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Thursday, September 23, 2004
The One With the Home Loan 

So okay, my father has always wanted us to invest. So...we bought a serviced apartment...recently, around 2 months back. It was something tht didnt acquire the 10% upfront, just the booking fees. So, we decided that we could try to jump into this. The problem for now is the loan.

The developer gave us a list of the banks it's connected to (in which the stamp duty would be free). Nonetheless, following the advise of a colleague, we went in search of the best interest rate for home loans for various banks. But the advise also is to head on to the foreign banks first. Why foreign banks? They offer a pretty impressive package; which includes daily rest, fortnightly scheme, flexipayment and wat-not. Next is insurance hse. AIA and Aetna are offering homeloans too. We didnt opt for these, as we were told it's more of a fixed interest kinda thing.

Okay, so what you need to check for the homeloans would be
1. interest rate (fixed/BLR)
2. daily/monthly rest
3. other benefits

Interest rate
Fixed interest rate is set on the day you signed your agreement with the bank. And it starts right away. There's no extra interest charges. And it doesnt fluctuates. It's FIXED! Automatically you will have to pay the exact amount (as specified by the bank) the very next month and for the next 30 to x years. Most islamic homeloans are fixed interest rate scheme. One advantage would be you would be able to budget x amount of money every month for the rest of tenure period (years/term of loan).
BLR interest rate depends on the BLR fixed by the Bank Negara (subjected to the country's development, economic budget etc). It varies over the years. It fluctuates. You start paying the homeloan once the property is completed. So between that, you would probably just need to pay for the progressive interest rate in which could also vary from as low as RM 50 per month.

Daily/Monthly rest
A daily rest is when the interest rate is counted on the day you pay your homeloan. Where else the monthly rest would not care about the date of when you paid your homeloan. It takes the month as a whole. Of course, daily rest is better because you are subjected to interest payment that is calculated on the exact day. So, lesser interest.

Other benefits
One that I like most would be the part where it is flexipayment. In which, although you only start paying your homeloans once it's completed, you can still start to pay your homeloan after you have signed the contract/agreement with the bank. The amount? It is up to you. The amount will automatically subtracted from the principle amount of the homeloan. It goes the same when you pay extra on your monthly payments. Which means that, by the end of the period, you would probably subtracted an amount of your principle. Less interest!

Oh yes, dont forget about your MRTA (Mortgage Reducing Term Assurance). You could specify the percentage in which you want to be covered. 100% of the insured sum. Etc. If the property would be loaned under 2 names, both can have 100% premium of the insured sum. Some banks include this in their schemes. Some are optional, in which you can actually acquire it from other insurance companies personally.

And also, dont forget about your EPF withdrawal. You are entitled to withdraw from your Account II. If the property is named under 2 individuals, it would be considered a joint property thus, both parties can withdraw the balance in their Account II.
Amount Eligible For Withdrawal

Members can withdraw their savings as follows, whichever is lower :
Individual Purchase
The difference between the price of the house and the housing loan
with an additional 10% of the price of the house
OR
The balance available in Account II.

Joint Withdrawal With Spouse, Family Members or Other Individuals
The difference between the price of the house and the housing loan
With an additional 10% of the price of the house
OR
The balance available in Account II for all applicants
subject to the difference of amount stated above.

For joint purchase, the EPF will firstly process application from the first purchaser and if the amount is insufficient, only then the application from the second purchaser and so forth will be processed.

Note :
For members who have withdrawn their savings to purchase/build a house, they are eligible to withdraw their savings to reduce/redeem housing loan for the same house every three years from the date of the last withdrawal. For further information, please refer to Reduce/Redeem Housing Loan Withdrawal Scheme.

The 1st withdrawal will be given to you straight to your bank account. After that, the withdrawals will paid straight to the bank.


We went to 3 banks respectively.

YearsPublic Bank
(monthly rest)
HSBC
(daily rest)
Citibank
(daily rest)
11.68%1.75%1.50%
2-1.00% + BLR-1.00% + BLR0.50% + BLR
30.28% + BLR0.35% + BLR0% + BLR
40.28% + BLR0.35% + BLR0% + BLR
50.25% + BLR0.35% + BLR0% + BLR
60.25% + BLR0.25% + BLR0% + BLR
70.25% + BLR0.25% + BLR0% + BLR
80.25% + BLR0.25% + BLR0% + BLR
90.25% + BLR0.25% + BLR0% + BLR
100.25% + BLR0.25% + BLR0% + BLR
110.25% + BLR0.25% + BLR0% + BLR
120.25% + BLR0.25% + BLR0% + BLR
130.25% + BLR0.25% + BLR0% + BLR
140.25% + BLR0.25% + BLR0% + BLR
150.25% + BLR0.25% + BLR0% + BLR
160.25% + BLR0% + BLR0% + BLR
170.25% + BLR0% + BLR0% + BLR
180.25% + BLR0% + BLR0% + BLR
190.25% + BLR0% + BLR0% + BLR
200.25% + BLR0% + BLR0% + BLR



Of course, we were attracted to Citibank FlexiHome Loan, especially with it's Loyalty Bonus "The longer you stay with us, the cheaper rate you are going to enjoy" which is it lowers the interest rate according to the maturity years. But we couldn't apply for Citibank because the developer is not listed under Citibank's developers. Next, we opted for HSBC. But we were only approved for 80% of the property amount due to some reasons ie I have 2 cars under my name etc. So, lastly we have to go to Public Bank, as we know of the Manager there. Oh well, we might change to Citibank later on I guess. I just loved the sight of the (-) minus symbol. Anything to lower down the monthly payments.

p/s: we were also advised that since this is an investment property, we should take the tenure period of 30 to 35 years. Anything affordable and bearable. Oh yes, maximum tenure period for foreign banks are 30 years. And the current BLR is at 6%.

*Writing based on the information given to me, and what I actually understand of them.

Here goes to our 1st property together!





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