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 Refinancing your property for cash

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linmac
post Oct 26 2015, 04:43 PM

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Joined: Jan 2003
QUOTE(b00n @ Oct 9 2015, 08:18 PM)
Again for Refinancing of an encumbered property, pls note that the refinance portion of which additional cash out is to be made is to be assessed with 10 years repayments for DSR qualification.

Illustration (again with 100% financing):

Scenario 1 - Clean property (i.e. no mortgage on the property)
Property price = RM1 million / loan RM1 million with tenor of 30 years
For calculation of loan commitment on that loan (later to be added to total customer's loan commitment) is RM1 million divided by 30 years (assuming no interest), monthly  installment/commitment  will be RM2,777

Scenario 2 - Property with mortgage loan in Bank A
Property price = RM1 million / loan RM1 million with tenor of 30 years (however, the loan outstanding with Bank A is RM400k)

Under this scenario, loan needed to redeem the loan from Bank A is RM400k, which means customer will get the benefit of RM600k as cash (hence the term cash out).

For calculation of loan commitment on that loan (later to be added to total customer's loan commitment) is no longer RM1 million divided by 30 years.
It will be RM400k divided by 30 years = RM1,111 plus RM600k divided by 10 years = RM5,000.
Therefore total commitment for DSR assessment becomes RM6,111. Although customer still is borrowing for 30 years with a monthly commitment of RM2,777.

That is why since late 2013 and early 2014, many people are complaining refinancing with additional cash out is no longer that easy to qualify.
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1 - The monthly Installment will be RM6,111 or RM2,777 ?
2 - All banks doing this now?

Thanks


 

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