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 FD OR SEMI-FLEXI HOUSING LOAN, INVESTMENT

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davison
post Mar 30 2017, 04:26 PM

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If u keep rolling money in FD with same rate (never withdraw any single sen from FD), u could get more money. 40k in FD total interest u can get over 30 years is around 90k. if u dump in money into housing loan and u could save the interest over 30 years is less then 60k.... best way i could think is put ur money in FD 1st to roll more and more, after u got a huge amount of money and 1 lump sum to clear off the loan is better way to do.
heavensea
post Mar 30 2017, 06:14 PM

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QUOTE(davison @ Mar 30 2017, 04:26 PM)
If u keep rolling money in FD with same rate (never withdraw any single sen from FD), u could get more money. 40k in FD total interest u can get over 30 years is around 90k. if u dump in money into housing loan and u could save the interest over 30 years is less then 60k.... best way i could think is put ur money in FD 1st to roll more and more, after u got a huge amount of money and 1 lump sum to clear off the loan is better way to do.
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which means early settlement of housing loan isn't worth at all?

I thought you should be included the money saved from "reduced total HL amount", and reinvested it back?
kradun
post Mar 30 2017, 07:38 PM

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QUOTE(davison @ Mar 30 2017, 04:26 PM)
If u keep rolling money in FD with same rate (never withdraw any single sen from FD), u could get more money. 40k in FD total interest u can get over 30 years is around 90k. if u dump in money into housing loan and u could save the interest over 30 years is less then 60k.... best way i could think is put ur money in FD 1st to roll more and more, after u got a huge amount of money and 1 lump sum to clear off the loan is better way to do.
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1. The monthly repayment amount will remain even though settled partial outstanding via the 40k of cash.

2. Since the repayment amount is remain, so the repayment tenure shall be reduce significantly. The repayment period reduce to about 25++ years.

3. For the same duration, the FD earn about RM60k++ while the interest saving from housing loan is about RM80k++.

Or if you would like to short paid the repayment from RM2,271 to RM2,078 to remain the repayment tenure, then on top of interest saving of about RM29k++, u will have to add in the interest generate by the monthly additional cash of RM199, which is about another RM64k++ over the period (assume 4% compounded on monthly basis).

No matter which way, settle loan with higher interest will save more money.


SUSMNet
post Mar 30 2017, 08:07 PM

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QUOTE(mingfei2u @ Mar 21 2017, 11:19 AM)
Hi, my FD 40k will due on 25th March 2017.

Wondering wanna put the money into semi-flexi housing loan account reduce principal or put FD with Affin 4.1%

1) my housing loan rate is BR+ 0.65% = 4.17%

2) Affin FD offer is 3.78% for 20% portfolio + 4.1% for 80% of portfolio

which choice that brings me the better return??? anyone can advise?? (Skip the cash flow or liquidity elements)
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why not u trade forex?
it can earn more than 4% each month

TSmingfei2u
post Mar 31 2017, 10:51 AM

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QUOTE(MNet @ Mar 30 2017, 08:07 PM)
why not u trade forex?
it can earn more than 4% each month
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no thanks!!!

Anti-FOREX here, any investment that not regulated by Bank Negara, never in my consideration list!!!
TSmingfei2u
post Mar 31 2017, 10:55 AM

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QUOTE(kradun @ Mar 30 2017, 07:38 PM)
1. The monthly repayment amount will remain even though settled partial outstanding via the 40k of cash.

2. Since the repayment amount is remain, so the repayment tenure shall be reduce significantly. The repayment period reduce to about 25++ years.

3. For the same duration, the FD earn about RM60k++ while the interest saving from housing loan is about RM80k++.

Or if you would like to short paid the repayment from RM2,271 to RM2,078 to remain the repayment tenure, then on top of interest saving of about RM29k++, u will have to add in the interest generate by the monthly additional cash of RM199, which is about another RM64k++ over the period (assume 4% compounded on monthly basis).

No matter which way, settle loan with higher interest will save more money.
*
what I thought exactly same as yours, but ppl here come telling me that vice versa way~

impossible bank loan interest will less than the FD, else how bank earn money from their loan products?

housing loan interest is calculated daily basis compounding and FD just calculated as simple interest calcualation, which I thought many of them omitted the effect of compounding though?
tifosi
post Mar 31 2017, 11:25 AM

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QUOTE(kradun @ Mar 30 2017, 07:38 PM)
1. The monthly repayment amount will remain even though settled partial outstanding via the 40k of cash.

2. Since the repayment amount is remain, so the repayment tenure shall be reduce significantly. The repayment period reduce to about 25++ years.

3. For the same duration, the FD earn about RM60k++ while the interest saving from housing loan is about RM80k++.

Or if you would like to short paid the repayment from RM2,271 to RM2,078 to remain the repayment tenure, then on top of interest saving of about RM29k++, u will have to add in the interest generate by the monthly additional cash of RM199, which is about another RM64k++ over the period (assume 4% compounded on monthly basis).

No matter which way, settle loan with higher interest will save more money.
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This is right.
kradun
post Mar 31 2017, 12:38 PM

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QUOTE(mingfei2u @ Mar 31 2017, 10:55 AM)
what I thought exactly same as yours, but ppl here come telling me that vice versa way~

impossible bank loan interest will less than the FD, else how bank earn money from their loan products?

housing loan interest is calculated daily basis compounding and FD just calculated as simple interest calcualation, which I thought many of them omitted the effect of compounding though?
*
Both are apply compounding interest, just that fd will show u the interest after factor in the compound effect, ie suppose to be 4% but bank sell it as 4.xx%.

The daily rest calculation mean if u early settle the housing loan then the interest will calculate up to 1 day before settlement (probably) while for fd if any pre-mature withdrawal u will not entitle the interest from 1st day till 1 day before withdrawal. Bank loan compunding on monthly basis, if compounding on daily basis then its snow ball effect will be very scary.

The saving from interest mainly due to different in interest rate, settle whichever with higher interest rate then will end up save more money.

This post has been edited by kradun: Mar 31 2017, 01:10 PM
Bussybody
post Mar 31 2017, 01:11 PM

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How about settle remaining car loan vs dump into semi flexi loan?

Thank u!
fun_feng
post Mar 31 2017, 02:35 PM

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QUOTE(davison @ Mar 30 2017, 04:20 PM)
Hey bro, everything i am calculated Rm 470,000 principle.
From TS scenario with principle 470,000 and he got 40k on hand then he have planning what to do with the 40k,
from the example i have is 470,000 without any extra payment how much interest have to pay,
2nd example is 470,000 principle and dump in 40k cash which mean left 430,000 principle then to calculate the total interest to pay.
Finally compare back to your 40k put into FD with 4.07% p.a. over 30 years total interest u got.

if u want example for 470,00 principle and pay extra monthly payment with Rm200 per month after 1 year loan, then see this and compare the interest u could save between FD interest u got. (200 per month x 12 x 29 = 69,600)
[attachmentid=8666822]
[attachmentid=8666823]
[attachmentid=8666824]
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No, what i meant is that in your 2nd example, you are going to get "extra" rm200 monthly because the monthly installment has been reduced compared to the 1st example where the money is kept in FD

As another forummer has said, dump in money to whichever has higher interest.

In TS case, the loan 4.17% has higher interest than FD 4.02%

And it will be very very rare that FD% > loan%.


fun_feng
post Mar 31 2017, 02:48 PM

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QUOTE(Bussybody @ Mar 31 2017, 01:11 PM)
How about settle remaining car loan vs dump into semi flexi loan?

Thank u!
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If your car loan is a flat interest rate loan, you need to convert it to effective interest rate,
and then pay whatever has the higher interest rate

https://loanstreet.com.my/calculator/flat-t...rest-calculator
jasmineh2y
post Apr 14 2017, 05:12 PM

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QUOTE(fun_feng @ Mar 31 2017, 02:48 PM)
If your car loan is a flat interest rate loan, you need to convert it to effective interest rate,
and then pay whatever has the higher interest rate

https://loanstreet.com.my/calculator/flat-t...rest-calculator
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we can convert the car loan to effective interest rate? i thought only upon sign contract to choose flat or effective?
fun_feng
post Apr 14 2017, 07:49 PM

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QUOTE(jasmineh2y @ Apr 14 2017, 05:12 PM)
we can convert the car loan to effective interest rate? i thought only upon sign contract to choose flat or effective?
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I mean the effective rate same as the home loan interest rate. This way you can compare.
Nothing to do with the loan agreement

 

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