People, there are 2 main reasons for this.

1. First of all you need to make sure that your banks are calculating the interest on a daily-rest basis. Nowadays most banks are using daily-rest calculation, however if your loans are signed a few years ago be cautioned that they may still be calculated using monthly-rest. With daily-rest, for each Ringgit that goes into your account, the outstanding balance is reduced on the next day, thus saving you from paying interest. As such, there are some advantages in splitting your payments over 2 bi-weekly payments because you get to save the interest payments over 2 weeks for the split amount each month.

2. However take note that most of the calculators consider bi-weekly payments as being paid in 52-week long year and NOT 12-month long year. What does this mean? In a 52-week long year, there will be 26 sets of bi-weekly payments, or 13 sets of monthly payments. While there are 12 sets of monthly payments in a 12-month long year.

Essentially, they calculated based on you paying 1 extra month each year (13 monthly payments) compared to the normal 12 monthly payments.

In Australia and Europe it is quite common for the employees to get paid calculated using the weeks. As such they do get paid for 52 weeks while Malaysians normally get paid for 12 months. As such if you follow the calculations, you are essentially trying to pay for 13 monthly payments a year while earning 12 monthly salaries. It can be done! But the calculators can be misleading, and that's why your get the surprising result of the cost savings.

Let's illustrate this! Now look at the table below which is taken from the same link Hou JaI posted. Notice that there is not much savings between paying Bi-monthly (every 2 weeks) and Weekly (every week)? That's because in both of these calculations, the calculator are using the 52-week long year calculation, hence it is making an equivalent of 13 monthly payments in a year. While the monthly repayments are being made for 12 months.

13 monthly payments VS 12 monthly payment EVERY YEAR. Surely the 13 monthly payments would reduce the total interest paid and loan tenure! But you are paid salary 12 months a year, not 13 months a year. Hehehe.

A more accurate comparison would be 26 bi-weekly payments vs 13 monthly payments and I can guarantee that there isnt much difference in terms of total payment and interest saved.


[As above]

[As above]

This post has been edited by wild_card_my: May 19 2014, 04:07 PM

Hi Faiz, regarding your point no.2, it confused me, so in conclusion, the new loan of rm400k can be repaid in 35 years? And if so, all bank or selected banks offer above package? Thank you.[I]

This post has been edited by zelltgb96: May 19 2014, 04:08 PM

Hi Zell, yes although you were confused (Sorry about that), you are correct in that the new loan of RM400k can be repaid in 35 years (or whatever maximum tenure you are allowed to based on your current age.

I cannot speak for all banks, but I know of 3 banks that allow you to repay both the refinancing portion AND the cash-out portion in 35 years.

Thank you for the explaination, mind to share with most of us the 3 banks you referred to?

OCBC, Bank Islam, Maybank

Ok noted with million thanks, this is a very useful information for most of us

Hi, nice to see your detail explaination...

I have questions here.
Let say I refinance 100k (cash out portion) in House A. All agreement signed and done case. And I need to pay RM460 monthly for House A cash out portion.
Then I wanna refinance 100k (cash out portion) in another House B. Bank will view my monthly commitment of A is RM460 or RM1026 since it was a cash out portion?



This post has been edited by propusers: May 19 2014, 06:07 PM

Thank you. If you need any financing assistance, I am happy to help!

For education purpose only. Note the recent date! You can still refinance for 35 year tenure!



For prop A's loan (RM100k, RM460k installment), the loan will appear as a TERM LOAN on the CCRIS. So if you need to refinance another house with bank B, depending on the bank, the prop A's TERM LOAN will be calculated just like a housing loan.

So in this case, the loan will be viewed as having RM460 monthly commitment.

This post has been edited by wild_card_my: May 19 2014, 06:05 PM

Thank you.

I have joint name housing loan with 1 sibling for house A (Alliance Bank). Monthly commitment is RM 1200. When I want to buy a new house B on my own, bank will view my monthly commitment of A is RM 600 or RM 1200?

If me and my wife would like to apply another housing loan, would like to find out how much maximum housing loan amount can we get with the below liability? It will be 70% LTV since it is going to be our 3rd housing loan.
I am 39 and my wife in 37 now.

joint net income = 13k
existing car loan = 1k
existing total housing loan installment = 3.1k


Can we include rental income 2.9k into net income calculation? Thanks.

The new bank for the new house will view that commitment as half of the full commitment, it is split into 2 just like you assumed

Hi!

1. Can you giver me the gross income as well? Break it down between the 2 people, the gross salary and the fixed allowances if available. Also if there is any commissions and bonuses all in gross form!

2. Can you also share your:

a) Original loan amount for the car(s)
b) Current balance outstanding for the housing loan(s)

3. Yes, you can include the rental income as part of your income, but pending valid documentations. Do you have have the stamped rental agreement? Or any bank statement to prove 6 months rental deposit ?

Thanks

This post has been edited by wild_card_my: May 22 2014, 10:49 AM

my gross income ~9k
wife gross income ~9k

original car loan amount ~70k
outstanding balance of 3 housing loans:
1) ~140k
2) ~140k
3) ~400k

i have the stamped tenancy agreements but one of them expired although the tenant is still renting and paying the rent.

thanks.

Noted.

1. Ive calculated your data. Help yourself But... ask me for help if you need anything!



2. It's okay about the expired tenancy agreement as long as you have the bank statement (6m) to prove money deposited.

This post has been edited by wild_card_my: May 22 2014, 11:06 AM

Sorry not quite understand the calculation.
So with all the commitment we have now, we still can apply new housing loan 1.2 mil???
Thanks.

Hi!

1. Yes, as far as the calculation is concerned, that is about the amount you can get. But everything is pending approval by the credit control ya

2. However, your LoanToValue is till limited to 70%, so while you can get a loan of 1.2 mil, your LTV is capped at 70%. Hence if you can probably aim for a 1.7 mil house (70% of 1.7m is about 1.2mil)

Thanks!

i did not know that we can get so high loan amount. Actually we are aiming for a ~750k house.
if we do not include the 2.9k rental income into calculation, what kind of maximum loan amount i can get?
thanks. you have been very helpful.

This post has been edited by happyhealthy: May 22 2014, 11:22 AM

This one:



Thank you very much!

This post has been edited by wild_card_my: May 22 2014, 11:24 AM

Thanks a lot.
Because I heard we can only get loan amount 1/3 of our net income. With the existing commitment we have, I thought we cannot get much loan if we were to buy another house. We actually aim for a 750k house.

Hi Guys need ur help and advise regarding the maximum mortgage amount that I can get, my info as follows,

My age:29
My net monthly salary: rm2655
Commitments: None (Only PTPTN rm20k)

Looking forward to hear from you.

That is a very simplistic way of calculating your income. The bank's practice is to calculate for your net income (using their own adjustments), and then deduct your current commitments, and then from whatever income is left used to calculate for the highest loan amount the bank could give.

I value the details so I created the calculator to x-ray my clients (and potential clients') finances for their own assessment.



Hi, what is your gross monthly salary ya? Please include salary and fixed allowances if any.

Thanks.