Yup, that's right.
I have my manager having rm30M of NAV, but if really cash it out, that's only rm600k.
Saving money no doubt it will be way slower, but then it is still real cash. My terrace house that I'm staying only cost rm130k when I bought it and now it can easily shout for rm800k but bank only put a value at rm600k. So I can always make my NAV higher by using rm800k as calculations.

I have my manager having rm30M of NAV, but if really cash it out, that's only rm600k.

But from your way of saying, your "asset" is still on paper, right? Not yet cash out.
If you are referring to this, then my NAV is at rm20M which is way more than yours.

U need to learn how to calculate NAV the CORRECT way. Its not just based on rubbish bank valuations of your property and surely isn't some imagined figure.

And if ure really having a NAV of RM20mil, u will surely not be on this forum talking about settling bank loans for a terrace house.

Lets argue with real facts shall we?

Yup, that's right.
I have my manager having rm30M of NAV, but if really cash it out, that's only rm600k.
Saving money no doubt it will be way slower, but then it is still real cash. My terrace house that I'm staying only cost rm130k when I bought it and now it can easily shout for rm800k but bank only put a value at rm600k. So I can always make my NAV higher by using rm800k as calculations.

NAV of 30 mil means you have net 30 million cash if you sell all your properties and settle all your loan. Clearly, what you have is 600k being your NAV. The 30 mil is your total value of properties owned. You owe the bank 29.4 mil. Anyway, hard to believe bank will loan you that much.

hi cybermaster98, sorry for interruption. i thought NAV is all assets u have - all liabilities u have = NAV
example:
asset=
house1 market value: 1m
car1 market value: 100k
savings: 100k
total asset = 1.2m

liability=
mortgage for house1: 500k
car1 loan: 90k
creditcard loan: 100k
total liabilities: 590k

NAV = asset-liability = 1.2m-690k = 510k (is this correct?)

can u enlighten me the correct calculations of NAV?

<40. As said, NAVs mean nothing as it is just table talk. Yup, bought 10 years back and it is a corner unit.
I can only know once it is cashed out. And for my case, it is only rm1M if I really can cash it out.

Your calculations are correct.

The only differing bit is how you evaluate your property. It should always be based on average actual transacted property sales. I usually have a buffer of 10-15% when I evaluate my property value based on transacted prices.

Folks,

I'm thinking of purchasing my first property. However, I'm wondering about what would be the best combination to obtain the best value for my hard earned money.

My understanding is that :
1. Higher downpayment = lower total interest paid
2. Shorter loan term = lower total interest paid

How do you determine the best combination of downpayment and loan tenure for a given property purchase - can I approach a Financial Planner on this ?

I don't think it would be a good idea to ask bank staff because they have a vested interest to maximize the interest earned on every loan.

i'm lagi kiasi - i value my properties based on last bank-lelong reserved price
feels good to value them at "hot prices" though - feel saja lar, not prudent of me

BTW, for the saving portion of NAV, don't you think that we should also take out the EPF/pension fund/insurance cash value etc from calculation too?

To me I consider all those are "non-accessible" until you reach certain age. Should not be reflected in our current NAV. Agree?

Actually I'll also take out the house that I'm currently staying from calculation too. This is the one property that I cannot afford to sell as everyone need a roof to live as well.

Your calculations are correct.

The only differing bit is how you evaluate your property. It should always be based on average actual transacted property sales. I usually have a buffer of 10-15% when I evaluate my property value based on transacted prices.

Yea, it all depend what is one purpose of calculating NAV. If only for "syiok sendiri" and own ego, you can add all the junks to it and blow up the figure.

But if it is for making big decision like business venture, large investment or decision to retire early, then better to be prudent....

I assume that whatever returns you can generate from long term stocks investing should be about 5% to 10% in the long run. Your effective loan interest should be about 5%. However, paying off loan means guaranteed return of 5%. Investing in stocks should get higher return but not guaranteed. That is why I say invest some in stocks and pay off loan with some excess cash. You really should concentrate on your working income. Whether you invest or pay off should not be of much difference. Just my humble opinion.

You don't really need a financial planner when common sense applies.

Higher downpayment and shorter loan tenure = less interest paid is true.

We take as much loan as we needed to - not more, not less, just adequate; just as we buy something we truly need, we buy enough and not frivolously more than necessary.

First, think what you need to bridge the gap between owning the house and what you have in hand. This gap is the amount you need to borrow from the bank.

Then think how much you can comfortably afford to pay every month back to the bank.

(One may do a bit of projection into the next few years like salary increment or job promotion, and have slightly more added into the installment amount, and this means a tighter monthly budget till the increment or promotion.)

You then approach the bank with the loan amount you need to borrow, and the installment you could afford and like to pay every month. With these 2 figures, the bank can work out the loan tenure; and you won't be distracted by any offers for a bigger loan or longer tenure or what special promotion they have.

=================

If we could only afford to buy with the most minimal downpayment and the longest tenure available, maybe we should think again whether we can really afford the house and whether we should wait till there are more savings and continue looking for the right house at the right price.

So what is the right house at the right price? According to some financial rule of thumb, it is about 2.5 times the annual salary; monthly installment of not more than 36% of your gross monthly income, and at least 20% as downpayment. 

http://money.cnn.com/pf/money-essentials-home-buying/

Can these rules of thumb apply to Malaysia? Maybe, maybe not, or maybe they should be adjusted a bit like 3 to 3.5 times the annual salary, monthly installment about 30-40% of net salary, and 15-25% as downpayment. The adjustments should not be too far off the rules of thumb.

Good luck, and happy house hunting.

I wouldn't call that a smart move. You are still with the old mindset of paying off home loans fast. But it was valid back then cuz home loan rates were about 7-8% unlike the current 4%+.

What's the point of having a fully paid up house? Your value is stuck on the house and u cant touch it unless you sell/refinance. Its just a feel good feeling that you have a fully paid up home.

If u were a savy investor, u would know how to utilise loans to grow your money and your NAV faster. I would rather have 4 properties on loan (with high capital appreciation) vs 2 fully paid up properties.

We should focus on growing our money not saving. Saving is a very slow process towards financial freedom. Learn to diversify, invest and grow your NAV. You can achieve a much faster growth rate than just saving.

I grew my NAV by RM1.8mil within 9 years using this method.

Bro, use flexi loan and you will have a lot of flexibility. Your above 2 concerns will be solved.

1. Higher downpayment ?
Flexi loan allows you to dump your excess cash into the current account to reduce the amount outstanding, thus reducing your interest expense. While the excess cash can still be withdraw out for your own use later (if you can find some investment with good return for example). That is the beauty of flexi loan.

So, take as much loan as possible (90% LTV) with the bank. Then dump in your extra cash into the current account later to reduce interest expense, while still be able to use it when you need money. If you pay higher downpayment, then your cash will no longer be available to you

2. Shorter loan term ?
Again, flexi loan will take care of your concern. Interest is calculated on daily basis based on your balance outstanding. So if you have extra cash, dump everything into the current account. It has the same effect of paying more instalment as a shorter loan term.

So, take loan term as long as possible in flexi loan. Then deposit as much money as possible into the current account. That will save you interest. And you may pay off your loan sooner
By getting flexi loan with as much LTV + as long loan term as possible, it gives you the flexibility to pay lesser interest and at the same time allows you to withdraw the excess money when you need it. And the extra money you paid into your current account will be available for use for a longer period also.

However, flexi loan is of no extra advantage for people who has no extra cash to dump into the current account. For this category of people, there is no difference for them to take conventional fixed loan

But I still have an ultra newbie question:
Assuming you have 300k cash and your home transaction price is 450k, is it still better to pay 10% downpayment (45k) and take a home loan for 405k for 30 years (and park the remaining cash in the linked current account to reduce the interest payment) ?

Simple way is pay 10%, take the longest tenure and save money in another account. Then reduce principle once every 6-12 months with that money.
Remember, once you own a house, you need to serve loan and other bills.
Now I can live without any income for 5 years as I have no loan at all, following old timer's mindset way of settling loans.

That if he is really making money from his investments. What if not? Or you can 100% sure any investment in this world sure make money?

So you are out of idea and trying to relate life = money
Investment are nothing more than gambling, as you are putting money and giving a hope that it will make more than what put in.