Category: Mortgage (6)

property finance

There are hundreds of different home loan products on the market that fit into each of the types of loans explained below. With so many loan packages offered by Banks and Financial Institutions, how do you know which one suits you best? We have provided some pro’s and con’s to help you understand each loan type.

 

Refinance

Refinancing your home loan to save on your current interest rate and reduce monthly repayments and/or loan tenure and to tap into your home equity for additional funds for emergency and other ventures if your home has increased substantially in value. If your home loan is more than 5 years old, it is likely that you are servicing your loan at a higher interest rate than what is on offer by financial institutions today.

However, with the many competitive home loans products on offer especially ones that will cover any refinancing costs including the exit penalty fee exploring refinancing is a worthwhile for loan which is still under lock-in period. Refinancing is to reduce your current interest rate, monthly repayments and/or loan tenure and also consolidate your debts and deposits for better cash flow management

 

Longest Loan Tenure

Ability to redraw all that you have paid into your loan. Revolving credit limit increases as your property appreciates. Older borrowers. Those with insufficient retirement savings.Revolving credit that increases as home value increases. Re-use all sums paid into loan.Penalty for prepayment fees.

 

Zero Payment (During Construction)

Allow you to pay nothing during the whole contruction period. Construction property. Borrowers who are low on deposits but still want that dream house. Also those who may have money in high interest yielding investments and prefer not to cash-out to raise the deposit for the new house. Pay nothing during construction period.

 

Fully Revolving Credit Loan

Fully revolving credit term loan. Prepay and redraw as much as you like. Free personal accident insurance. Any home buyer.Flexible repayment. Full revolving term loanSlightly higher rates.

 

100% Margin of Finance (SPA Price)

Enjoy up to 100% of loan financing. Suitable for those who are strapped for cash at the beginning of the home loan.0 or low outlay from your ownA high margin, which is rarely disclosed, can result in a substantially higher interest rate than you were expecting.

 

Deposit Linked Flexi Home Loan

A home loan and Checking Account combined into 1. The more money you have in deposit, the lower interest you pay on the loan. Allows pre-payments and withdrawals of pre-paid amounts anytime. Suits business / self-employed people. Those who sometimes have excess cash and who are cash-strapped at other times.You can achieve cost savings if you have a windfall, while having the flexibility to redraw on the money should you need it.Require discipline in managing funds. Interest rates may be higher than loans without such features.

 

Fixed Rate Loan

Enjoy a peace of mind knowing that your repayment will never fluctuate with the economy. Enjoy the lowest fixed rate in history. Anyone who values certainty in his monthly payments.Ease in budgeting and assurance that you won’t be paying more, allows you to hedge against future interest-rate hikes.For insurance lenders, insurance is compulsory.

 

Islamic Home Financing

Syariah compliant Home Financings. Those wishing to have syariah compliant financing.”Halal” and rates are fixed. No penalties chargedMay appear more expensive, however, some lenders offer “rabates”.

 

Floating Rate Loan Packages

with rates that fluctuate with Base Lending Rate or BLR less a spread. Any home buyerUsually have a low interest rate. Repayments are also lower.May not offer the features or flexibility of other home loans. Plus installments will increase as rates increase.

 

Investors’ Home Loan / Low or 0 Lock In

Buy and sell, then turn in a quick profit. Check out home loans with zero or low ‘Lock-In’ periods. These home loans allows you to sell the property and pay off the loan early without penalties. Suitable for those who buy and sell, then turn in a quick profit. Allows you to sell the property and pay off the home loan early without penalties.This home loan normally is higher in interest rates.

 

Low Deposit Loans Low on deposit?

Check out home loan that offer high Margin Of Finance or interest servicing only. May benefit 1st Time Owners. Suitable for those who are strapped for cash at the beginning of the home loan.You may be able to take on a bigger home loan, on the assumption that your income will grow.Payments usually increase after few years. May revert to standard.

 

Hybrid Loans (Fixed & Floating)

A home loan to enjoy fixed rates for a few years then revert to floating rates subsequently. Those who value certainty for a fixed period or think that interest rates may drop in the medium term.This type of home loan provide certainty for a fixed period of time. Be prepared for a jump in installments when the rate reverts to floating status, especially if interest rates creep up during the fixed-rate period.

mortgage_application

Most important step in purchasing the property is apply the loan from any of the financial institute in the country, it is the responsible for the buyer to know and understand the procedure for the loan application. the following are some of the tips and required documentation that you need to be prepare when apply the loan in order for you to get your loan to be approved on the given time frame without any delay.

 

First, for a loan application, the applicants should prepare several necessary documents. The documents are:

1. Photocopy of identity card
2. Latest 3 months pay slip
3. Company registrations (for self employed)
4. 6 months bank statement (salary credited account)
5. 6 months company current account (self employed)
6. Latest EPF statement
7. Borang B with tax payment slip
8. Personal savings/ current account (latest 6 months) or fixed deposit
9. Tenancy Agreement if property is rented out

The applicants should not always be very confident with the load approval, since there are chances for the loan to be rejected by the bank. Besides that, there are also few things which should be considered by the buyer before purchasing a house. There are tips on how buyers can handle these situation. Among the tips are:

1. Do not get stressed and submit your application to all the banks if the loan is rejected. Find out the reason for the loan rejection and understand the criteria required by the banks to improve the loan approval chances. Please understand that, different banks have different approval criteria.

2. Don’t be over confident on the loan approval and check with the banks before paying deposit for your house.

3. If the buyer pays an extra 10% of your installment towards the principle of the loan, you will save a minimum of 4 years tenure.

10 Things You Should Know Before Refinancing

There’s more than one way to tie a shoe, and many more ways to botch a refinancing concern. The following are the top 10 mistakes refinancers make:

  1. Automatically refinancing with your current lender without shopping around
  2. Assuming lower rates will automatically save you money without considering overall cost versus savings
  3. Procrastinating over applying for a home loan while waiting for interest rates to drop. Don’t gamble on better future rates.
  4. Failing to get your new rate locked in writing
  5. Not doing your sums. Decreasing your interest rate by at least 0.75% to 1% will save you about $100 a month on a $150,000 mortgage
  6. Switching loans or lenders without clarifying whether the total costs (including establishment fees, legal fees, stamp duty fees, ongoing fees) are outweighed by the savings in interest
  7. Not having a lender or broker evaluate your credit rating and regularly revise your financial position
  8. Not knowing the true cost of refinancing. Make sure your lender provides you with written statements on application fees, deferred establishment fees, or break costs on fixed loans.
  9. Falling prey to the lure of honeymoon rates, which ultimately revert back to their original or higher rates at the end of the introductory period.
  10. Taking out money to pay off credit cards with no intention of changing spending behavior, racking up further debts while drawing out more home equity. Don’t turn what could be a short-term debt into a long-term debt

Mortgage Reducing Term Assurance (MRTA) is also frequently referred to Mortgage Life Insurance. MRTA helps you settle your housing loan in the event something happens to you.

 

Although many people don’t like talking about it, disability, illness or death can occur any time. MRTA will cover the unpaid portion of your loan if this happens. It gives you peace of mind and protects your family from losing a home. It provides coverage even during the construction period. The premium is reasonable, and it can even be financed by your bank.

 

What are the benefits?

  • Lump sum repayment to your mortgage loan in case of death or total and permanent disability due to natural causes, illness or accidents.
  • Coverage is 24 hours, worldwide.
  • Premiums can be financed by the bank.
  • Discount on the premium for joint life application if your home is jointly owned by your spouse or immediate next of kin.

 

What does MRTA cover?

It covers disability, illness or death and also total and permanent disability. However, there are exclusions such as:

  • Death due to suicide and AIDS/HIV
  • Total or permanent disability due to self-inflicted injuries, armed forces, riot and civil commotion, flying other than as a fare-paying passenger, racing on a horse or wheels
  • Pre-existing conditions such as AIDS/HIV

 

How much would my premium be?

Premium factors depend on the sum assured, interest rate, term, construction period, premium financing, joint-life, age at next birthday.

If you are between 18 and 60 years of age and in good health, you are eligible to take up MRTA. You can always make an application by filling up an application form at the Bank.

Mar
15

Housing Loans

home-loans

Introduction

Buying a house is an exciting event. It will probably be the biggest purchase you will ever make in your life. Understanding the steps involved in securing a housing loan will help you save time and avoid uncertainty and anxiety.This information in the following pages will give you an insight into the various issues on financing a house and outlines the major steps in the overall process of financing a house. It guides you through the basics, explains the technical terms and gives you invaluable tips on financing a house.

 

Buying a House

Buying a house is a major step, so it deserves careful thought and planning. If you are buying a property under construction, you should check the background of the developer. You should ensure that the developer:

  • Has a valid licence issued by the Ministry of Housing and Local Government which is still in force (not expired)
  • Has a valid advertising and selling permit issued by respective local authority which is still in force
  • You have the right to enquire from the developer, information on licence and permit. You can also refer to the Ministry of Housing and Local Government for further clarification. A developer with a good track record reduces the risk of the project being abandoned.

Continue reading ..

These are the basic information that every home buyer should equip themselves with pertaining to Base Lending Rate.

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What is Base Lending Rate (BLR)?

  • A minimum interest rate calculated by financial institutions based on a formula which takes into account the institutions cost of funds and other administrative costs.
  • Typically similar amongst major banks.
  • Adjustments to the BLR are made by banks at the almost same time, though not regularly.
  • BLR adjustments correlate with adjustments of the Overnight Policy Rate (OPR) which is determined by Bank Negara Malaysia (BNM) during Monetary Policy Meeting
  • Effective 1 November 1995, BNM imposed a ceiling on the BLRs quoted by banking institutions. The ceiling rate would be determined by a formula. This framework was further revised on 1 September 1998 to enhance the speed of transmission of changes in BNM’s monetary policy (via revisions to intervention rate and SSR) to changes in the economy’s interest rate levels.
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