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 Need urgent help on home loan calculation/ options

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TSjunior
post Dec 6 2009, 10:44 PM, updated 17y ago

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Joined: Dec 2005
Plan to get a housing loan of RM 150K at interest rate of 3.8. Daily rest calculation. Can pay extra without incurring penalty. Extra payment will always reduce principal.

I've shortlisted 3 options:
(Tenure / Monthly payment / Total Interest)

5 years / RM 2,748.96 / RM 14937.64
7 years / RM 2036.54 / RM 21069.39
30 years / RM 698.94 / 101616.97

Interest rate = BLR 5.6 - 1.8 = 3.8

I'm able to pay RM 2036.54 monthly.

Questions:
1. Which package should I choose?
2. If I go for 30 years option and if I pay RM 2036.54 monthly, will the loan finished within 7 years and with the same total interest? Based on the daily rest calc etc as stated above. Reason being for going for 30 years package is so the monthly installment is lowered to RM 698.94 thus letting me to get loan for 2nd house etc in the future.
3. If I have RM 20K cash, should I dump in to reduce the principal or use it to buy 2nd house? With current BLR - 1.8 = 3.8 and investment rate @ 6%, should I pay my debt or use the $ to invest?
4. Should I prepay more monthly eg. taking 30 years loan at RM 698.94/monthly. I'm able to pay RM 2036.54. The question is should I pay more or channel the money for investment?

Thanks sifu!
TSjunior
post Dec 7 2009, 11:08 PM

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QUOTE(tatatan @ Dec 7 2009, 01:17 AM)
If i am you, i will take 30years loan. And put all my extra money into the current account(flexi account). In case i need money for 2nd home or emergency, i can always withdraw the money. If after 7years, you dont plan to buy another house or anything, you can always choose to full settlement.

Just my 2cents, hope it help you.
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Appreciate your view. After listening to you and some other feedback, I'm 60% leaning towards to the 30 years loan.

Added on December 7, 2009, 11:18 pm
QUOTE(sameer27 @ Dec 7 2009, 01:08 PM)
If you plan to stay in the house, as you can afford it. It's wise to take the 7 years tenure.
If you were to rent it out, you should take the 30years tenure as you can cover it up with the rent.
^that would answer which package you should choose.
2. If you signed the required papers that states that the loan taken RMxxx, repayment within xxxmonths. Then, sure the loan will finish without any other interest.
3. It would be a good option to pay high downpayment as your monthly payment would be drastically reduced. If you plan to buy another house, you should perhaps you that cash as an investment.
4. This is entirely up to you. If you are gonna live there, the faster you pay it off, the better you would feel, as it's all about financial security.

If you are still young, it would be advisable to take the 30years tenure.
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1. I plan to stay for this house, at least for another 3 - 5 years. In the future may want to sell if I go working abroad.
2. I wanna sign up 30 years loan but paying extra like 7 years loan, meaning that I will finish paying by end of 7th year. No penalty for sure but I just wanna make sure the total interest rate is reduced to 7 year one 7 years (RM 21069.39) instead of RM 101616.97 (interest incurred if opting 30 years loan and paying monthly RM 698.943.
3. OK, I think I better use the cash to re-invest in 2nd house or other investment, rather than use it to settle debt.
4. With money on my hand, I feel financially secure already smile.gif My main concern is whether to settle debt eg. paying house loan or use it for investment. Think I'm leaning more towards investment now as the return interest rate will be higher than housing loan rate.

Added on December 7, 2009, 11:21 pm
QUOTE(jasonhanjk @ Dec 7 2009, 04:12 PM)
Why BLR-1.8%?

There is still one bank offer BLR-2.4% with ZEC at 150k loan.
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Really? Mind to share more infos?
The one I quoted is Citibank, which is the best I've got so far.

This post has been edited by junior: Dec 7 2009, 11:21 PM
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