Refinancing a Home Loan in Malaysia: Legal Fees, Documents and Process

In Peninsular Malaysia, the legal fees for refinancing a home loan are calculated on the new loan amount under the Solicitors' Remuneration Order 2023 (SRO 2023): 1.25% on the first RM500,000 and 1% on the balance, plus 8% SST. On top of that you pay 0.5% stamp duty on the new loan, the cost of discharging your old bank's charge, and disbursements. For a RM450,000 refinance, the loan agreement fee works out at about RM5,625 before SST. This guide breaks down the legal costs, the documents you need and the legal process from letter of offer to release of the new loan.

What does a lawyer do when you refinance a home?

Refinancing means replacing your existing home loan with a new one, usually for a lower rate or to take cash out. Legally, it involves two pieces of work running side by side: discharging the old bank's charge (the redemption) and preparing the new loan and security documents for the new bank.

The lawyer's work covers:

• getting the redemption statement from the old bank, showing the amount needed to settle the old loan;

• preparing the loan agreement and the new charge or assignment for the new bank;

• coordinating the release of the new loan to pay off the old loan;

• registering the discharge of the old charge and the new charge at the land office (or, for property still under the developer's master title, handling the reassignment and new assignment instead); and

• arranging stamping of the documents and the handover of title documents.

For more on the discharge side, see Discharge of Charge By Lawyers.

How much are the legal fees for refinancing?

The main cost is the legal fee for the new loan agreement, calculated on the new loan amount under the SRO 2023 scale (the same scale as an ordinary home loan):

The SRO 2023 scale for loan and charge documents is 1.25% on the first RM500,000 (minimum RM500), then 1% on the next RM7 million, with the fee above RM7.5 million negotiable but not more than 1%. It is calculated on the new loan amount, not on the value of the house. SST at 8% applies to legal fees. Lawyers may give a discount of up to 25% on this scale, but not below the minimum fee.

Besides the loan agreement fee, budget for:

• Stamp duty on the new loan – 0.5% of the new loan amount (for example, RM2,250 on a RM450,000 loan);

• Discharge of the old charge – a separate, much smaller legal fee under SRO 2023, plus disbursements; see our discharge of charge cost breakdown;

• Disbursements – land searches, registration fees for the charge and discharge, stamping, courier and similar out-of-pocket costs; and

• Valuation fee – charged by the bank's valuer, not a legal cost, and based on the property's value.

Some banks offer to absorb or subsidise part of the legal fees for a refinance as a marketing incentive. Ask the bank at approval stage whether a package that covers legal fees is on offer, and what conditions (such as a lock-in period) come with it.

"The most common mistake in refinancing is comparing interest rates only and forgetting the legal fees and the stamp duty on the new loan. Saving RM100 a month in interest means little if the upfront cost takes years to recover. Work out the break-even point first," says Akmal Saufi Mohamed Khaled, lawyer and principal of ASCOLAW (Messrs Akmal Saufi & Co).

What documents do you need to refinance a home?

• The letter of offer from the new bank;

• A copy of the title, or for property without its own individual or strata title, the sale and purchase agreement and the original loan agreement;

• The redemption statement from the old bank;

• Your identity card and income documents; and

• The latest quit rent and assessment bills with proof of payment, if requested.

Your lawyer and the bank will tell you if anything else is needed for your particular property.

What is the legal process for a refinance?

1. Letter of offer accepted – you accept the new bank's offer and appoint the lawyer (for the new loan, usually a firm on the bank's panel).

2. Redemption statement requested – the lawyer asks the old bank for the redemption statement and the undertakings needed to release the title documents.

3. Documents signed and stamped – you sign the new loan agreement and charge or assignment, and the loan agreement is stamped at 0.5%.

4. New loan released – once the bank's conditions are met, the new bank releases the loan to settle the old loan.

5. Discharge and new charge registered – the old charge is discharged and the new charge is registered at the land office. For property without an individual title, the old bank reassigns its rights and the new bank takes a fresh assignment.

6. Completion – the title (or original documents) is held by the new bank, and you start paying the new instalments.

How long does refinancing take?

As a general guide, the legal process takes about two to three months from the date you receive the letter of offer. The time depends on how quickly the old bank issues the redemption statement, the type of title (individual, strata or master title) and registration at the land office. Property still under the developer's master title, without an individual title yet, may take longer because it involves assignments rather than a registered charge.

Is refinancing worth it?

Refinancing is worth it when the long-term interest savings are more than the upfront costs (legal fees, stamp duty, valuation). To find your break-even period, divide the total cost of refinancing by your monthly saving on instalments. If you plan to keep the property for longer than that period, refinancing usually makes sense. For the financial side of the decision, including rates, cash-out and when refinancing makes sense, read our broader guide to home refinancing before moving on to the legal stage.

How ASCOLAW can help

Want to know the actual cost and timing of your refinance before you sign the letter of offer? ASCOLAW (Messrs Akmal Saufi & Co) can review your letter of offer and title details, give you a breakdown of the legal fees, stamp duty and disbursements, and explain the steps involved.

Fill in the ASCOLAW enquiry form below with your new loan amount, property type and current bank.

Frequently asked questions

How much are the legal fees to refinance a RM500,000 home loan?

For a new loan of RM500,000, the loan agreement fee is RM6,250 (1.25%), or RM6,750 with 8% SST. Add stamp duty of 0.5% (RM2,500), the cost of discharging the old charge and other disbursements.

Who pays the legal fees for a refinance?

The borrower pays, unless the bank offers a package that covers legal fees. The lawyer acting on the new loan is usually on the new bank's panel.

Can I refinance a house that still has a loan on it?

Yes. That is what refinancing is: the new loan is used to settle the balance of the old loan, and the old charge is discharged before the new charge is registered.

Is stamp duty charged on a refinance?

Yes. The new loan agreement is stamped at 0.5% of the loan amount. LPPSA financing documents are treated differently, so refinancing an LPPSA home to a bank needs separate advice.

This article is general information only and is not legal advice. Every property transaction is different, so get advice on your own documents before acting. The SRO 2023 fee scale applies to Peninsular Malaysia; Sabah and Sarawak have their own rules.

Related guides

• Discharge of Charge Legal Fees in Malaysia (2026): The Full Cost Breakdown

• Discharge of Charge By Lawyers

• Housing Loan & Loan Agreement Legal Fees in Malaysia

• How to Compare Two Home Loan Offers Before Signing the Letter of Offer

• Legal Fees for Buying and Selling a House in Malaysia (2026 Guide)