Hi everybody, i been reading post here from time to time. I just want to say thank you for the constant update and info.

doraemonkiller, you raise a very good calculation. I never thought of it that way. But then would RM220k buy a house 40 years in the future?

I hope i have not offended anybody by giving this reply.

Yup.. Logic question.

Try to look at this from another angle, assuming you keep RM430 every month, using Excel spreadsheet, with compounded interest calculated for 40 years, you will be astonished the amount you will have versus the RM206400 you have calculated.

On your FD calculation it is incorrect. you should take RM100,000, compounded interest for 40 years.

100k x 1.03 = 103k for year 1
103k x 1.03 = ....for year 2
...
Use Excel to do the calculation....
3% interest is consided as on the low side. You can use 3.25 to 4% to calculate to see the best case scenario...

This post has been edited by gsc: Feb 27 2013, 01:35 AM

I jus wonder how bank earn money if the house loan interest is lower than fd. How they gonna make money. I can use fd interest to offset loan interest.

Its a matter of compound interest plus monthly/yearly/zero rest (total loan amount) calculation. You wont beat the system..
Thats how most people got trapped by easy loans.
FD interest calculation is slightly different than loan calculation but the variance is huge.

Ps: dont ever miss a car installment payment as there will be a huge interest penalty.


This post has been edited by magika: Feb 27 2013, 09:37 AM

Your calculation is incorrect.

To compare,
If you have 100k now, instead of paying for the properties full 100K, one opt to take a 100k loan 40 years (with 430 month repayment), the correct way of comparison is

First month you have 100k FD that can gain interest,
Second month, you only have 99,570 FD that can gain 3% interest.
Third month, 99,140 FD with 3% interest,
After 1 year only 94,840 of FD.

It is a correct way to see the difference between paying full 100k lump sum vs taking loan 100k with balance in FD to gain interest.
One will see the difference out of it. That's where bank earns their profit from.

for any sum, you won't find a bank that gives you higher int for deposit than they charge for loan. that's called spread and that's precisely the way they make money. if u can, then u r a better bank than all of them!

note that in a rate hike environment, banks raise lending rates much faster and more than deposit rates. when rates decline, deposit rates are first to go down.

This post has been edited by AVFAN: Feb 27 2013, 10:45 AM

Cannot compare like that, house loan is based on reducing principal while your FD is constant.

4.2% p.a. monthly rest vs 3%p.a. annual rest(assuming FD interest paid yearly), the answer is apparent and clear....Putting 100K into your housing loan save more loan interest cost then you can earn from FD interest.

But if I were you, I will put the 100k into other investment/business opportunities that can yields more than 4.20%

Your calculation of repayment interest is incorrect. The monthly installment amount is correct.
Imagine you are the bank and received 430 monthly, use Excel and calculate. I have done this last time for my loan.

Month 1 430, interest earned. (430 x 0.03 x 30/365)
Month 2 430 + 430, interest earn is ----{430 + 430 + () } x 0.03 x 28/365
Month 3 430 + 430 + 430, intrest earn ..using the same formula as above..
That is what the bank earned.

I already said FD monthly renew. No one can show me the total amount after 40 years?
There is a calculator here. Which interest frequency?
http://www.miniwebtool.com/fixed-deposit-calculator/

guys I need clarifications on FD rates.
Say a bank gives 3.20% per annum for 3 months tenure.

I put in RM10,000. After 3 months do I get:

a. RM10,320 (RM10,000 + RM320), or

b. RM10,080, based on my calculation below

b, of course.

thanks!

10000 x 0.032 x 3/12 is your interest after three months. But bank normally calculate interest based on day, assuming three months jan, feb and mar

10000 x 0.032 x (31 +28 + 31) /365 is your three month interest

a is meant for interest if you placed it for a year

I wanna open up a saving..Which bank give high interest rate? Or all the bank is same? Any recommend?

Try M2U Savers-i from Maybank (But you need to have M2U logon first)

Savers-i is only for Muslim ? There are 2 options on my maybank2u, savers and savers-i. There is not differences between this 2 except the "Shariah-compliant".

Non-Muslim can open Islamic accounts also

is the 4.5% promo from OCBC still on?