Hello everyone, I am Faiz, and let me clear some things up

1. Recently BNM has set up a guideline to reduce the maximum tenure for personal loans to 10 years. This is done to curb increasing household debt and irresponsible or needless spending (wedding receptions, vacations, home appliances) by the Malaysian public..

2. Unfortunately, the cash-out portion from a refinancing is now considered as personal loans, because borrowers are mortgaging their property that has already been partially paid to get cash that can contribute to needless spending as per above.

3. So now, when refinancing:

a) The outstanding amount from your current loan as well as the redemption fees can be refinanced to the maximum tenure that is available to you (i.e 35 years or until age of 70 for most banks)

b) Anything extra, that is the cash out portion is limited to 10 years.

c) For most banks, the cash-out portion gets the same interest rate as the refinanced amount

4. So essentially, the best reason to refinance is to lower the interest rate from the old rate that you signed up with to the new rate.

5. However, it is not a bad idea to refinance to get some cash along the way because the rate is still significantly lower than the typical personal loans.

6. All BANKS as well as FINANCIAL INSTITUTIONS like MBSB has to follow this new rule. It is only a matter of time between now and the implementation.

7. As of now, the list of banks that has already implemented this rule are:

OCBC, MAYBANK

The banks that have yet to do it but confirmed to are:

MBSB, AMBANK, HSBC, STANDARD CHARTED

Everyone, I am a mortgage consultant. Self-professed, sure, but I am not an agent nor broker. I talk to my clients, discuss with them on the best methods to get a loan, indulge them with industry-related news and tangos, and my motto is share share share. Share with everyone on how involved I am with mortgages and I know you will come calling. So do call if you need to buy a property and need some help securing loans.

Check out my other threads down below to understand more about mortgages, don't forget to ask questions:

1) https://forum.lowyat.net/topic/2671761/+40

2) https://forum.lowyat.net/topic/2759418/+440

Thank you

This post has been edited by wild_card_my: Sep 13 2013, 10:21 PM

Hey people, I have made a small illustration on the impact on your refinancing of the outstanding amount and the cash-out portion between the old policy and the new policy





This post has been edited by wild_card_my: Sep 14 2013, 10:39 AM

I know that this thread has aged for longer than a year, but I was redirected to this thread by another forummer.

Let it be known that you can still refinance for 35 years repayment. The difference is that the cash-out portion is not being calculated as if you are making your repayments in 10 years and not 35 years. So for most people, the loan applications would be rather difficult. However, if approved, you would be repaying both the refinancing and the cash-out in 35 years.

Faiz Azmi

For a number of banks, the calculation for the top-up or cash-out is calculated based on 10 years repayment period.

However, the actual repayments can be done based on 35 years or until you reach 70 years old.

In short, if you qualify for the loan (Refinance with cash-out), your repayments will be for up to 35 years or until you reach 70.

This applies with a number of banks only. Ask me more if you have any other questions, or you can post your question here:

Mortgage inquiries