I think you guys have not met up with more professional mortgage consultant. Let me try to explain this (Btw, I am not a bank officer)

Case : example.
1. Loan amount : 100k
2. Monthly installment : 1k

A. Full Flexi

- you will have 2 accounts : one is saving/current and another is loan account . Let just call them Account S and Account L
- If you have extra money and want to minimize the interest charge onto you to . Then you can pay the usual 1k into Account L and the remaining money (e.g. 4k) into Account S.
- The interest will be charged based on the balance between the 2 accounts, in this case, it could be 95.4k (100k-600-4k, as another 400 is paid on interest).

Semi-flexi :

1. YOu will only need 1 account actually. You can still save interest by putting in extra money into the so-called Loan account. well, if you put in 5k, 1k will goes into payment of installment, while you need to inform (informing is simple, you can tick on the form or put remarks on the online transfer, not like calling or personally going there) the remainly 4k if you want to park under the principal (reducing the principal) or into a virtual account (no number) that you can eventually withdraw if you need the money.

Both will help you to save interest. But full flexi is more flexible as you can easily see the amount of money in the current/saving, and if you need, withdrawal is pretty simple (ATM, check, etc). But you need to pay RM10 per month. This is good if your salary is deposited into your saving or current account and you have lot of cash flow there....so while waiting for the cash to be withdraw or pay for other things, you are actually saving interest.

Semi-flexi, is stil the still same concept and also allowing you to save on interest, but instead of a saving account, you have a so-called virtual account. You still can withdraw but not so convenient like the saving account. This is good to save RM120 per year, and that you dont have much movement in money....if your loan amount is less and your moving cash is not that much, seriously, just take semi-flexi and save the RM120 per year.

Dont be confuse with the payment to reduce principal , this shall be the same for both type of loan. Which means if you want to reduce the principal, the money that you dump in will not be able to withdraw. (of course now some banks offering slightly flexible way).

I would suggest that with both bull or semi flexi account, there is no need to reduce the loan principal, you can put in more cash to reduce interest (into the saving account or the socall virtual account under different loan type respectively). Save the money for contigency.....and you shall only do so (reducing the principal), when you either about to pay off the house loan or really have too much cash to spare and very confident that you would not need the extra money.

e.g. loan principal after 3 years, is 85k ....if you have cash of 40k, no point dump in to reduce the principal. Because the only reason to reduce principal is to save on interest, since both flexi loan already allowing you to do so. Unless you have 85k of cash, and now, you want to pay it off or you just need 40k cash, then you can consider putting int the 45k to reduce the principal.

This post has been edited by spydermind: Mar 6 2012, 06:59 PM