Hi all,

I have a full flexi account with some money deposit inside. My house is under construction and i have been servicing my house interest and find it every month burning money by servicing interest just like that. So i talk to my bank to do early installment, so that i can start paying installment instead of burning interest.

But the way the bank explain to me is it wont make a lot of difference since my account is full flexi, and my current deposit already deducted some of the interest. Even though i start early for installment repayment, its just like deducting more from my account, but the interest saving is the same.

Can anyone enlighten my is it true? i thought start paying installment early better than start late, or it make no difference?

Thanks.

your early installment means every month you put your scheduled monthly installment into your full flexi current account right?

it would help a bit but it won't help much unless you put a lump sum of money into your full flexi current account.
let's say your loan size is 500k, you put 200k inside and the interest charge base on 300k only
but if you only put monthly installment into it , like 2500 then the interest charge base on 497500 which is hardly to save up any

but now you are servicing your interest while waiting your house to complete so it depends on the progress of your house currently. If your house situated at lower floor then the interest you need to service is getting more. If at higher floor then the interest still lesser.

If you are having the true full flexi account, it works very simple.

You just need to dump in the amount of money into your account that is same to the amount bank pay to developer, then no interest charge shall incur. Depending on the bank, there may have some additional maintenance charges (RM 10 per month for example).

Let say bank pay RM 50k to the developer, and you put RM 50k into the account, then you do not need to serve any interest.

If let say bank pay RM 50k to the developer while you only put RM 20k into the account, RM 30k will be subject to interest and will be automatically deducted from the RM 20k you put in.

There is no need to start the installment officially with the bank early, you can just every month put in the installment amount by yourself into your flexi account and definately it will reduce the interest.

The principle for full flexi account is simple and straightforward, they only charge interest on the outstanding amount. The higher outstanding you have, the higher interest you need to pay.

Hi, Does the above principle apply to semi flexi loan? I planned to do so for my flexi loan with Hong Leong bank (i.e. to dump one lumpsum payment for the full amount bank has disbursed to the developer). Appreciate your advice.

Thanks in advance.

also have to clarify with bank if they have a minimum interest that will be charged. CIMB has this clause.

Thanks for the reply. my point is by start paying installment early, there will be some portion will go to the principal which will reduce the principal. Unlike now keep servicing interest but my principal owed to the bank still the same.

So because it is a full flexi account, will it make a different if i start paying installment early vs start late (after bank disburse all the money)? at least there is some interest saving by starting early?

Thanks very much

In principle, semi-flexi suppose to be the same, the difference only on the mechanism of withdrawal of excess cash in the account is different.

Nonetheless, I found that semi-flexi account nowadays vary from one bank to another and may have their own rules and regulations, so I am not sure if full flexi loan pricinple still apply to semi-flexi loan.

Can you clarify more on this?

IIRC it was during the early stage of constrction.

Developer claim 50k so I put 50k into the account. I was charged a minium interest.

They have a minimum amount to be charged as interest even tho you dont owe them that much.

but my loan was 2013. not sure if its still there. This clause was not mentioned by the salesperson when I sign the loan.

Now they change to penalty for those who underutilise the loan amount.



This post has been edited by jonnie: Apr 6 2016, 04:52 PM

Putting excess money to reduce the outstanding for sure will reduce the interest as well. But the amount you save would depend how much you able to reduce.

Let say bank already paid RM 250k to the developer and charge RM 1k interest per month, so if you pay RM 1k, next month bank will charge you RM 1k again as interest for that RM 250k outstanding.

If let say instead you pay RM 1k for interest, you pay RM 2k instead. So your new outstanding would be RM 249k, and may charge RM 999.50 (just example, for actual amount, need to count by yourself) interest in the following month, so you save RM 0.50 cents of interest.

You can put whatever amount into the account by yourseld, no need to start installment officially with the bank early.

Got it, make sense. Thanks very much for this

What's the rate of the minimum interest? 50k, 100k, 150k also similiar?


The case of penalty for those underutilize the loan amount is already called off.

https://forum.lowyat.net/topic/3762030/all

RM 10-20 every month. if i remember correctly.

Never owe them money but still pay RM10 maintenance plus the minimum charge for a period.

small amount but felt cheated. lol

just ask your opinion....if u have 50k, would it be better to dump it to your housing loan account or put it in fd?

If i recall correctly, full flexi got a service charge where you pay an amount (RM50?) every time u withdraw money from the account. Semi flexi you pay a fix amount RM10 - RM20 per month as service charge but can withdraw as many times as u like.

This post has been edited by JianNinety: Apr 6 2016, 05:31 PM

Just calculate the interest lo. FD interest higher or your housing loan interest higher? Put in the higher one.

u terbalik jor

full flexi = monthly charge

semi flexi = charge per withdrawal

Alamak, remember wrongly ady. Long time since I go touch property loan. Thanks for correction.

This post has been edited by JianNinety: Apr 6 2016, 05:34 PM

depends on the FD interest rate vs your loan interest rate.

Are you sure about this? From my understanding, if your loan amount is RM500k (monthly repayment RM2.1k) even after you throw in RM200k (monthly repayment still RM2.1k) just shorten the loan tenure and monthly repayment will never go down.

I would prefer full flexi so repayment more easier.

lifebalance

Hi,

Regards to your matter, you will need to check in your bank letter of offer under progressive interest. It will state whether the bank allows you to put in any amount of money during the progressive interest period (underconstruction). Some bank LO will state that you can't put more than certain amount or % of the amount into the account to offset the interest.

The reason is because the bank would want to earn the interest from you while the property is underconstruction. If there is no such clause that restrict you, then you can feel free to dump in any amount into your loan account to offset the interest. Your installment per month will not reduce, just that your loan tenure will be shorten.

Some banks will penalise you if you put in more than certain amount by charging you certain fees as the penalty as well. Hope this is clear enough

I have a cimb full flexi loan in 2013, but due to property is still having the DIBS scheme, I have not encounter such incident. My other full flexi loan in UOB not such problem, no minimum interest charge, even the deposit amount is same as loan amount..

If only 50k, better to put it inside the loan account, still not come across any FD rate is higher than Loan rate for RM 50k.

1. there is no different in your total interest amount, early settle or not.
2. the bad side of pay earlier, you lost the opportunity to use that amount of money. if, in case, you need money. you can take back the money in flexi account. but, after you early settle, the money move from flexi to loan account, you cannnot take it out.

if you put 2500 in loan, you save 9.357 per month.

if you put 2500 every month, you save 1350 in one year.

whether rm1350 is consider big money or not, it depends. for you, you may feel rm1350 is not money. for me rm1350 is a lot.

Gd morning sir, this's a very good and straightforward explanation. Thank you.

I've some doubt abt flexi loan ac, hopefully you do not mind to explain.

About the flexi loan account number, is it the same ac numbers to pay "normal monthly installments" and "extra lumsum money to offset principal"?

full flexi loan, you got a saving account right? money in that saving account is used to offset the loan amount interest. am i right?

my past experience with cimb is quite simple. cimb full flexi will provide me a current acc and its linked to my home loan so i just dump in to my current acc from the beginning to offset the progressive billing interest as well as loan interest to reduce the principal amount. There is a monthly service fee RM10. This was 7 yrs ago but today most of the banks had revised the t&c for full flexi loan as they will not allow you to offset any progressive billing interest at all during construction period

I already got a saving ac of mbb, how they gonna link it to my flexi loan account? Open another saving ac for me?

thanks for the info, which means we can only offset the interest after vp? So unfair...

My HSBC Flexi loan allow to offset progressive billing interest during construction period.
Mine is started last year.
As long I dump in certain amount of money into my current account, it will automatic deduct the principal and charge interest based on remaining amount.
For example I borrow 500,000
They will show my current account amount like -500,000.
When I dump in 50,000, it will show -450,000 on my account, and usable amount 50,000.
The interest charge on daily basis.

The con of flexi loan is when you unable to fulfill your repayment, then it will be disaster.
Not advise for those without discipline to pay your loan on time one.
For those always pay loan in advance one, it is advisable that you should go for flexi loan

You are right. Full flexi is good for those with excess fund as you can dump in to offset the interest at any day and time and also with the flexibility to withdraw it out at any time as well

of course it's not advisable to perform any withdrawal since the ultimate goal for full flexi is to save big chunk of interest to reduce overall loan amount but at least it gives you the flexibility

It's good to know HSBC still allow to offset progressive billing interest

semi also good, no maintenance fees. Mbb also allow to offset progressive int.

Have to wait 2~3 days to get the money back thou.

Full flexi is pretty okay if you have discipline.

It's just RM 10,60 with no withdrawal charges per month. By 35 years only, RM 4,452.00

Dump in extra cash / salary / etc at start of month, withdraw if you need to use.

Rinse and repeat.

Ya you're right too, but I use semi because of cheapskate with rm10.6 / month. But the withdrawal charges for semi flexi is rm25 per withdrawal.

Rm10.6x12 = semi flexi can withdraw 4.8 times per year lo. I don't think I'll withdraw the money frequently.

Difference is, I'm planning to use the current account for everything including salary, other possible income and etc

Rather than to skimp on the 10.60 per month, I can freely withdraw and top up the account without waiting 3 days for the money to be transferred.

Guys...wanna seek some advice from Guru here...

i plan to get a property with 700K loan (full flexi) @ 35 yrs and i have FD of 900K....

Question 1 - if i park in 700K into the flexi acct, does that mean my loan will still still be valid for 35 yrs ( assuming i dont take out the 700k) ? since i dont owe to bank, there is no monthly installment need to pay right?

Question 2 - can i park my 700k as FD in the flexi acct? or there is no such thing?

appreciate all Guru advices..here..

You cannot park your full amount inside.

That will be considered full repaymentand bank loans will normally have lock in periods where you cannot make early settlement, else you will incur a penalty.

U/C or Subsale?

new..not sub sale.

You just pay as per bank draw down to developer's claim, into your flexi current account.

You may opt prepayment of the same into your loan account directly too.

You will be notified upon each progressive claim, so just do the fund transfer to knock off interest.

Your choice btw 1 or 2

This post has been edited by jojolicia: Apr 2 2024, 07:53 AM