I have been offered
RHB MY1 FULL FLEXI HOME LOAN but there is something unclear and need those who has knowledge in this to help explain.
We all know that we need to link the savings account to loan account via standing instruction(SI)
1) Let's say ( example) during construction the first 10% progressive/drawdown is 50k and I need to pay RM 500 interest monthly.
What happens if I made a prepayment of RM 49.7k to reduce the principal loan ?
From my understanding, you need to key in the amount (RM500) when setting up standing instruction. If this is the case then my loan will be zerorised next month and I need to pay the bank penalty for full repayment during the first 3 years.
But my mortgage officer told me that during construction period , you don't have to key in the amount when setting the SI . It will only deduct the interest of principal owned ( for my case, the interest of RM300 ) from my savings account to my loan account.
Can anyone confirm is this the case as it sound more like direct debit to me instead of SI?
2) He said that you can only key in the full Monthly Repayment amount in the SI once the loan has been fully disbursed.
Lets say by the time the loan has been disbursed, my total loan is 500k and I already made a prepayment of 499K to reduce Principal. My Monthly Repayment Amount is RM2k.
With the SI, what are the methods to reduce the interest without zeroing the loan and incur penalty?
Can I make a prepayment to my loan account to a max of 497 and let the SI deduct the 2k from my savings account to my loan account every 5th of the month
to let the loan account to be 499k .Then I transfer it back to my savings account on the 3rd next month and let the cycle repeat again.
In this best case scenario, I only pay minimal amount of interest provided I have the cash and I don't plan to settle the loan early as I might need the cash later for emergency.
Thanks
1. SI is literally you're giving an instruction to the bank to make a regular deduction from your savings/current account, similar to auto debit.
2. You may put prepayment up to 497k which means you incur very few interest since you're made such a high prepayment, therefore the 2k you paid every month would pay directly towards your loan principle amount of 500k.
The purpose of the flexi loan account is so that you have the flexibility to take out the money to use for other purposes. So there is no harm doing so.