Thanks CFA28 for the summon


1. The rates depend on the loan amount, generally, and I said this without guarantee, HLB and AMBANK are giving more competitive rates. In the end of the day though, the rates depend heavily on these 3 factors:

a) The bank you are applying for
b) The loan amount you are applying for
c) Your credit rating (good paymaster vs bad paymaster vs having no loans at all)

2. As for the legal fees, only HSBC that I know of can absorb the legal fees in its entirety, but the rates CAN (not necessarily) be worse than the other banks by about 0.2 to 0.3%. On the other hand, other banks do offer to include the legal fees into the loan amount, so your refinancing would be at a margin of 90% + 2~%.

- Faiz Azmi (+6 013 369 3993)





edit: You can also post your questions in this thread sanctioned by our STAFF Lucifah linked below ya. No questions are too stupid, you can ask about ANYTHING related to mortgage there, dont be afraid: Mortgage Loan Package Inquiries

This post has been edited by wild_card_my: Dec 12 2014, 01:25 PM

1. HLB would probably give the better rates, but all offers are only final when the LO is issued by the respective banks, and I really cannot speak for them although my firm empannel all 3 (we have 5 banks under us); I cannot guarantee that HLB would give the best offers. I usually apply up to 3 banks for each customer, any more than this is a waste and it may affect the customers future applications since these applications (whether they are approved or rejected by the bank, accepted or rejected by the customer) will be recorded in the CCRIS

2. The loan is equivalent to 90% (plus 2~3% for legal fees that can be financed into the bank) of the MV. Provided that these are your 1st and 2nd house. But if it is your 3rd house, your refinancing would be capped at just 70%

3. Typically, to calculate the difference without a calculator.... 0.1% in interest charge for RM100k loan amount is RM100 a year. So if the difference is 0.3%, for a loan amount of say, RM500k, the nominal difference is 3 x 100 x 5 = RM1,500 a year that you overpay (or save, depending on which bank you take la)

Typically the Legal fees is about 2% of the loan amount only. So at 0.3% difference in interest rate, in 6.66 years you would already have covered the legal fees, and if you go beyond the 6 years, you would be over paying the bank that initially covered your legal fees. The legal fee absorption is good if you are planning to sell or refinance the house within 6 years of purchasing/refinancing.

Sorry late reply, went for Friday Prayers

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.



This post has been edited by wild_card_my: Dec 12 2014, 09:39 PM

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.

This post has been edited by wild_card_my: Dec 12 2014, 10:06 PM

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.

This post has been edited by wild_card_my: Dec 13 2014, 04:20 PM

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.

This post has been edited by wild_card_my: Dec 13 2014, 08:46 PM

Ill let the rest of us decide whether or not I am a cheater or you are just being childish. I presented numbers in its most basic form while you are just chattering like a monkey repeating the same things over and over again.

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.

Because a mortgage has its interest calculated based on reducing balance. Given whatever the outstanding balance is, going forward would you want to pay the outstanding balance based on BLR - 1% OR BLR - 2.4%?

At that big a difference between the old offer than the new offer, it is easy to tell that the client would benefit in paying their remaining outstanding balance by first refinancing it to lock-in the lower rates of BLR-2.4%. I'll show you again just for kicks ya:

Going forward without refinancing, the client is poised to pay



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



So by refinancing, the client would save:

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 for our consultants to use with our clients, and one of the most basic formula is the calculation for the PMT (installment) of FV (future value) 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.

This post has been edited by wild_card_my: Dec 14 2014, 09:17 AM

I will tell you how he got 5%. In 2005 (which is when the loan by TS was signed), the BLR was 6.0%. TS's rate is BLR - 1%, so the effective interest rate at the time is 5%.

What he is misunderstand about reducing balance concept is that the interest is calculated upon the current outstanding balance, at the current interest rates, which is as you calculated, BLR (6.85%) - 1% = 5.85%.

There are 3 variables when calculating for a repayment for your housing loan, these are the variables needed to calculate the tenure, interest rate, and installment needed to finish paying off the loans [use the =FV(....) function in excel]:-

a. rate
b. tenure
c. payment (instalment)

As such, if the interest is increased as we have shown above, and if we don't increase the installment, then the tenure would increase. To maintain the tenure to the original remaining length of 240 months in my example, you would then need to increase the payment. If we use 5% all the way like he wants me to, then the tenure would definitely be increased because the rate is now 5.85%.

Even my face is there... be warned though, when you see me on my new Youtube series about personal financial-management, you would see a chubbier, happily married guy.

This post has been edited by wild_card_my: Dec 14 2014, 09:53 AM

Not at all, you need to increase the installment (repayment) BECAUSE the rate has increased to 5.85% and you would like to maintain the tenure to the original end date (240 months from today, December 2034)

Since the interest rate has increased to 5.85%, and if you DO NOT increase your installment, you WILL NOT finish paying the loans off on December 2034, the loan would be extended.

Showtime747 derived his calculation from my calculations poster earlier.

Essentially when i refinanced the loan i have already included the balance+cost-of-financing(legalValuationStampduty). So whatever savings you get is nett. After refinancing the installments are reduced by about RM100 a month for the next 240 months.

And you got it right, when you refinance the only numbers that matter are the current outstanding balance, interest paid earlier are part of sunk cost.

I've presented my numbers, the other guy has not done the same. Probably because he is afraid that his lack of knowledge in this matter would mean that his numbers are wrong in the first place.

Anyway, the simplest way to think about this is that: going forward 240 months from today, would you prefer to pay:-

(don't refinance) Scenario A: RM1,179.88x240month = RM283,171.20

(refinance) Scenario B: RM1,086.10x240month = RM260,664 in total

Listen to the other guy if you want the bank to earn RM22k++ in the next few years. I am not asking everyone to start refinancing their mortgages, everyone has their reasons when deciding on a financial maneuver. But when the numbers have been presented, and peer-reviewed for all to see, and the other guy still insist that he is right, then there must be something loose in his head.

I am betting that he is so red-faced by now and couldn't stand down to admit that he was wrong. But whatever it is, this is the true face of supersound, I'm glad we had this exchange, it has exposed him for what he is.

This post has been edited by wild_card_my: Dec 14 2014, 02:31 PM

Well, guys, I am still here partly for work.

So to the TS and anyone else, if you still need to refinance, I can help with applications to 5 banks, all under our firm's panel. I can be contacted from the number posted in my signature below.

For the rest who still wonder about the numbers in refinancing or morgage as a whole, you can post your questions in this lovely thread here, as per allowed by our very own STAFF-MOD, Lucifah.

Have a good day people.

Thank you for the vote of confidence. My calculations and arguments have also been vouched by other verteran forummers in both FINANCE, BUSINES and INVESTMENT HOUSE subforum as well as PROPERTY TALK subforum.

In any case, if you are interested to refinance, I would like to put forward my services to you. As a mortgage broker, my job is... to secure my clients the mortgage that they need. My services are free, I earn my pay from the banks. Thanks