Hi all,

I'm new to this loan thing, can please give some feedback?

There's this loan which has loan account and current account where interest count on daily basis.

Let's say I take a loan of RM200,000 at interest rate of 4.2% per annum. Payment of eg. RM1000 per month.

(Just in theory) After a few days, I bank in RM200,000 into my current account.

What is the interest I need to pay, is it the interest calculated from the start day of my loan to the day I banked in RM200,000?

If so, then my monthly installment will still continue (RM1000 per month) but paying only to principal. And at the end of the lock in period (3 years lockin - 3% penalty). I can settle off this loan and get back the extra principal I have paid (RM1000 x 12 month x 3 years = RM36000)?

From what I've found out when I asked SCB about this kinda loan (housing loan+current a/c).

Example:
Loan Amt: 100,000
Interest: 4.2%
Monthly Repayment (estimate only - 15 yrs tenure): 905

If u deposit 50,000 into the current account linking to the housing loan, it'll automatically ofsett the loan amt to 50,000. Hence:

Principal: 50,000 (the balance of 50k still remains as unpaid but with the current a/c deposit of 50k, it automatically stops interest on this balance)
Interest: 4.2%
Monthly Repayment (estimate only - 15 yrs tenure): 905
(Actual repayment is 452)
(905-452=453) (this 453 should be parked into the principal amt la)

I could be wrong though.

Do call up a bank officer for a better clarification.

But then again, if you already have the cash - what is the point in applying for a loan?

Take your example, let's say after putting 50,000 into current account. Then now we have Principal of 50k + monthly commitment which 50/50 goes to principal and interest. In an event of a misfortune, how much will nominee get for the MRTA?

I'm guessing it's Loan Amt - Current account - principal (monthly repayment)?

Hey,

Not really sure on the MRTA value.

Coz for MRTA, you can choose to buy 15 yr (as per tenure period) or 10 yr, up to you & also bank's discretion. If say you buy 15 yrs, then MRTA shld be able to cover the whole loan tenure (actual loan amt. Not the 50k after deduct the current a/c.).

You do know that if you buy MRTA - the MRTA money (if there is any misfortune), it will go to the bank to offset your home loan right?

And your 50k current a/c amt will go to whoever you nominate under your Will.

Oh yea, please take note that there will be a service charge (forgot how much - not sure is it RM50) monthly to 'combine' both accounts (home loan & current account).

Did I answer your question?

Yes you answered my question, thanks.

---

Added on September 7, 2010, 6:39 pmI have a loan of RM250k, then i have 100k cash.

If I offer to take a loan amount of 150k instead, will the interest rate be better/lower? I think it's better rather than to opt for flexi, but if the interest rate is still the same, I don't see any benefit either. Any comments?

This post has been edited by PurpleBrinjal: Sep 7 2010, 06:39 PM

The Flexi loan function is to reduce the interest by offset the cash in your current account and calculate the interest base on the balance.

Please bear in mind, even if you have RM200k loan and put RM200k cash in the current account, you still own the bank RM200k. The RM200k in current account is ALWAYS your cash, not the bank. At this time if you check loan statement it will be zero balance (only for full flexi loan), but if you ask for settlement, bank will say you still have to pay RM200k, simply because the RM200k in current account is STILL your cash. Bank have no right to use it to do settlement unless you ask for it.

So, if let say you dump in RM200k in current account, MRTA still pay out according to the coverage chart.

If you wonder what will happen to your RM200k in current account, it will be your family/wife or anyone have the right to claim it according to your will or nomination.

From all the comments on forums that i've read, usually lower loan amount will get lower rates. But then again, i think it's the same thing.

If you borrow more - higher interest rates but still need to pay interest.
If you borrow less - lesser interest rates but again still need to pay interest.

But bear in mind, interest is based on balance of principal loan amt. I think if you borrow less will be better coz interest rate is based on lower amt borrowed.

Hi PurpleBrinjal,

Refer to your scenario, you have loan of RM250k and you have 100k cash.

Different between traditional and flexi loan,

1. Traditional = (eg. interest = 4%, tenure = 30 years)
-use 100k as downpayment, so your loan amount is 150k
-You installment = RM716


* The thing you need to do is just pay RM716 for 30 years then your loan will be settle. Total installment = RM257,805.27
* You had pay 100k as downpayment at starting, so total payable = RM357,805.27


2. Flexi (eg, interest = 4%, tenure 30 years, dump in cash of 100k since the 1st day of your tenure)
-loan amount is 250k, and dump in the cash 100k into the current account to save interest
-your installment is RM1193


* Although you had dump in 100k into your current account, but every month you still have to pay the RM1193 as your installment.
* The 100k that you dump into your current account can help you to offset the interest and shorter the tenure.
* So, you tenure will become 13.67 years, or 164 months (calculate by software), When reach 164 months your loan balance will become 100k, and
settle the loan by your 100k cash in the current account.
* The interest you save is RM134,394.41, total installment = RM195,278.60,
* Add the 100k which you had dump into your current account from the beginning, total payable = RM295,278.60,



Secondly, MRTA, MRTA is call as Mortgage Reducing Term Assurance, which the sum of assurance will be decrease yearly. The MRTA's sum of assurance of every years will be written on the MRTA policy. (eg. MRTA 100k sum assure at beginning, then 10 year later the MRTA sum assurance will become 70k). So, this meaning that what so ever that you do on your loan will not affecting your MRTA sum assurance, unless you surrender your MRTA assurance earlier.


Hope this can help you to have a better understand about the different from the traditional, and flexi loan. And also the MRTA.


Please let me know if you do need help in getting a homeloan. Thanks.

Regards,

Axtan, Ong
Lead Mortgage Consultant
Home Save Mortgage Consultancy
+6 017 5500905

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This post has been edited by Axtan_home.save: Sep 7 2010, 08:08 PM

Good stuff Axtan,

But I am still confused on how does the flexi mechanism shorten the period? From your calculation I can see that Flexi and dump in cash will be better.

So in a scenario that I would want to buy a 500k house, loan 423k (85%). And I dump in some cash make it until 250k left, the tenure will be shorten? How much interest can I save?

thx

HI Surf-it,

If you want to buy a 500k house, loan 423k (85%),

1. Without dump in money
* Installment = RM2,019
(eg, interest = 4%, tenure 30 years)

* Total installment = RM727,007

2. dump in money in downpayment make it loan only 250k. (Additional downpayment 173k)
*installment = RM1193
(eg, interest = 4%, tenure = 30 years)

*Total installment = RM429,673
* Total payable = RM429,673 + RM173k
= RM602,673

3. Dump in money into current account, make it loan only 250k (dump in 173k)
*installment = RM2,019
(eg, interest = 4%, tenure = 30 years)

* Your tenure will become 13.42 years, or 161 months, the interest save is RM230,099.98.
* Total installment = RM 325,059
* Total payable = RM 325,059 + RM173,000
= RM 498,059


The flexi loan can help customer to save interest and shorter the tenure whenever there are cash in the current accountm.
Whenever a installment being paid, it will separate into 2, which is deduct principle and pay interest. In your scenario, you put 173k into your current account to offset interest, this make the interest become lower, and increase the ratio of principle against interest, so your installment go more toward to deduct principle rather than paying interest. Whenever your installment go more toward to deduct the principle than usual, this meaning that you are shortening your loan tenure and saving interest.
This is the concept of why flexi current account can shorter the tenure and save interest.


Please let me know if you do need help in getting a homeloan. Thanks.

Regards,

Axtan, Ong
Lead Mortgage Consultant
Home Save Mortgage Consultancy
+6 017 5500905

Visit us in Facebook and ask a question

If you interested to know how, i can sent you a flexi loan calculator, from the amortize table in the calculator, you can clearly see how it works.

Pm me your email, i can sent it to you if you want.

through flexi acc and dump 100k into the acc

you still need to pay the agreed amt of monthly installment , of course your tenure is reduced. the good thing is you can take out the money when you need it.

whereas traditional acc , you dont dump in 100k but at X year, you settle straight with your 100k ... it should be the same ?

Nope, it's totally different with traditional loan.

Hi, Alfredfx,

It won't be the same, if you dump in money at x year, then meaning that the 1st year to x years you do not have money in your account, then you doest not reduce the interest. Meaning you still have to pay full interest at the beginning to x years. (eg, flexi, u put 100k in current, then your installment might be left 100k afterr 15th years; if traditional, you might have to pay for 25 years, only the loan amount will left 100k, then only you can settle it.)



Please let me know if you do need help in getting a homeloan. Thanks.

Regards,

Axtan, Ong
Lead Mortgage Consultant
Home Save Mortgage Consultancy
+6 017 5500905

Visit us in Facebook and ask a question

Thanks man, I like your professionalism and speed of response. will remember your contact

Hye..bro,coul u email me this calculator also??

shyfulnizam@yahoo.com


Thanks alot bro..hehe

Is there any bank that extend their loan to renovation cost?

Property: 420k
Downpayment : 120k
Loan: 300k

30 years

Any latest mortage rate for loan packages ?


Let say im taking 300k loan, 120k downpayment, and i got another 100k in EPF (6%annually)
Which options will be the best ?

1. 100k Keep in EPF (6% annually)- Continue FLEXI 300k loan.
2. 100k Put in FLEXI bank loan (in current account) to offset interest/tenure
3. 100k Put in with Downpayment of total 220k ( loan will be 200k )

I think 3rd option is the best... but i will not have any cash flow.....So 1st or 2nd option the best ?

Please enlighthen me


Thank you

This post has been edited by xjia: Feb 27 2012, 09:23 PM

Flexi Loan is the best, espcially for own stay and businessman.

Key benefit of flexi loan is that it allows you to park your monies in an account where it is "earning" same interest rate as your housing loan. The monies is at call, meaning can withdraw anytime without penalties.
Some examples when it is useful:

- When you want to park funds for emergency expenses. E.g. Flexiloan for own stay property. Financial planning recommendation is to keep at least 6 months worth of expenses in liquid funds. You can park these 6 months monies into this flexi account to offset the interest. Since the money is at call, you can withdraw if you need it for emergency.
- When you want to park investment monies while waiting for opportunities. e.g. You timed correctly and cashed out your stocks just before the Greece crisis erupted. Now you got cash on hand awaiting for stock markets to dip before going in again and need somewhere to park the money while waiting for 6mths to 1 year. Flexi account is where you can park the money instead of FD.

can anyone here know which bank still having full flexi mortgage loan for business premise ? which bank offering good rates on full flexi loan for business premise ? interested to take RM275,000 for 15 years... no cashout just the loan amount that needed to settle off my current HSBC bank..