Hi all,

First, let me first say that I am not able to find a suitable forum category to post this topic. Please move it to the appropriate place if there is one.

I have recently booked a new double storey link house in Putra Heights costing around 350k. Currently, there are 2 banks which are willing to offer me the 90% loan which are RHB and Public Bank. The S&P will be under 2 names. Mine and my girlfriend (which we will marry soon). The problem is that RHB does not offer a withdraw facility if I make extra repayments. Public Bank on the other hand, does offer such facility but requires both me and my gf name on the loan agreement as well. This complicates situation as she is still a student graduating in 1 month, and having a 2k housing loan on her name would probably she would never be able to buy a car until she earns 4-5k.

Since my repayment period is quite long (35 years RHB and 40 years PB), able to make extra payments can reduce the loan duration as both these loans are daily rest (like most of the others). However, not having a withdraw facility means that I will not be able to withdraw the extra money should an emergency happen.

RHB is the panel bank for my housing project whereas Public Bank is not. I'm not too sure what are the negative implications of having a non-panel bank as my end financier. The developer advise me to get a panel bank but I'm open to the bank that can give me the best offer.

Anyone have advise which bank I should go for? What would you do if you were in my shoes? Thanks

Hi there.

First of all, welcome to your first major decision as an adult. Here are my experiences:

If you're planning to apply for a loan from a bank that's not part of the panel, depending on your salary it may be difficult to get that 90% margin of financing. If you're married, this is not a big deal, because you can apply jointly - but if like me you're only planning to get married, you may want to try applying with a family member like your dad. This is because there's no guarantee your gf will be your wife, and it may turn out badly for you (loan wise).

This is because for single buyers, the banks can only give you up to 80% or even lesser, depending on the loan amount and your salary. The rule of thumb is your salary MUST be at least THREE times the monthly loan payment minus any other commitments.

I've personally had experiences with ALL of the banks, and I would recommend HSBC, Hong Leong and RHB. All three worked very quickly (assuming you're applying for a joint loan) and came up with satisfactory results. Maybank and BCB were horrible, as were Bank Rakyat. Public Bank was a close contender but their service was a bit slow. I'd also advise you to be wary of your legal options/fees and make sure what part of those fees are covered by the bank. Sometimes it's more favourable to use a panel bank because then the panel of lawyers is also attached.

The withdrawal facility and ability to make additional payments are IMPORTANT factors, IMHO. These allow you to control your finances better because every single ringgit you deposit will go towards reducing your principal.

I hope this helps. Feel free to PM me any questions.

Cheers!

This post has been edited by Lord_Ashe: Apr 18 2006, 11:48 PM

I took up loan from AIA. Only 5.89% per annum and daily rest fix for 30 years.

But their service is a bit slow. Maybe I'm in Penang, they are in KL.

No withdraw facility also.

Ask someone that you can trust and financially smart to go over your financial picture. IMHO, I do not think you can afford this house at RM350k at this moment. Please noted that you future wife/girl friend will not be helping you for quite a while since she have to pay for her car. It costs a lot more money to furnish and move into a new house too.

This is just my 2 cents worth advice.

Dreamer

Thanks for your feedback, guys.

The 2 banks I have mentioned did agree to give me 90% loan. I do agree that Maybank was absolutely horrible. BCB loan goes by monthly rest if I am not mistaken. HSBC does offer a nice package, but to get my dream house a 30 year loan might have trouble getting through. Most banks give a maximum of 30 years except RHB,Public Bank, Maybank and Affin Bank. Public Bank told me they can finish processing the loan application after 2 weeks whereas RHB bank told me they can get back to me by the end of the week.

I was looking at a low rates for the first few years because I need the extra money for furnishing and stuff which is why I did not opt for a fixed rate. Unfortunately, there's no one else I can depend on for joint loan application. My future wife curently does not own a car and we don't plan to get another car so soon. Maybe after a few years. My job doesn't move around so I'll be more environmental (and economically) friendly by using 1 car for the time being.

Both the mentioned banks said the I can qualify for 90% loan based on their prelimanary calculation. I'm not sure how reliable the information I receive from this mortgage loan officer is. I've heard cases that banks can just reject your application without any reason. I'm not opting for having the legal fees covered by the bank.

I think it's probably safer for me to choose a panel bank (RHB) as this is what the developer adviced me. HongLeong bank was not on the panel bank either but I'll check them out as well. Thanks for the tip! I am thinking if I should be one of those kiasu guys that go apply bank loan at every bank or just apply a few banks and wait.

p/s: Is there a more appropriate forum category where this post should be? Maybe there should be a new category under lifestyle that deals with finance issues such as house loans, credit cards, EPF, income tax and boring but essential stuff like that.

This post has been edited by normaldude: Apr 19 2006, 12:41 AM

Why not look for other banks eg citibank, Hsbc and Stan Chart..not forgetting other banks...sticking yourself with only two banks won't let you see the whole picture...

Citibank and Standard Chartered can only give MOF up to 85% for my case. HSBC offered 90% and for 30 years whereas the 2 banks that I mentioned offered repayment periods that is more than 30 years. Since it is daily rest, I can still save shorten the tenure by repaying faster.

The issue I want to highlight here is not the fact of whether I am eligible for the 90% loan, but which should I choose if both these banks approved my loan? Since I myself is qualified to get the loan, I don't see why another name that currently does not earn any money needs to be placed on the loan agreement. a + b is still a if b is 0 . If she was earning, I would understand the logic that adding her salary would make me in a better position to get the loan, but this isn't the case now.

Anyway about the furnishing and stuff, I opted for a 0% interest the first year so I have more money to do that. I can afford the repayment of ~2k myself currently and my future wife will be working soon (1.5 months) and will be getting a job which pays aroudn 2k. My car is finish paying in 2 years when the house will be completed. I'm not too concern bout the repayment amount but more like the importance of a withdraw facility vs the freedom of my future wife not to be bounded by the loan. So if next time wanna buy a new car or another house.. I can still use her name mah since mine got quite a lot of commitments dy.

Or another question is panel bank (no withdraw facility) vs non panel bank (with withdraw facility). I'm not too sure the implications of non-panel banks. Developer say chance of late payment by the bank is higher which will cause the borrower to pay the fine.

This post has been edited by normaldude: Apr 19 2006, 01:16 AM

umm... normaldude, under these circumstances, I feel that buying a home may not be the best decision for you at this moment. No, don't get upset yet I have my reasons.

First, you are capable of making extra repayment, but you want to take the longest available loan term, means you probably have additional income.

Second, despite having that additional income, you are not opting for a lower margin of financing. Which means you are probably sticking out everything you have on this house.

Third, your gf is still studying, so if anything happens to your income, both of you might endure some serious financial hardship. Even after after she starts working, she might not like her job and might want to switch, I'm sure you don't want her to be stuck in a job she hates right?

But since you already booked the house (does this mean you paid 10%?), I guess you're stuck with it. However DON'T put your gf's name on the S&P, you can always change it later, because if anything happens, she could be held liable too, and it could make selling the house in the future harder since you need both parties to sign. What you can do is buy MLTA or MRTA. I know you trust your gf, but this is the smart thing to do. Next, is your house a completed property or still under construction? If it is still under construction, you can get a higher margin from CTB and SCB (up to 89%). Or you can try getting your parents to fork out the additional 5% if possible, international banks are far more efficient and have better facilities.

Remember, this is a serious investment for at least 5 years or even 30 years, so you need to have as many safety nets as possible. So you'll need to make smart choices with your money.


p.s. I wonder if I can make money dispensing advices like these

This post has been edited by spanker: Apr 19 2006, 09:59 AM

Talk to the bank..it is technically possible for a joint owner (in this case, yr gf) not to be the borrower. She needs to sign some documents to consent to the property which she owns 50% of, to be charged to the bank as security for the loan. However, the bank may not be keen to approve if your credit rating is not very strong. Your case then becomes more risky (credit assessement wise) as they will view it as some form of non-commitment on the side of co-owner is not a borrower and therefore not liable for the loan repayment.



Ask for part of the loan to be in overdraft...that way, you have a redraw facility liao. Most banks allow a max of 50% to be in O/D portion.



You mention about the house being ready in 2 yrs...ie construction if already started should be at a very early stage. Since billing are as per construction stage, the interest for unpaid bills will be on the portion billed only. The possiblility of you having to pay interest on late payment due to (assumed) slower loan release (due to non-panel banks) will depend a lot more on other factors like:

Are the individual titles issued?...are the titles charged?....who are the chargor banks?



Go check with the bank. Most, if not all of these sudsidized rates for the initial few years, start from the loan approval date, or date of 1st drawdown. In yr case of a 90% loan, it would mean, perhaps as fast as 3 mths from now. So, actually, the low rates are only applicable for portions of your loan amount only.

For calculation of your personal finance, you would need to use the repayment fig of est. RM 1991/mth (i used 6.6% pa. daily rest for RM315k loan for 30 yrs term)

Since yr gf is not earning any income , adding her name as borrower is of no consequence to loan application, provided she is not the joint owner as stated in the SPA.



You may want to enquire if the 90% include the amount for MRTA.If it does, it essentially cuts into your loan margin to pay for the house. ..make sure you have the extra to pay towards that. Plus add a rough est. of 3% of purchase pc to cover legal fees, disbursement and misc. charges.


This post has been edited by ??!!: Apr 19 2006, 12:20 PM

In terms of flexibility, of course it's Citibank. The MOF is rather low but it's not for those who buy property, the cukup makan type.

Don't be fooled by the terms daily rest as I can see for your type of payment, in long run you pay even more than rest. Daily rest interest is higher. Unless you have lots of extra cash to dump in, else don't bother.

Flexibility has it's fine prints and that is what I always advice my customers. In some banks you say flexibility means you can put in your money...you have to choose.. either you want to put in your money and still can withdraw or you put in your money cannot withdraw but deduct interest. Ha... different you know... it's not that I wan to tuang beras (tou mai) on my fellow bankers.

Approval...it depends on few factors... we call it risk groups. Debt burden is taken into factor... Of course your mortgage officer haven't calculate for you in actual debt burden. Means how many credit cards you have, other loans, etc. Plus another factor is whether your past repayment records are nice or not. If you dun pay promtly, why should the bank risk themselves giving u the loan?

Here's the tips, you can add your fixed deposits certs, ASN certs, or anything that shows you are well off other than your pay slip as your supporting documents.

Lastly, I recommend that you do not add her(your gf) in the S&P and in the bank loan application. When conflicts occurs, lots of paperwork have to be done. Lawyer fees is 3% of the property value if i'm not mistaken, if u want to cancel her name.

Go for local banks. Eliminate MNC banks. Due to flexibility .
Save up like Rm30,000 for S & P and other legal fees if you want to buy a new house. Approx , my 5 yrs saving .

That's all.
I'm waiting for my new house to complete this end of year.

Actually the longer repayment period is a form of safety net for me. That's why I'm trying to opt for loans > 30 years if possible. This brings my monthly installment to around 1.8-1.9k, which I feel is still manageble for me. This will also soon be my only commitment (tho it is a high commitment) as my car will be finish paying dy. Also it will probably easier to approve also, coz the monthly installment is lower.

Of course the safety net by taking longer loan tenure may be much more costlier, but my preception is once can earn more money, can pay what is comfortable then. Maybe 1 month can pay 3-4k also. I don't want to get lower margin of financing as I want to use some money for furnishing the new house as this will cost a lot. I'm also paying for the legal fees instead as I find that having the bank cover your legal fees is not such a good deal after all. I don't want to over commit now, so if banks can give me 90% MOF, I'll take it. The mortgage officer did ask about other debts/loans as well and that's where I find different banks have different policies.

Some count the total value of all your credit card limits combined.
Some just count the outstanding balance of your CC bill every month.
Some count your average monthly spending on CC.
Some don't count it at all, only if you are blacklisted or not.
Some ask for the monthly car loan installment.
Some ask for the outstanding car loan balance.
Some ask for when the repayment finishes.
All ask if got good payment records.

To be frank, I have lots of credit cards, but most are dormant. I don't hav e any outstanding balances every month. My payment record is pretty good on my car loan, except I was late for the first payment only. I'm getting around 5.5k/month so 1/3 of it is around 1.8k which is what I get for loans above 30 years. Some banks count 2/5 (40%) instead. But some banks hor.. they add with the car installment as well, so if my car I pay RM 500 / month, I have to earn 6k to qualify. Some don't count like that. I also confused how all the banks count. Different bank count different things different way.

BTW, the titles are individual. What do you mean by charged titles? What are chargor banks? Are they the same as panel banks? I don't think those big foreign banks (Citibank, HSBC, Standard Chartered) is suitable for me coz I am small fry business to them. If I have so much money.. I no need to apply loan loh. Smaller local banks want my business more.. so I go to them. Actually if I want to, I can go for 85% MOF, but now I rather spend that 5% on furnishing my house.

You guys all so expert leh. Some loan officer I talk to quite blur like that.. make me feel not very confident of them. I guess flexibility and safety nets do have their trade offs as well. Thanks for your great comments!

Hi,

Since you are cutting pretty close to what you can afford to pay every month, read the fine print on what will happen when the interest rate goes up.

For example, if your loan was based on X interest rate. If the rate went up, do you have to

A) pay more per month

or

B) term of your loan is extended aka instead of paying 35 years, you pay 35 years and 6 months. Is there a limit on loan extension?? Aka, can they extend the loan up to after you are 65 years old?? What happen if the loan cannot be extended??


Please noted that negative amortization is not illegal in Malaysia comparing to other countries in the world. If the interets went up high enough, you could be owing the bank more money every month even if you pay the monthly installment in full.

What is your budget for furnishing and moving in to the house?? Please discuss with your future wife and stick to the budget. My feeling is it is at least RM10K and could be as high as RM30K.

Dreamer

when did u apply for dat loan? as i know they oni hav 6.25%, 6.55% fixed for 30 years & 5.75% fixed for 10 years below.

As long as the BLR doesn't jump a lot in the next 5 years, he's in good shape, since he's thinking about making additional payments (he was asking for withdrawal facilities after all). After the minimum holding period, he can always refinance, even if the BLR shoots up.

Spanker,

Refinance?? As far as I know, refinancing make sense when you can get fixed interest loan and the processing fee is low. I have not come across situation where it makes sense in Malaysia's market situation. Heva you seen it done proitably in Malaysia??

Dreamer

As the matter of fact, yes. I see people refinancing from one bank to another and save money all the time when I was working in mortgage sales. (why else would they refinance?)

That rate was about 2 years ago.

BLR will rise wan la. look at the economic cycle,1987 crisis, 1997 crisis, all after 10 years, maybe coming soon 2007 crisis. Already got signs, petrol price naik, inflation and BLR start increasing. from 6% to 6.5%. Later dunno how much more. So many property go on auction liao. Why? cannot pay loan lor...

I see most the customers refinance their existing property to have a lower rate and more flexible repayments. Last time their rate was like 11%, they refinance back to 3%, pay one shot the money, almost complete their loan payments, left the tied up period for them...but interest not running which is a good point. I dunno about local banks but this case happens a lot in citibank.

well sorry for hitchhiking , what is the car interest loan now. heard its from 3.90 % and now is 4.10 %

your gf is still young and i advised you to buy your own property first . dont you think its still early for her to get properties . how old is she?