Thank you, that explain a lot.
I thought people do refinancing, get the money and buy prop or pay other debt.
It is a bad time to do refinance as the cuckoo of the economy situation?
Next year the service will kena GST if wanna do refinance...
Or is it possible to negotiate with current bank to reduce the interest or etc...?

I need to get quote then only can compare between 2 contract then. Existing one is signed at 2005.
I don't have money to waste, as just recently only starts to concern about money. Yah, I'm seeellloooowwww learner...
So anything now concerning dollar and cent need to consider, cost cutting, SCM myself.
Btw, how to make money using CC?

I think is BLR -1%, need to double check it though.
What is the current interest rate?

That is a very smart way of you managing your money. I have the MBB 2 card also
Who you sell your goods to? Mini mart?

Yeah, just gonna contact banker request for revision of interest rate.
Well, anyway I just check the MBB 2 card T&C, apparently the cash back only on weekends and cap at RM50 per principal card holder per month.
So... Still  , how you do it.

Noted, and sure, I can help you with that if you want to proceed with the refinancing: I have 5 banks I can be contacted and we could meet up.

---

I got in a little late replying to this thread as I was meeting a client later in the evening. But CFA28 has pretty much covered things up. You can use the table and see how the money is divided up. But keep in mind that the table would be off if you miss a single repayment, or made an advance payment on your installments.

Amortization table, you should use it to get a more thorough understanding of the reducing balance loan... ask about it here if you need more explanation:



---

The differences between the interest add up over the years. A typical difference of 0.1% for every RM100k loan equals to RM100 a year.

So if your loan balance is RM200k, and your current rate is BLR - 1.0%, by refinancing to a -2.4% you could save about 14 * 100 * 2 = RM2800 a year (interest payable) and this adds up going forward. Of course, the loan balance would be reduced as you go along. And by refinancing you would incur costs such as the legal, valuation, and stamp duty that is rated at about 2% of the financing amount.

Sorry if I getting a little long-winded with my replies.

Im way too tired to go through your numbers, but if you had used the same amortization table that I posted, and inputting the same figures as you did, you would get the same results anyway. Amortization calculations are the same across the world, the only differences are if the interests are calculated based on a daily, monthly, bi-monthly, yearly rests etc. I am surprised that someone as experienced as you actually thought that there was a difference between using the malaysian based or foreign based amortization table. It's just a simple formula applied to the principal (outstanding) with interests and tenure as the variables.



Can someone take care of the guy on for me for the time being? I'll be back in the morning to reply his misleading numbers. I'll put it out here as a hint to help those who bother to calculate and present the results here, that there are definitely benefits in reducing the interest by 1.4% even if you need to pay the legal fees, as well keeping the remaining tenure the same as a new refinancing scheme. 

Good night everyone.

Uncle, after I post this I hope you can stand down and accept that you have the wrong idea about refinancing. Im in the middle of filming for my personal financial-management youtube series, but I spent some time in this nice morning (morning sun is good for lighting) just to show you what you missed.

Refinancing is a financial move with a lot of flexibility:
 
a) you can reduce the installment amount payable by extending the tenure and/or locking-in better interest rates
b) you can borrow from the bank for the cash-out portion at the lowest interest rate possible, no other loans that are available to the general public have lower interest rates than a mortgage. Many people use this money for other business and investments that are yielding higher returns than what the banks are charging as interests. This is called leveraging on your assets instead of sitting on them. Whether or not to do it depends on you, but there shouldn't be 1 true way to go about it.
c. You can shorten the tenure, but still pay the same installment amount
d. You can maintain the tenure while lowering the installment if you could lock-in a better rate (like what I am going to show below)

Keep this in your head: refinancing is flexible, and depending on your situation and the economic conditions, you should take the move (or not) as you see fit. Only a stubborn person would think that there is only 1 true way of doing things without considering the situation of others. My job is to listen to my clients and give them options based on what I know and what is available to them. Your job... apparently is to chatter like a [redacted] about the first thing that appeared in your head without contributing anything to solve these people's financial problems.  

My job entails me to provide solutions to my clients and prospects: I get PMs, emails, whatsap, and phone calls everyday asking for my financial consultancy services. I can attribute those to the way I answer the questions posted in this forum to the best of my abilities; for example, when someone is asking for a refinance just like the TS did, just look at the details of my answer - you wont get that from a normal consultant. I refrain from giving unsolicited advice like how you seem to enjoy doing (again, signs of old age, no offense to other lovely elderlies). These forummers don't need over the top loud mouthing by someone who thinks he knows it all because he is either old, or thinks he is smarter than anyone in the room. Sorry for making this rather personal but you never bothered to hide your misguided hatred towards financial consultants either, which in my opinion, is very childish. Don't dish it out if you can't take it.  

--- --- ---

I will start with these numbers:

Initial loan RM200k
30 years tenure
Interest at BLR - 1% as per what TS mentioned

*Do note that I work with my clients closely and I would ask them for their loan statements, without which would be difficult for me to know the total installments paid over the years due to the changes in BLR. But for the purpose of our education session today, the BLR in 2005 was 6.00% but increased to 6.75% in 2007, and hovered around that number and ended up as 6.85% today. As such, whatever outstanding balance stated below cannot be accurate altogether. But that is why you need a consultant to go through these numbers for you and present it in the way that you would understand.





Now, let's refinance based on the remaining balance + cost of refinancing





Results, comments, and conclusion:

a. The tenure (in this case, to please the uncle) has not been changed. The loan remains to end after 360months (30 years) on December 2034.
b. The installment has changed from RM1179.88 to RM1086.10 (including the cost of refinancing) from the 121st month onwards till the end of the loan tenure. This move lowers your installment by about RM100 a month, without extending the tenure. Why would you want to pay RM100 a month to the bank? Because uncle said "no need to refinance"?
c. Here is the calculation for total savings:





Or in simple terms, because the client needs to pay off the outstanding balance anyway, ALL you need to do is to SIMPLY differentiate the difference going forward between maintaining the status quu by paying RM1179.88 x 240 months VS refinancing midway and paying  RM1086.10x240 months:



The client would save RM22,507.20 in this particular case. Of course, every person would face a number of different situations. To refinance or not depends on their needs, situation, economic climate, and ambition (do they want to be extremely, moderately, or lowly leveraged?). And I work with my clients to find a solution to their needs or problems. In addition, there are many other things that you could do with refinancing: to get a loan from the bank at low interest rate for the purpose of investing in other, better opportunities; to extend the tenure and reduce the installments for better cash flow (who are you to judge whether they should do it or not?), to shorten the tenure but pay same amount (like I have explained above), or to take the advantage of the periodical lower interest rates offered by the banks.
  
Uncle, maybe due to your age you have become risk aversed and afraid of taking risks, whether or not it is reasonable is debatable because a number of my older clients are still able to stomach some risks due to the fact that they have their retirement nests ready (planned by myself, of course); but just because you are near the end of your line (of career, you know, because of the age) doesn't mean you should stop others from exploring their options and opportunities. You are quite the poison in this subforum as far as I can tell. Other people have opinions and talk about them openly, occasionally arguing by providing citations and or numbers. But you? You chide other people's efforts because you think it's either your way or the highway. I hope this has served as a good lesson to you in terms of sharing opinions and ideas online.

Have a good day. Don't forget the medicine. 

Uncle, I call you that with the utmost respect, I think your unsolicited advice may have helped some forummers in some unimaginable ways; but if you are so insecure about it maybe it is because you know that people loathe listening to you? I can't help those with insecurity issues, I am not a psychologist.

But I think your issue can be attributed to your prejudice against the financial planners; perhaps you met the wrong ones, or perhaps you were too naive to differentiate between the honest and the dishonest ones: as such, since age has caught up to you, you are unable to change and it is clouding your decision making skills on top of being too stubborn to admit defeat.

I tell you what, I will help you see this through. Going forward without refinancing, the client is poised to pay

RM1,179.88x240month = RM283,171.20 in total

By refinancing today, of the outstanding balance amount plus refinancing cost, the client will pay

RM1,086.10x240month = RM260,664 in total

So by refinancing, the client would save:

RM283,171.20 - RM260,664.00 = RM22,507.2

--- --- ---

Uncle can you see it now? By simply refinancing, the client would have saved RM22,507.20! What else do you want? Medicine?
Thanks for the support. I noticed his behavior in other threads too. But I can't just leave him be especially when he quotes me.

Thank you, I need all the support I can get to differentiate between truth and lies.     
Okay, this is where I have to call you stupid. You know that the TS's interest rate is based on BLR - 1% right (see his post above)? so if I were to put the interest rate as 5%, then that would be wrong because his interest rate from today onwards is already BLR (6.85%) - 1% = 5.85%.

Sure, his interest rate in 2005 when he took the loan was BLR (6%) - 1 % = 5%, HOWEVER BLR has increased from 6% in 2005 to 6.75% in 2007, and now hovering at 6.85%. As such, today and going forward, his interest rate will be calculated at BLR (6.85%) - 1% = 5.85% as I posted above. Wait, unless you actually think that the rates that he took in 2005 would remain as in till today? Then I have an even low opinion of you since you speak as if you know things but couldn't even comprehend how the interest rates are calculated - based on the daily-or-monthly rest, on the outstanding balance of the loan, on a rate calculated as this: BLR (current BLR, not the BLR at the time the loan is taken) adjusted according to the loan agreement. As such, when the BLR changes, so will the effective interest rate. So why would I set the earlier calculation as 5% because that only occurred for the first 2 years and have increased significantly in 2007 till now?

In addition, I have mentioned that when I meet my clients I would need to see their loan statement to know exactly the amount of their paid installments as you do realize that it is impossible to calculate it exactly due to the changes of the BLR over the years right? If you haven't realized this and insist on setting it at 5%, you really really really are dumb, especially for someone who talks so much 



Also, the most important thing is going forward, how much the TS will pay in the next 20 years, and if he were to refinance, will the total repayments be lowered due to the lower interest rate? The answer is yes(!!!) as I have shown multiple times, but because you may have lost some marbles up there, I will show it again:



I really don't like to call others stupid, or dumb, I am very open to opinions and discussions; but when they can't see the things that are right in front of them what else can I do? I respect many old people, I learn A LOT from all my clients especially the older ones, and they return that by fully respecting my opinions as a financial planner regardless if they agree with me or otherwise. But you? I don't know what kind of financial planners you have met, but if you got cheated by some of them previously you only have yourself to blame for being too stupid and naive, because the final decision always require your signature. You signed your stupidity by signing contracts with dishonest financial planners.

Bro, why do you refuse to understand what wild_card_my presented ?

Read again what he wrote. It is long, but he is just being patient to explain to you some very simple stuff

Ignoring what was paid in the past.

Just compare, existing principal outstanding at BLR less 1% for remaining tenures.

Then refinancing the same principal outstanding with same tenure at say BLR less 2.4%.

What is the interest savings less the refinancing cost.

Of course, we can have secondary argument as to whether you need to present value back the interest savings.

It should be that simple right. Past is past. Just focus on remaining loan amount.

Past interest paid is "sunk cost". It has been paid. You can't recoup no matter how. Like cf28 said "past is past". We should only look forward

Since it is a Sunday, I will use supersound's example to illustrate to TS the simple calculation (not trying to convince supersound because he feels he is never wrong  )

Original loan = RM200k
Interest = BLR -1%
Year = 2005, tenure = 30 years finish paying in 2034
After 10 years on 31/12/2014 = principal paid down to RM150k. Interest paid RM70k (as assumed by supersound)

Now TS wants to refinance RM150k
Refinancing interest = BLR - 2.4%
Tenure = 20 years. Same finish paying in 2034
Scenario 1 - Don't refinance. Continue existing loan

Interest already paid = RM70k (cannot change because already paid)
Loan amount = RM150k, Interest rate = BLR-1% = 6.85% - 1% = 5.85%

What is the total interest payable from 2015 - 2034 ? Based on loan calculator = ~RM105k. Monthly instalment = RM1,062
Scenario 2 - Refinance.

Interest already paid = RM70k (cannot change because already paid)
Loan amount = RM150k, interest rate = BLR-2.4% = 6.85% - 2.4% = 4.45%

What is the total interest payable form 2015 - 2034 ? Based on loan calculator = ~RM77k. Monthly instalment = RM945
Conclusion : By comparing the 2 scenario, the monthly instalment is reduced to RM945. The interest saved will be RM105k - RM77k = RM28k. It should be more than able to cover the refinancing cost.

What I calculated above is the same as what wide_card_my presented. Simple calculation which any people with SPM maths passed can calculate

Bro, if it is in real life, you are actually defaming/slandering wide_card_my

But you will get away in cyberworld. Unless you stand by your opinion and give your actual name, I/C, contact address etc 

You do know that when BLR increases, and if you want to maintain tenure, your instalment needs to increase too right?

My company develops our own calculators four our consultants to use with our clients, and one of the most basic formula is the calculation for the PMT (installment) for a reducing balance loan. There are 3 variables when it comes to calculating the FV [future value](remaining outstanding balance of the future, which you would like to be 0, that is when you would have finished paying for the loan).

Do yourself a favor, open up excel and type this:



You will notice that it would be asking for at minimum 3 variables:-

A: Payment [pmt](installment amount)
B: Rate [rate](Interest ate)
C: Number of payments in a set of tenure [nper](number of months, since the installment is set to be payable every month)

*The items in the squared brackets are the same items you put in your excel if you need to see it for yourself*

So if you would like to maintain the tenure (240 months), but the interest rate has increased (from 5.00 to 5.85%), you would then need to increase the installment accordingly.

But here you are yelling about 5% 5% 5%, without realizing that as the interest rate for the client climbed to 5.85%, so will the installment as long as he intends to maintain the tenure (which mean he does not prolonging it).

---

Everyone else reading this thread... You guys can decide for yourself who is right and who is a monkey. I don't know why uncle is acting the way he does, but I've presented my arguments in the best way possible. On the other hand all he ever does is to call me a cheater, and all his replies are without any substance. Well it is his right to make himself look stupid. But I implore that everyone read all the posts carefully to decide which side is talking about facts, and which side is filled with unreasonable hatred towards an array of entities; and if you have any doubts, do post your questions here.

If you have decided that he is a poison to our little community, please do your part and link this thread whenever he swoops in to give his unsolicited advice. This will give him a piece of his own medicine. I hate doing a witch hunt, and it would sadden me to continue putting people down, but I also believe that no bad deed can go unexposed, especially if he insist on continuing with his denials... the best way to make it stop is to let the masses decide.

Have a good Sunday, people.

I am still learning about all this kind of things. But shouldn't we use  6.85% as the current rates as the TS wanted to refinance this year? So where is the 5% coming from?

I would like to see your version of calculation.

Sorry. Kind of headache  .

Thank You

So if you increase the payment, you still get to pay at 5%?

So going back to this person's loan, the person already paid RM70k in interest. Shouldn't when you do refinance, your new loan starts with your new principle and not your old one?

Second, from the calculations done by Showtime747, he can save Rm20k+. But like you said legal fees = Rm5k-Rm10k. So TS will still save say RM10k-Rm15k right?

I am still confuse about the part where wild_card_my cheats others. He is using the current BLR which is right I suppose? We cannot use 5% anymore as BLR have gone up.

Thanks for the calculation comparison. This has clearly makes me understand more about load financing.
Do you have calculation to show?
If I'm not mistaken, what you are trying to tell me is that refinancing is BAD choice when;
1) If I increase the tenure, i.e. my case, which supposed to be finished by 2035, but I increased it to 2045. Hence, I need to pay additional 10 years interest, so the "sunken" interest that I paid need to be taken into consideration.
2) If the current LO are not better than my existing one.

--------------------------------------
Was busy over the weekend, didn't expect this matter will escalated...

Conclusion, wild_card_my is correct in between the comparison between the old LO and new. supersound may also be right if what he's trying to tell me are as I explained.   Thank you all for helping me understand.

Just to update my situation,
I'd contacted my banker, apparently my LO is BLR+0.15% after 2007 (only the first 2 years are BLR-1%). It is definitely worth to do refinance in this case. HOWEVER, I have advance payment of 9 months in the system, due to I paid more than the minimum throughout the years and sometimes bonus. So, I got introduced a plan call "Capital Repayment", and can be paid using EPF account 2. After ding dong calculation and read through this thread, I can shorten my tenure to 3 years only!!

2. Withdrawal to reduce / redeem a housing loan
This scheme allows individuals to withdraw money from their EPF Account 2 to reduce or redeem the housing loan balance with approved financial institutions. This can be done for individual purchases, joint purchases, or for a spouses’ housing loan.

To apply, the latest Housing Loan Balance Statement (no more than 3 months from date of application) and all Loan Redemption Letters (where refinancing was performed before) must be submitted at the time of the application. You can walk in to any KWSP office to submit the KWSP 9C (AHL) (D8) Withdrawal Form , along with the supporting documents or submit via postal services.

Withdrawal limits
The entire housing loan balance
Any withdrawal amount is always subject to whatever money is available in the applicant’s (and where applicable, joint applicant’s) Account 2.

In other words, I will not refinance at the moment (even though my LO rate is super high), but I will use the refinancing when the next right investment comes into my sight.