Hey all,
Seek your views on my plan to consolidate my loans.
I am planning to do a top up loan on my housing loan next year when I get VP.
Existing home loan is 355k, and hoping to get 450k, 95k top up. (subject to valuation)
Currently serving the interest, and post-VP, I will be paying RM1626.00 @ 4.5% interest

I got a RM60k PL (was 100k, then I refinance at 16th month and paid some amount, down to RM60k). Outstanding of RM57k
I've been paying this for 9 months already, and got another 111 months to go. RM690.48/m @ 3.81% interest

HP with outstanding balance RM46k (Probably 42k if want to settle now) and currently on 19th month. 65 months to go. RM711/m @ 2.77% interest

So total loan id be serving upon VP is  711+690.48+1626= RM3027.48/m

I plan to do the top up loan so that I can pay up the PL and HP.
This would reduce my monthly commitment to RM2300/m (for the 450k home loan)
Difference of RM727.00.

Worth it to do the top up?

I plan to further my studies and work abroad, and my side business/passive income can cover that no problem. Wanted to focus on one account instead of 3 (and few others) for better management.
Also got cash to pay either one full (HP/PL), but prefer to keep for my study budget.

First of all, wishing everyone in this forum a Happy New Year!

With regards to above post on emergency fund and having access to it during holidays and weekends, let’s clarify what is an emergency fund.

Referring to Investopedia, an emergency fund is for unexpected events such as losing one’s job or an unexpected huge financial expense as in medical expenses. It is not for everyday and minor events, though unexpected and unfortunate, such as losing your wallet when on vacation or fracturing your arm due to an accident.

Though the latter events may also be deemed an emergency to you, they don’t warrant such a high savings to last 6 months or about 18k. It is not necessary to have access to the whole 18k at anytime.

But in an event such as losing work, being jobless and without income, and yet having to pay the monthly instalments on a house and car, and other bills and living expenses on yourself and family, having enough emergency fund till you can be gainfully employed again is crucial. Otherwise, you may lose the house and car…

While it is not necessary to have immediate access to the emergency fund, it is equally important not to tie it to any investments (such as unit trust or mutual funds or equities) that have a high investment risk even if the investment allows you to withdraw at anytime and you will receive back the money within a week or two.

Remember that the emergency fund is in reserved for an unexpected event such as losing your job.  You will want to put it into a safe and sound financial vehicle to have peace of mind and not worry about investment risk and risk losing any part of it.

Lastly, regarding equally sound and safe investments comparable to FD…

First, look at the picture of the total money involved.  18k is not that ‘a large amount of money’. FD rate is currently at about 4%. A 4% annual return on 18k is $720 or $60 a month.

Let’s say the other financial investment tool gives 7% return. This means an extra 3% above FD’s 4%. 3% of 18k is $540 or $45/month.

So the big picture is this… put the emergency fund into a bank’s FD to gain an extra $60 a month, and hope there will not be a bank run anytime soon… put it into a mutual fund to chase a further $45 and hope that the fund is run transparently without any scandal that will cause a ‘bank run’ on the fund.

Do note that in event of a ‘bank run’, the withdrawal policy can be suddenly changed and the withdrawal amount can be limited at each withdrawal. During the Greece financial crisis in 2015, the ATM withdrawal was up to 60 euro only. It will take 300 days or 10 months to withdraw 18k.

Once again, Happy New Year. Don’t worry too much. Live and let live.

A bank run is a possibility but don’t let it worried you. If you get freaked out on every mere possibilities, how to survive another year?

Not if you pay back on time.

hi all sifu...
im newbie.. want to ask
if i do bank transfer rm10,000
some bank charge, per annum or one-time upfront handling fee
anyone can explain per annum and one time upfront? which 1 is better for us to apply?
From my basic knowledge, one time upfront not worth if in case i loan 24 mths but i able to pay within 12 mths.
im not sure about per annum, if borrow 24mths 5% per annum, how to calculate the 5%?

can someone explain here? thanks!!