Refinancing Costs: Legal Fees, Stamp Duty and Timeline

What this refinancing costs guide covers

Refinancing is not a sale, but from the land registry point of view it involves almost all the same steps. Owners are often surprised by the cost, because they assume switching banks is a matter between them and the banks alone.

What actually happens during a refinancing

The existing bank holds a registered charge over your title. The new bank will not release funds until it is satisfied that the old charge will be discharged and its own charge can be registered in its place.

So two matters run in parallel: discharge of the existing charge, and registration of the new one. Both are registration matters at the land office, not merely an exchange of documents between banks.

The stages

• Redemption statement. The existing bank issues a settlement figure valid to a stated date. The figure changes if that date is missed.
• Official title search. To confirm the registered owner, the existing charge, and any caveat or restriction that could block the matter.
• New loan documents. The loan agreement and charge are prepared, executed and stamped.
• Release and settlement. The new bank releases funds directly to the existing bank.
• Discharge and registration. The discharge from the old bank and the new charge are registered at the land office.

What has to be paid

Legal fees for loan documentation are calculated under the Solicitors Remuneration Order 2023 on the new loan amount. They are the same at any firm.

Beyond that there is stamp duty on the new loan agreement, land office registration fees for both the discharge and the new charge, official search costs, and other disbursements.

One point worth checking: from time to time the government issues stamp duty exemption orders covering refinancing in defined circumstances. They are not automatic and the conditions change. Ask whether any exemption applies to your case before assuming the full cost.

The expensive mistakes

Counting the monthly saving alone without the registration costs. If the interest saving is RM150 a month but the refinancing costs several thousand, the break-even period may be longer than you intend to hold the property.

Another: the lock-in period on the existing loan. Many banks impose a penalty if the loan is settled within a set period. Check the original agreement before starting anything.

And the one we see most often: the title is still in the developer name because perfection of transfer was never done. A refinancing cannot proceed until that is resolved first.

How long it takes

For a straightforward matter, two to three months from execution to completed registration. Where the title has to be perfected first, or where a caveat or restriction in interest exists, that period extends.

Frequently asked questions about refinancing costs