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Full flexi loan, to start installment before VP, Good or Bad? can save interest?
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TScheekychee
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 Apr 6 2016, 04:07 PM, updated 10y ago
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Getting Started
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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.
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TScheekychee
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Apr 6 2016, 04:35 PM
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Getting Started
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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
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TScheekychee
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Apr 6 2016, 04:57 PM
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Getting Started
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QUOTE(samkps @ Apr 6 2016, 04:54 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 |
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