
- First-time home buyers may enjoy stamp duty exemptions (under government schemes), but legal fees remain payable.
- Some banks occasionally offer promotions where they absorb part of the legal cost.
- Always confirm with your lawyer and bank before budgeting.
FAQs About Legal Fees in Malaysia
1. How much are legal fees for a RM300,000 loan?
About RM3,000 + SST + disbursements.
2. Who pays the legal fees in a housing loan?
The borrower (not the bank) pays.
3. Are legal fees negotiable?
No, the fee scale is fixed by law. Only disbursement costs may vary.
4. Are legal fees tax-deductible?
No, they are not tax-deductible for personal housing loans.
5. Do legal fees differ between banks?
No, but disbursements may vary slightly by law firm and loan structure.
Fredrick is the creator behind houseloancalculatormalaysia.online, dedicated to helping Malaysians easily understand and calculate their home loan payments. With a focus on accuracy and simplicity, Fredrick develops reliable tools and clear guides to empower users to make informed financial decisions. His goal is to provide trustworthy, user-friendly resources that save time and reduce confusion in the complex world of home loans.