Fixed-rate mortgages and adjustable-rate mortgages (ARMs) are the two primary mortgage types. While the marketplace offers numerous varieties within these two categories, the first step when shopping for a mortgage is determining which of the two main loan types - the fixed-rate mortgage or the adjustable-rate mortgage - best suits your needs.

Fixed-Rate Mortgages
A fixed-rate mortgage charges a set rate of interest that does not change throughout the life of the loan. Although the amount of principal and interest paid each month varies from payment to payment, the total payment remains the same, which makes budgeting easy for homeowners.

The partial amortization schedule below demonstrates the way in which the principal and interest payments vary over the life of the mortgage. In this example, the mortgage term is 30 years, the principal is $100,000 and the interest rate is 6%.

Payment Principal Interest Principal Balance
1. $599.55 $99.55 $500.00 $99900.45
2. $599.55 $100.05 $499.50 $99800.40
3. $599.55 $100.55 $499.00 $99699.85
As you can see, the payments made during the initial years of a mortgage consist primarily of interest payments.

The main advantage of a fixed-rate loan is that the borrower is protected from sudden and potentially significant increases in monthly mortgage payments if interest rates rise. Fixed-rate mortgages are easy to understand and vary little from lender to lender. The downside to fixed-rate mortgages is that when interest rates are high, qualifying for a loan is more difficult because the payments are less affordable.

Although the rate of interest is fixed, the total amount of interest you'll pay depends on the mortgage term. Traditional lending institutions offer fixed-rate mortgages in a variety of terms, the most common of which are 30, 20 and 15 years.

The 30-year mortgage is the most popular choice because it offers the lowest monthly payment; however, the trade-off for that low payment is a significantly higher overall cost because the extra decade, or more, in the term is devoted primarily to paying interest. The monthly payments for shorter-term mortgages are higher so that the principal is repaid in a shorter time frame. Also, shorter-term mortgages offer a lower interest rate, which allows for a larger amount of principal repaid with each mortgage payment, so shorter-term mortgages cost significantly less overall.

Adjustable-Rate Mortgages
The interest rate for an adjustable-rate mortgage varies over time. The initial interest rate on an ARM is set below the market rate on a comparable fixed-rate loan, and then the rate rises as time goes on. If the ARM is held long enough, the interest rate will surpass the going rate for fixed-rate loans.

ARMs have a fixed period of time during which the initial interest rate remains constant, after which the interest rate adjusts at a pre-arranged frequency. The fixed-rate period can vary significantly - anywhere from one month to 10 years. Shorter adjustment periods generally carry lower initial interest rates.

ARM Terminology
ARMS are significantly more complicated than fixed-rate loans, so exploring the pros and cons requires an understanding of some basic terminology. Here are some concepts borrowers need to know before selecting an ARM.

Adjustment Frequency - This refers to the amount of time between interest-rate adjustments (e.g. monthly, yearly, etc.).
Adjustment Indexes - Interest-rate adjustments are tied to a specific index, or benchmark, such as the interest rate on certificates of deposit or Treasury bills, or the LIBOR rate.
Margin - When you sign your loan, you agree to pay a rate that is a certain percentage higher than the adjustment index. For example, your adjustable rate may be the rate of the one-year T-bill plus 2%. That extra 2% is called the margin.
Caps - This refers to the limit on the amount the interest rate can increase each adjustment period. Some ARMs also offer caps on the total monthly payment. These loans - known as negative amortization loans - keep payments low, however these payments may cover only a portion of the interest due. Unpaid interest becomes part of the principal. After years of paying the mortgage, your principal owed may be greater than the amount you initially borrowed.
Ceiling - This is the highest interest rate that the adjustable rate is permitted to become during the life of the loan.
ARMs are attractive because they offer low initial payments, enable the borrower to qualify for a larger loan and in a falling interest rate environment, allow the borrower to enjoy lower interest rates (and lower mortgage payments) without the need to refinance. The ARM, however, can pose some significant downsides. With an ARM, your monthly payment may change frequently over the life of the loan. And if you take on a large loan, you could be in trouble when interest rates rise - some ARMs are structured so that interest rates can nearly double in just a few years.

Which Loan Is Right for You?
When choosing a mortgage, you need to consider a wide range of personal factors and balance them with the economic realities of an ever-changing marketplace. Individuals' personal finances often experience periods of advance and decline, interest rates rise and fall, and the strength of the economy waxes and wanes. To put your loan selection into the context of these factors, consider the following questions:

How large of a mortgage payment can you afford today?
Could you still afford an ARM if interest rates rise?
How long do you intend to live on the property?
What direction are interest rates heading and do you anticipate that trend to continue?
An ARM may be an excellent choice if low payments in the near term are your primary requirement or if you don't plan to live in the property long enough for the rates to rise. If interest rates are high and expected to fall, an ARM will ensure that you enjoy lower interest rates without the need to refinance. If interest rates are climbing or a steady, predictable payment is important to you, a fixed-rate mortgage may be the way to go.

Regardless of the loan that you select, choosing carefully will help you avoid costly mistakes.

Read more: Mortgages: Fixed-Rate Versus Adjustable-Rate http://www.investopedia.com/articles/pf/05...p#ixzz4mVUR7j5P
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Before the argument went to rate fighting at 4.25 vs 4.99%, as I said, rates are not fixed and BNM have already warn on an impending increase of interest rate.

We can argue all day and night which is better or not, take it as an insurance.

If you fix your rate @ 4.99%, and the variable rate increased to 6%, would you be crying or laughing at that time against people who took the bank loan ?

If you're not willing to pay for the premium, take a variable and subject to the fluctuating but don't start blaming anyone if the rate does increase to 6%.

The illustration above is an example, may or may not happen, like I said, you take it as an insurance and fix it now as per what the article wrote.

That is all.

Unconscious? Did he sign the power of attorney to anyone?

Nope.
Any other method?

Hi, is it a good idea if i redraw a home loan to buy car?

I have a home loan that I am very close to settling after less than 10 years.
Seeing that home loan interest is usually less than car loan interest, will it be a good idea i redraw the home loan to pay for the car?

Of course, I will still pay/settle the loan asap, or at a minimum, pay it as much as a car loan's monthly payment.

So, do I save up in interest rate? Is there a con in this?

There is probably no other way to go about this as the Owner is still alive but unable to perform action, similar to someone who is Comatose or Brain Dead.

Unless that person passes away and left a will to pass on the property to someone else, you can't do anything for now.

Can get court to do something?

Please note that you cannot redraw any amount that you utilise your EPF Account 2 in the past.

I dont quite understand this part. What does EPF acc 2 got to do with anything?

If you have used your EPF Account 2 to pay down your Housing Loan previously, I was told that you CANNOT redraw out this amount in the future.

Nope.
Any other method?

U sure? How do they even track this? 

After u withdraw EPF acc 2, the money is transferred to your bank acc and that's it. U can do whatever you want with the money. The bank won't even know if you use the money to pay house loan

Current low interest rate is a fallout from u.s fed qe, unlikely to remain low for long. Unless myr, mgs, bursa is isolated, local bank interest rate likely to track fed rate increment although bnm will delay the rate as long as possible.

Like many gomen index, bnm blr should be read with a pinch of salt as probably the few if not the only one that had blr minus for borrower.

Can get court to do something?

very difficult, no Power of attorney assignment, and the owner is still alive, although unable to perform any actions. I would recommend that you talk to a lawyer, this is a little beyond me. Perhaps a letter of probate is in order? Just throwing that out. Best of luck.

In serious kopitiam there is a thread by a lawyer (?) or perhaps a law student. You can try your luck there: https://forum.lowyat.net/topic/4230890/+120

Abam_Beruang
You can check with the bank that you have made the deposit into. You can ask them if there is any redrawable funds in the loan account or not
Bu the QE has ended by the time BNM lowered their OPR which all banks followed through and lowered their BLR and BR recently, by 0.25%. You are saying that BNM is.... manipulating the OPR to maintain it as low as possible? For what reasons?

I am planning to refinance my asset which I bought 7 years back at RM380k to RM750k with current market.

The reason I need to streamline all debt i.e cars and other loan into 1 loan.

It is possible and any advise on this?

I am planning to refinance my asset which I bought 7 years back at RM380k to RM750k with current market.

The reason I need to streamline all debt i.e cars and other loan into 1 loan.

It is possible and any advise on this?

after 1st drawdown, whats next? how long for balance drawdown?