This is my first time into investment. Need some advise.

Property is an office lot (RM450,800) for rental investment. Ready in 2 years time.

Currently these 2 banks offered me the package below.

Bank A
85% Loan
Flexi - Can withdraw money anytime. Per transaction RM25.
20 years loan
BLR -1.95
Without MRTA
5 years lock in

Bank B
90% Loan
Non Flexi - Money in cannot be withdrawn
25 years loan
BLR -1.7
With MRTA 5% (90% + 5%)
5 years lock in

My concern is the extra 5% difference. I can afford the extra 5% but my at the same time now I am also buying my first house (RM377,000) for staying. Already did the booking. It requires 5% down payment too.

The house will be ready in 2 years time, and by then I will need cash to buy furniture and renovation. So I am wondering whether should I get Bank B and save the 5% upfront cash for the office and used it for my house later on.

Which deal is a better deal for me? I'm not too sure how to count this, but is there big difference in terms of interest for Bank A and B?

This post has been edited by auhckw: Dec 4 2009, 02:20 PM

i am a defensive person, would rather choose B, to reserve some cash in hand....(without really looking into the rates yet)

Did you try with others bank? Try to get flexi loan with 90% margin from others bank 1st.

If you have no choice but only this 2 bank, i will go for option 1 if you can afford it. Where by the interest is better and the flexi option and you mention that you have the 5% on hand also. And you still have 2 years time to increase your saving again for the new house's furniture and renovation. But if the money is need to pay for the new house's down payment, then you have no choice but take option 2. (or try to get offer from others bank)


Some summary of both option,


Option 1
85% loan = RM383180
BLR-1.95%
20years

Monthly installment = RM2243
Total interest = RM152449

Pros = lesser interest -1.9%, 20years settle, no need MRTA, flexible
Cons = 85% margin only (RM22540 lesser), installment extra RM145/mth

Option 2
90% loan = RM405720 (MRTA not include yet)
BLR-1.7
25years

Monthly installment = RM2097
Total interest = RM220072

Pros= extra 5% margin, lower monthly installment
Cons = 90% margin, higher interest -1.7% ,MRTA, 25years to settle, not flexible

i only go for flexi loans. easier to dump in money.
instead of monthly rest

Delete

This post has been edited by auhckw: Dec 4 2009, 02:49 PM

Yes, better go for plan A.

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Added on December 4, 2009, 2:16 pmBTW, above are refering to which bank's offer? mind to share?

This post has been edited by ken6828: Dec 4 2009, 02:16 PM

I applied few banks... but came down to this 2 which is the 'best' among them

Bank A = Maybank
Bank B = Affin Bank

I have excluded
UOB = 85%, 20 years, BLR -1.6, Flexi, Zero Movinng Cost, No MRTA
CIMB = 85%, 20 years, BLR -1.7, Flexi, Zero Movinng Cost, No MRTA

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Added on December 4, 2009, 2:21 pmMost banks said for commercial property these days, one can only get 85% loan.

This post has been edited by auhckw: Dec 4 2009, 02:22 PM

as i know CIMB commercial do offer up to 30years tenure. Did you check with your banker?

Check liao.. I am 30 but they give 20 years

How much cash left if you opt for :

1. Bank A

2. Bank B

~Removed~

This post has been edited by auhckw: May 27 2010, 05:18 PM

Think EPF only allows withdrawal for residential props, can anyone confirm?

My take on your scenario is that if you have good savings level(100k is quite decent actually), then better go for flexi for both office n residential.

Good luck mate

Well,

When you are unsure of , always take the flexible approach, Flexi Loan.

Unless , you have the crystal ball to see your future up to next 20 years, nothing is certain of.

Are you very sure tenants pay you on the dot, stay in your premises for the next 20 years ? Have you heard of people trying to get the tenants out bcos of non payments ?

( I do not mind to give a bit of discount if I could collect advance rentals plus deposits so I could dump into my flexi loan account. ) For sure you save interest and peace of mind. Though unconventional way , right ? REIT co collects up to one year rentals in Singapore . Correct me if I am wrong .

Even Maxis, Celcom and Astro give discounts if you go for auto debit , why cannot we ?

Even corporations need Plan A and B. If Plan A fails , moves to Plan B. Flexi loan allows you that.

Flexible Loan gives you the advantages to play with, at the same time saving you interest if you plan for it. There are also investment vehicles you could consider to put in , to earn more. Not have to put back into this flexi loan account.

And also CASHFLOW PLANNING is the most important thing to consider , if int rate is more or less the same.

Planning is the keyword.

( There is also a way to get loan , more than 100% of the property amount , through proper banking channel . You need another source of income to support it .In short, you have to qualify for it.) Just ignore this part if you can. I shall not discuss it openly.

All the best in your planning.

Final decision still be yours i.e IT IS YOUR PLAN, not us.

This post has been edited by SKY 1809: Dec 5 2009, 10:04 AM

Time to finalize which to choose...