Hi all,

wanna ask about capital repayment vs advance payment (which one can reduce the interest rate)

Let say my house installment is Rm 1500. But every month I pay Rm 2000. (the extra RM 500 consider as advance payment, according to my bank officer)

Or I just pay RM 1500 every month, after 10 month I straight pay Rm 5000 as capital repayment ( RM 500 x 10
) since the additional RM 500 i keep every month until the 10th month.


Some ppl say no different. So kind of confuse now . Hope you guys can enlightens me in this loan matter

The terms are little confusing. To make it clear, as long as you are paying to reduce your loan amount, then it will reduce your interest repayment.

e.g.
Lets say your loan is still RM50k, then you dump lump sum RM5k (tell the banker that this money is to reduce your loan amount). Your new loan amount will be RM45k. Your interest will be based on RM45k rather than RM50k.

Advanced payment is something like you are still paying your normal installment, just that you paying more for installment. But you are not directly paying off your loan amount.

Hope i didnt confuse you in here. Trying my best to explain. LOL. Cheers

Thanks a lot.

Just wondering since Im paying more in advance. doesnt it mean i settle more every single month?

I check with the bank, the person say advance payment mean u pay first, if you didnt pay for the installment for few months also ok. "cz i ady pay in advance. " thats why i bit not sure here

I think if advance payment, it won't help to reduce the interest and you earn nothing on the amount too. You may clarify with the customer service.

depends on ur account bro..

if ur housing loan is full flexi, then no nid inform.. ur housing loan account = current account = checking account

so if ur loan is 50k, and u put 50k in.. then no interest

for conventional, then need inform

for semi flexi, i dun quite sure, but i think need inform also

by paying extra RM500 each month, you'll effectively reduce your loan principle by RM500 each money.

If you hold for 10 months and pay in 1 lump sum RM5000 also can.

You'll have to check whether your loan is a flexi loan or it's a non-flexi loan & whether the bank allow you to do any advance payment that will reduce on the principle

i think TS refer to semi-flexi.. and yes
if you just pay more, its consider advance payment, means u pay for the next half month (installment 1k, pay 1.5k)
means next month you only need to pay 500

or you can do it every single month, but its very inconvenience for you
just go to counter and said paid to principal, and sign a form..

or you can go around half years or 1 years

personal experience, if you have semi-flexi loan, just pay extra every month.

you'll noticed the interest for next month will be lower (cos its based on reducing balance) = more money will be paid to reduce the capital that you owed to bank.

advantage of not using the 5k to pay to principal and keep it in loan account : if 1 day you need to use money, you dont need to do refinance. just withdraw the extra payment from the semi flexi account.

Yes. Yes. Im semi flexi

I have check. with the officer. They say all this while im paying in advance. It doesnt reduce the interest rate but i ady pay in advance.

So, even i didnt pay for the next 5 months also can cz the amount of "advance payment" can cover my monthly instalment.

mine is semi flexi.

Have to inform. Ady check with the bank. Thanks a lot.

Thanks for all the sifu reply. I have the answers ady.