Refinancing your property for cash and credit consolidation

Refinancing is a process that property owners could engage to unlock the full value of their properties. To initiate the process, the bank would request a valuer to perform a valuation on the property and proceed to offer up to 90% of the property value as loans, with the property being used as a collateral. If the property is encumbered, a portion of the money will be used to pay off the outstanding loan and the remaining amount will be credited into the applicant’s account.

In general, secured loan facilities such as mortgages, hire-purchases, and ASB loans are charged lower interest rates compared to unsecured facilities such as credit cards, personal loans, and to some extent over draft accounts. Secured in the phrase refers to the loan agreement having a collateral, e.g. property, car, ASB units. There is a number of overdraft facilities which we will go over one of these days, but for now it is enough to know that overdraft facilities can be granted with or without collateral.

Cashing out on the paper gain

Paper gain of a poperty is the unrealized gain from capital appreciation. Imagine buying a property 10 years ago at the cost of RM200,000 and today it has appreciated to RM400,000. You would be happy with the gain but there is no way for you to utilize the gain unless you either sell the property outright or refinance it.

Selling the property may not be suitable if the investers are planning to take advantage of the rental income as rental increases as property prices increases. For property owners that are staying in the property in question, selling it is also out of the quiestion as they may already be deeply rooted in the residential area and would prefer not to move.

As such refinancing the property may be one the options that property owners could take to unlock the value of their properties without selling them outright.

Consolidating your other loans into a single account

A typical person may have a few loan accounts attached to him, this can be seen in their credit report. These loan accounts may in the form of mortgages, hire-purchases, personal loans, PTPTN, and more. Each loan account has its own tenure, outstanding, installment amount, and most importantly interest rates. As mentioned above, loans with collateral have lower rates than those without.

The basic idea with refinancing to consolidate the other loans is to take advantage the lower interest rates offered for a secured loan facility (a mortgage) to fully settle other loan facilities with higher interest rates. A typical mortgage at the time of writing has an interest rate of around 4.2 to 4.6% per annum (p.a.), depending on the loan amount and credit profile of the applicant. A higher purchase of a passenger car taken at 9 years has an annualized interest rate of 5 to 6%, personal loan starts at 6%, while credit card is just stupidly high at 1.5% per month of the previous month’s statement balance.

Final thoughts

Refinancing is a quick and cheap way to unlock the paper value of your assets. The funds raised from the process of refinancing has lower interest rates than personal and business loans. It is also ideal as a way to consolidate other liabilities into a single, low-interest account.

This post has been edited by wild_card_my: Apr 20 2017, 05:39 PM

what would be d strategy like to cut finance period shorter using re-financing?

wanna cut down d interest rate/sum so that can sell off d prop faster

The only way to cut down your finance period by refinancing is if:

a. You refinance only the outstanding loan amount and not add any cash-out from the refinancing exercise
b. the interest rate is lower than the current interest rate
c. legal fees is not financed into the financing as this will increase the total loan amount. You should pay it off out of pocket.

What is your current interest rate and outstanding balance?

a. yes, its NOT to obtain cash for other spending.
b. my current prop A int rate is 7.0% flat (i think)
c. this depends how much is d legal fees.

oustanding balance is ard rm 110k

a. Understood
b. That is pretty high, even with the ups and downs of the BLR, the effective rates for the past 10 years have never reached 7%. Right now, at 110k loan amount, at 4.5% financing rate, you are saving about 2.5% per annum by refinancing
c. The legal fees should be about 4 to 5k depending on the title details (strata vs individual, leasehold vs freehold, master vs without title). At this rate, financing it into the loan may be wise.

Tenure will be set to maximum, but with flexi facility, any money that you pay extra on top of your installment will be used to offset the interest payable on a daily basis.

Let me know if you want to proceed, we can discuss your situation privately.

This post has been edited by wild_card_my: Apr 20 2017, 07:05 PM

Appreciate the food for thought. TQ

How about pawn the house to bank? How this work?

For example have a fully paid property market value 200k.

You would get a maximum of 90% of the MV, plus some as moving costs. So you would get a RM185k~ loan, of which RM180k would be as cash for you to invest in other things.

You would be responsible to pay back the bank installments, but you are borrowing from the bank at a low rate, compared to personal and business loans.

B. yes, old rate signed 10x years ago. is this roughly correct that:
: 7% @ rm 110k = rm 7700/yr
: 4.5% @ rm 110k = rm 4950/yr
Difference : RM 2750/yr x 10 remaining yrs of loan = RM 27.5K cumulative interest.
est refinancing costs = RM 4500, so total saving is ard RM 23K

c. Its a strata title.
D. Does refinancing take into considerations that my current loans/commitment status? It obviously has changed since the past 10+ years.

Ys, pm me ur contact. I would like to find out more on debt consolidation.

Thanks!

PTPTN has the lowest interest rate of 1% to 3%

car loans are at 3.2% (give and take)

why would I consolidate it all under a home loan at 4.2%?

btw I appreciate your topics ts. it really helps me understand the nature of refinancing. I have a property that I purchased 4 years ago and I need money to furnish/do some repair works the home for my future bride. did a calculation that I need nearly 20k to 50k to do all of that

I'm really thinking of refinancing my home.

I need to check on PTPTN, but car loans are calculated on simple interests... the same goes with credit cards and personal loans, these are calculated using simple interest method. To do an apples to apples comaprison you will need to convert it to annual interest rate.

As you can see, the simple interest rate of 3.2% when converted to anual interest becomes 5.84%, which is higher than 4.2% annual interest for a typical housing loan

Annual interest rate for housing loan, 4.2%



Simple interest converted to annual interst, 3.2% becomes 5.84%



This post has been edited by wild_card_my: Apr 21 2017, 12:56 PM

How is the Effective rate is 5.84%? I'm using the calculator for car loan of 100k and 3.2% p.a for 9 year, the loan is total up of RM 128.8k which 28.8k is the interest. Divided back to 9 year is 3.2k each year which means is exactly 3.2%. How the 5.84% calculated??

So what you did just now was to calculate the loan based on simple interest, which doesn't make you wrong, but the whole exercise was to convert the simple interests (PL, HP, CC) into annual rates to see how it would compare to annual interest loans (Mortgage, ASB-loans, some PL)

So based on your calculation, at 3.2% (not p.a. since this isn't an annualized interest) for 9 years, the total repayment is RM128.8k, which is correct. Now if you plug in the numbers (the total repayment) into a mortgage calculator (using annualized interest, ie. p.a), the interest rate is 5.84%.

So a 3.2% simple interest (typical HP rate for local cars) is actually more expensive than 4.2% annualized interest (typical mortgage rate)



here is the same loan size, at 4.2% interest rate. You can see the savings of about 8k, due to the lower interest rate



All this means is that the simple interest cannot be compared to annualized interest without conversion. So it is wrong to say "HP rate is cheaper than mortgage" just by looking at the numbers. Even bankers (salesmen) tend to make this mistake.

This post has been edited by wild_card_my: Apr 22 2017, 11:44 AM

Ah~ I get what you means now. Due to house loan was charged on the balance of loan, which the interest incurred was reducing method, therefore the interest payment throughout the loan period will getting lesser.

However, for car loan the interest was calculated beforehand and add into your loan, therefore the interest was fixed and actually if compare to other loan type the interest incurred throughout the period is actually much higher. (3.2% become 5.84% effectively).

You got it!!!

This is simple concept but it can be confusing due to the misinformation perpetuated by some ill-informed bankers and "consultants". I forgive them for not knowing, but I cannot forgive them for not accepting nor learning the truth in what they are trying to teach.

Well what can I say, their primary purpose is to sell, not to educate. So some misinformation goes a long way.

its funny that we had to discuss this in "refinancing" article. I will write another one based on the topic we just discussed then, thanks mate.

Nice info there Ts, good read although quite tldr

-So for refinance rate usually can get lower interest than current loan, but with extending tenure?
- for pawn, usually the interest rate range is higher or not from normal loan?
- agreed, with fix vs effective interest rate figure, I observed sometimes some banks will put the lower one in the pamphlets (which is the fix rate), whereas the actual calculation might be reducing type, e.g. In PL.

1. that is correct, although you can also maintain the tenure and in the end pay less interests, as long as the interest rates charged is in fact lower than your current loan

2. If you are referring to repawnin a fully paid-off property (unencumbered property) to the bank in exchance for a mortgage (for cash-out), the interest is the SAME as if you were to get a mortgage for purchasing a new property

3. And people are easily fooled, for reasons no other than not educating themselves. But I am happy that people are learning from my postings, I wish I can do this on a much larger scale.

True. People have a few options, to let go of the properties or to refinance to get some form of liquidity. Although refinancing requires them to prove their source of income too.

Which means if you were to do it, you have to do it before it is too late. There may come a point in your life where you would have a propety with low encumberance, but have no means or refinancing due to your lack of source of income.

Ts,

Possible to get sgd loan by refinancing props in Malaysia???? Ha ha.. lower int rate

Very very interesting.

But is it following the BLR? And Fluctuate? Or follow Flexi?

Because having long term and stable tenant will allow you to do that...

Hi TS,

Is that possible to refinance my dad's property under my name which the property doesn't not have my name in it ?

Yes it is possible. If your dad doesn't want to transfer you by way of MOT (transfer the title completely to you), then we have to do it through 3rd party loan application.

Your dad will be a joint-applicant with you, but income is derived only from yourself. There WILL NOT be any changes to the actual owner of the property, the only documents that need to be signed are the Letter Offer from the bank and Loan Agreement, which is an agreement between you+father and the bank. This is doable. Please let me know if you need help with this arrangement.

This post has been edited by wild_card_my: Apr 24 2017, 01:51 AM

thanks for the reply, is there any different or disadvantage of joint-applicant with parent than having name under the property ? as the property already over 10 years old and yet to receive individual title, something which i think the developer delaying.

Bit if you're confidences to get or to earn more than the loan rate. I don't see refinancing is a bad move.

Ha ha...1% loan from the bank? Do you know how banks work of not? Ignorant.

Err.... How sure are you if refinance loan at 1%?

And I look around me, I doesn't feel like I'm in USA?

Btw.

USA = America.


Are you in the wrong section? This isn't k/

Ha ha. So because it is very safe, then banks must loan to you at 1% interest only? So, if I pledge a RM1mil FD to you (which means it is 100% safe to you), will you lend me RM1mil at 1% per annum? Can ah? Bodoh!

Do not twist and turn talking about inflation, BLR, macroeconomics and Zimbabwe.

there are a few banks that allow the financing of properties over 10 years, but without title. If you were PURCHASING the property, I would tell you to walk away as per the article in my signature. But since you already have the property and would like to unleash its value, we can look into refinancing it with the right banks for this situation.

1. The disadvantage in your setup would be that you PARENT (the owner/chargor) of the property would have the finance facility in his CCRIS. But look at it in the bright side, assuming that your PARENT is NOT applying for any loans soon.. then YOU would have this finance facility as JOINT LOAN. Going forward, in the future when you are applying for a loan you would have the commitment for this particular facility HALVED. Good for you then.

2. yes, developers DO delay the sub-division at times due to multiple reasons. not much you can do about that other than making noise

This post has been edited by wild_card_my: Apr 24 2017, 07:48 PM

Hi TS,

Can we refinance/repawn a fully paid-off property but the property is lease hold that remain less than 30 years.

A client of mine who is a Finance Director with a company refinance his home to purchase another property in Australia, as the interest rate here is lower

That's smart. As per one of my earliest points​, you refinance your property to unlock its value - cash. With this cash you can reinvest in an investment vehicle that gives higer returns than the interest rates for the mortgage.

Let say i own a house fully paid with my parents..can i refinance it and what is the procedure?

Let say i got 2 houses still under finance and wanna refinance my own fully paid house (3rd house), will it fall under 3rd financing rule? Meaning only can get 70% max.

Yes, for every financing application, the bank will look at your current CCRIS. when they see at least 2 residential housing loans on your CCRIS, the next application will be default to 70%

My posts are being reported for spam, in threads that I created myself. Please have a "balanced life" la dear competition... You will never be able to catch up to me if you keep chasing my shadow

D. Refinancing will take into your account for your current commitment although it's on loan consolidation.

AIA fixed rate loan will not consider your existing loan as part of commitment in loan consolidation with 35 years cash out calculation compared to normal banks @ 10 years calculation for the cash out

Therefore you are able to loan out a higher portion as well as consolidating your debt into 1 loan

Not possible la ... haha

Yes you can, we can do it under the love and affection transfer which means your father SPA can be changed to you and the loan can be refinanced and put under your name instead.

Yes you can but you will need to renew the lease prior to the refinancing as your current 1 is less than 30 years already

Yes you can refinance, firstly you need to establish, do you intend to transfer the SPA from your parents to your name, if yes, then you can save some fee by using the love and affection transfer.

Procedure is similar to applying for a new loan.

You'll need to submit the ful, document such as
IC
3 months payslip and bank statement
EPF Statement
EA Form
SNP and Title of the property

Yes, this will fall under the 3rd financing rule meaning your cash out amount or refinancing amount is restricted to 70% of the current market value.

E.g valued @ 1 mil, you can only refinance 700k.

please elaborate more the bold statement please, property is fully own by parents no loan with bank & still pending individual title.

what is the different in term of fee if spa still under my parents name and or join name or my name ?

This post has been edited by aoisky: Apr 29 2017, 12:48 PM

Meaning when you apply for love and affection transfer, meaning transfer of property from parents to children, you save on the stamp duty and pay a smaller fee for the SNP portion

If your parents decided to hand over you the property, you can refinance the property under your name. And the money goes to your parents.

If using transfer through love and affection below are the scenario

In contrast, pursuant to the Stamp Duty (Exemption) (No. 10) Order 2007, the law provides for stamp duty exemption for a transfer of property between family members by way of love and affection as follows:

Transferor Transferee Exemption Rate
Husband Wife 100%
Wife Husband 100%
Mother and/or father Child 50%
Child Mother and/or father 50%


Note that ‘Child’ means a legitimate child, a step child or child adopted in accordance with any law. Also, stamp duty is typically paid by the transferee, unless agreed otherwise by parties.
http://www.mahwengkwai.com/transfers-famil...s-tax-exposure/

Whereas if you want to cut and transfer your name via the usual snp procedure then it will be the full snp fee.

This post has been edited by lifebalance: Apr 29 2017, 12:59 PM

thanks for the info, if the property remain unchanged under my parents' name, still can apply for refinance right ?

Can, no problem with that

WIth love and affection transfer you are still responsible to pay the transfer agreement feees, but you are exempt from paying the stamp duty on the transfer which can be more expenve than the transfer itself

So my suggestion is to transfer the property to your name, and then finance it to get the cash out.

ALTERNATIVELY, if you are refinancing it without making any transfer, there wont be any transfer agreement fees, but your parent (the owner of the property) has to be part of the loan application and this will appear in their ccris report. Which can be good also, since for you, the loan is considered joint-loan and in the future when you are applying for another mortgage, this commitment will be split into two... your commitment would be low

Yes, as I mentioned above. They need to join in the application though.

Once again thank you very much for your reply.

Say I have inherited my parents' house, current value hovering around 350k (landed) and I want to refinance it so that I can dump it much more downpayment for a new house (roughly 600k price inclusive of stamp duty, MOT, etc.)

do people do this? for the sake of minimizing loan amount on new house. Would prefer to sell off the first house but the situation is that if the new house is not finished building yet, nowhere to live Intention is to borrow less than 100k.

Normally refinancing amount requirement need to be above 100k.

If less than 100k would need to take personal loan.

Unless your intention is to keep the first house for a longer term, Refinancing the earlier house will probably cause another lock in period of 3 - 5 years depending on the new loan agreement you took with the bank.

Some people do the above as you mentioned because they intend to keep their existing property and utilize the refinanced amount as downpayment + renovation.

Yes, this is called consolidating your loans into a single loan, backed by a single security. Doing this is better than getting multiple loans for multiple properties because:

1. In a way, yo usave on the legal fees for your other properties that you do not need to buy with cash
2. You do not utilize the allocation for your first 2 residential housing loans, or in some cases, you free up the allocations
3. You get to enjoy rental income from the first house, AND get to unlock the value of the first house to buy new ones
4. Save on insurance since you can use a single MRTA to cover one property as opposed to multiple ones. Try to avoid MLTA unless you minimize the slack as the agent commissions are too high.

In your case, you should only consider doing a refinancing if the MV of the house has risen significantly compared to the outstanding with the current bank.

Btw, when you said "not finished building yet" do you mean that it was an underconstruction unit?

is it a good idea to refinance a property to get more fund for business startup?

When you buy a property and it appreciates, you cannot count it as a gain yet unless you cash it out by selling the property off or refinancing it.

Meanwhile your money is "lock in" in the sense of paper value because it's not realized yet, but at the same time you don't intend to sell that property off because there might be few possibilities
1. You still think the property value will go up further
2. You want to stay in that house
3. It's not the right time to sell it off now

Then refinancing the housing loan is an alternative because you don't have to involve selling off the property to someone else while cashing out the money from the appreciated property at the same time.

With the housing loan interest of 4 - 5% nowadays, if your business is able to give you back more than 5% return then it's definitely a good deal to refinance the house otherwise better put the money elsewhere.

Statistically, 90% of new business fail in the first 3 years.

That's called taking a risk to be an entrepreneur.

You can't be jealous at successful business owner who earns millions or thousands daily and envy at their establishment.

The question is are you willing to make the jump and take the risk or forever be a basic income earner and play safe?

This is no different from the question of putting your money into Fixed deposit or the share market

If you're afraid of losses then gain a 3% from FD. If you're complaining on the low interest then why didn't you put into shares? Oh because it's high risk, then what do you want?

You can't keep dreaming about being somewhere in your mind achieving it if you're not taking the action.

This post has been edited by lifebalance: Jun 28 2017, 09:50 PM

U see, I'm not the only one who tell you that you mental stop you from archieve anything in your life ...

I am not going to touch on the validity of your business, that is yours issues alone. As a financier, I focus on the rates available in the market for my clients.

The short answer is yes, refinancing your property to get a fund for a business market has a lot of financial sense, if you compare the rates that you are going to get as its is. Business loans and personal loan have much higher interest rates, and you are not going to qualify for a business loan anyway due to the nature of your company - a start up.

Mortgage charged to a person (vs a company) rates start at 4.25%, while personal loans start at 8-9% p.a (not simple interest, we need to do apples-to-apples comparison)

According to a wealth report, only about 0.3% of adults in the kangkong land have over us$1m net worth. Rich and successful business man are fewer than most people thought.

During u.s property bull run before 2016, it was popular to refinance their house for investment. It seems those refinance for new business, venture or investment have high risks of foreclosure. However, risks on expanding existing business is lower.

For reasons, only about 4% of adults have over us$100k net worth. Joining the herd almost automatic exclude to be in the elite group.

Hi TS,

Want to check with you, is now a good time to refinance?. I have 1 property that I bought since 2010. Rented it out till now. I need money to continue my study. How long does it take to refinance normally?. I ve read that people say its not a good move to refinance, as you are resetting your loan again. Please advise on this, thanks!!.

Do take note on tax treatment of interest expense resulting from refinancing for the purpose other than your property financing is subject to interest restriction. So you may not be able to claim the full interest expense after refinancing

Got 2 property. 1 already fully paid, 1 still on loan. Can both be refinance? Like to get some cash fund to grow my business, hope can guide/assist me.

The refinance process until disbursement takes about 3 - 4 months depending it's a leasehold or freehold property.

Whether it's a good or bad time depends on what's your purpose of refinancing, since you mention it's for study, do you need to enroll it now or you can enroll it later ?

Can it be delayed further ?

And you mention about resetting your loan, is this study / education worth for you to pursue taking in the extra debt ?

These are all personal questions and it's up to you to see if you see the value in it, not anyone in the internet can advise you on this, this is your life & your aspiration.

Once you're ready with a decision then I can only advise you the next step in refinancing.

Yes, both can be refinance as long as there is an increased in property value and the banks can finance 80 - 90% of the current market value.

With regards to checking on your eligibility you will need to provide me your personal info as below

Age
Gross pay
Nett pay
ASB
Rental Income
Bonus 2014 2015 2016

Commitment
House
Car
Credit card outstanding
Personal Loan
PTPTN

Refinancing takes about 1 week for the offer, and 2-3 months (could be more though) for money to be released...

1. If you first got the property financing in 2010, your rate may be a little worse or on-par with the current market rate, which starts at about 4.25% and above, it may be ok to refinance to get a better rate, but if you need the money instead....

2. Refinancing for cash is one the cheaper options available out there.. it is cheaper than personal loan, hire-purchase, cc... if you have the cash to fund your business/studies/etc. sure, don't refinance, don't reset and extend your mortgage... but at this point you need the money to continue your studies... you have the option between:

a. personal loan, 10 year tenure and 8%~ above rate (unless you get good deals from your company)
b. friends/family loan, which is dependent on the situation
c. refinancing, 35 year tenure (you can choose to take 10 years by paying more each month through a flexi account) and rates start at 4.25%...

Sure you are resetting your mortgages and paying more interests, but you if don't need the money from a loan you wouldn't need to discuss it anyway... keep in mind that not everyone is in the position to refinance their properties, many people don't have any asset to mortgage, so they need to take personal loans or credit card cash advance instead

Yes, can, not an issue. The only issues would be to show proof that you have enough income vs banking commitment, also referred to as debt-service-ratio (DSR), to fund the refinancing of the properties.

Your incomes can be in the form of business income, employment income, investment income, or a combination of them

This post has been edited by wild_card_my: Jul 3 2017, 02:39 PM

2-3 months process.. any info which process that consumes too much time? Land office? What are the process after signing the docs?

The 2 to 3 months period is basically the process on getting the relevant permission from government if its leasehold. Otherwise it's to settle off the existing bank loan with the new financiers, discharge the title and subsequently to charge the property to the new bank.

Its the same process like purchasing a new house just without the sales and purchase agreement

Here is the processes ya:

Application - Approved, LO issued - LO signed/accepted - Sent signed-LO to the bank - Bank accepts, issue Letter of Isntructions (LI, along with original LO) to law firm (and instructions to valuer) - law firm applies for consent from land office (if needed) - law firm drafts the Loan Agreement (LA) - have you come over for LA signing - send the LA and LO for stamping - send the stamped documents to bank for execution - bank accepts the documents and execute the loan - bank asks how much is the settlement amount for the previous loan - law firm sends the settlement amount request to previous bank - previous bank sends letter to the law firm lettering them know the settlement amount - the law firm sends letter called the Advise to Release telling the bank the settlement amount - bank releases 1st payment, called the 1st draw down - paid to law firm - law firm pays to previous bank - previous bank sends letter to law firm acknowledging the payment - law firm sends another Advice to Release to bank to release the remaining money - bank releases the cash out...

I hope I didnt miss anything

Anyhow, the reason i wrote all that is to illustrate the pathway of communications in the transaction. It may not be the most efficient but that is how it is....

so to answer your question, which process consumes too much time? Well all of them... any party that doesn't play ball delays the process as a whole.

Thanks for the insights. For the consent from land office, how long it normally takes? My sister currently refinancing her house and her process basically as follows:

1. sign LO
2. sign LA on 11/5/17
3. valuer visit house 18/5/17
4. previous bank issue redemption statement for 3 months
5. sign amended LO - valuer increase house value
6. now waiting consent to charge from land office

So looks like still lot to be done i guess? She's quite sceptical on the 2-3 months process since i told her from the blog i read usually more than 6 months. If 2-3 months I also want to refinance later

You need to factor in public holidays as well. Most of the time the delay is between the banks on the redemption and also on the respond of the lawyer in doing the paperwork as soon as possible

But that you need not to worry as normally the lawyer will have a deadline to meet to insure it keep up with the bank KPI

i have been looking around for HP alternative, 1 of it was refinancing my fully paid house and to buy the car in cash to reduce overall interest bank charging me.

but it seems like recently i found out that rhb and cimb are offering flexi HP for car which did exactly what you mean, the interest isnt fix and is calculated base on how much amount it left in your total amount.

do you think is still a good method to refinance the house for it?

the rates offered i still not sure la

Hmm I wouldn't do that if I were you because Refinancing involves loan agreement fee which might end up paying more than you take the hire purchase loan alone.

But it's good to know that hire purchase facility are being offered like OD facility

this is what i'm afraid of

if there is agreement fees or need to go thru lawyer smth...it just kills the idea of paying less

while bank are coming up something like i mention deduct from principal amount HP for cars.

1. The valuer did his job quickly; but their part is easy, they come, visually inspect the house, write a report, get paid, release the report to the bank and send you a copy. Their job ends there.

2. Now the delayed part in your case is most likely gettin the consent of charge, but that is really beyond your and the lawyers' power. Some lawyers claim that they can "bypass" the process with "money", but that is outside the book and I will not comment on that.

3. Since this is not a purchase, the delay caused by the consent of charge may matter, but not too much since there is no vendor-party waiting for your money.. its is only your money that is being delayed

The problem with consent is that because you are dealing with government offices, and they may be understaffed, and/or their performance don't affect their bottom line, so there may be some slack there.

4. 2-3 months is doable, especially if the property is freehold, or not encumbered (free of any charges from banks) and/or the bank that releases the redemption letter does not take too much time out of that

At this point you may realize that due to the multiple parties involved in the process, any of them delaying their work will affect the rest of the processes. The lawyers job is to help you with everything, but sometimes the lawyer is the one that is slow hahahaha

1. Oh yes, banks nowadays are being encouraged to offer reducing balance loans... even personal loans are being slowly introduced to the reducing balance calculations.. however they are being advertised as simple interest loans... for example, a Bank Islam personal loan is being advertised at 3.89% flat-rate for 10 year repayment... but if you look at the LO, it is actually being calculated at 6.2% per annum (p.a., meaning it is a reducing balance loan)... which is GOOD, that's the best practice for loans...

but why advertise it as 3.89% flat? well they are not being dishonest, that is exactly the rate and installment you pay if you compare the rate to other fixed-rate loans... and they need to compete against other banks that are still using fixed-rate... so if Bank Rakyat advertise their fixed rate loans at 4.0%, and BIMB advertise their at 6.2% p.a. (3.89% fixed/flat rate), then BIMB would lose out eventhough their offer is much better than Bank Rakyat's

2. On to your second question, refinancing your properties would cost you about 1-2% of the house value due to the associated moving costs - valuation, legal fees, stamp duty, these can be financed into the loan but they are still costs that you have to pay one way or another. I can't really compare the options that you have without really knowing the MV of the house as well the price of the car that you are buying...

take it this way, if you are buying a BMW... RM200k loan... rate is 2.5%... for 7 years, the efective interest rate p.a is 4.69%... while refinancing can net you a rate of 4.35%, will the difference of 0.35% p.a for 7 years cover the cost of refinancing? errmmm... maybe provide me the numbers and we can learn together. What car are you getting, how much are the cars...

btw, for the reducing balance loans offeredby the banks for car purchase... what are the rates like? im not into cars so Im not in the market for their loans hahahaha

yes, but the answer should be beyond gut-feeling, there are calculations that one can perform to decide financial matters.

Also, i think you are confusing OD facilities with reducing balance term loans.. with OD you dont have to pay the principle balance, you just serve the interests till you die or bank withdraws the facility. With reducing balance term loans, customers still need to pay the installments which are divided into 2 portions, the capital repayment AND the interests/profit... the capital repayment will zerorize the outstanding loan you have with the bank. While the insterests/profit are the banks' profit for providing you the facility, no different to installments for mortgages (property loans)...

If you want to learn more about mortgages, you can ask about them here in the these thread below, I help forummers and non-forummers alike all the time there for close to a decade...

https://forum.lowyat.net/topic/2759418?author=wild_card_my
https://forum.lowyat.net/topic/3437581?author=wild_card_my

Faiz Azmi

not going to be BMW la

im peasant looking ways to pay the maximum less amount interest to bank

take it 50k

and i found some links for the flexi loan i mention

http://www.cimbbank.com.my/en/personal/pro...e-purchase.html

https://www.rhbgroup.com/products-and-servi...cle-financing-i

while cimb have listed the amount....but is for foreign brand and non valid for local brand in the BFR

Hmm in this case you should get the opinion of hire purchase bankers from RHB and CIMB. Doubt you can find them in here. You have to walk in to the branch

Actually it is easy to compare in this case. All you ned to do is to get a quotation of the installments from both types of loans... in fact, just a quotation on the interest rates (simple insterest VS reducing balance insterest) should do, along with the amount that you are looking for.. then we can do the calculation together...

what is the consent to charge in terms of leasehold property?

You need to get the government consent first for any transaction involving leasehold property where its a buy sell or Refinancing because there is a clause on restriction within the property title.

And keep all when you deal with the government, expect delays in the handling of paperwork

i see. just have a glance at e-consent website, proses selesai. i guess lawyer lazy to follow up with land office?

All these paperwork are still done by human, whether it involves the bank officer, lawyers or the government, if you need to rush to get through to the final process then by all means call the lawyer, bank officer in charge and the government bodies daily and do the follow up yourself.

Think of it another way is that, why not do everything yourself right ?

spot on! charge legal fees but slow follow up.. need to inform my sis on the e-consent approval.

Can i refinance my fully paid up house while not hvg job/income?

Hi

You can refinance a fully paid property but you need to show proof to the bank that you're earning some sort of stable income.

Therefore you can't apply for refinancing at the moment unless you can show proof of income.

Otherwise, you can refinance it under your spouse name if you're married using your spouse's income.

Guess so.thx for reply.

Yes, that is normal.. They are all human so can't really let go without any follow-up

Possible, but you need to have some sort of income to pay the installments. rental, business, commisions, are all some types of income that you can provide

Is below calculation correct for refinancing house ? :

Assuming the house is worth RM400,000, outstanding housing loan balance is RM150,000, interest rate is at 4.6% and Margin of Finance is at 90% of market value

Amount to cover outstanding balance = RM150,000
Tenure = Max 35 years
Monthly Installment = RM719.20

Cash Out Amount = RM210,000
Tenure = Max 10 years
Monthly Installment = RM2,186.54

Total Refinance Amount = RM360,000
Total Monthly Installment
= RM719.20 + RM2,186.64
= RM2,905.84

That will be incorrect.

This is bank DSR internal calculation.



If it passess.

Then it will be revert back to original 360k 35 years tenure which is RM1726.

However, there are some unique financial institution like AIA for example, which the internal DSR will calculate as 35 years instead of 10 years. Which makes the refinance process easier as the DSR will pass easily.

This post has been edited by lifebalance: Jul 6 2017, 11:49 AM

No it is wrong. because most banks would allow you to repay the 10 years cash-out tenure (10-years for BNM requirement when calculating the DSR) in 35-year tenure.

So your full isntallment should be RM1726...

May i know maximum how many percent of commitment / income for AIA when applying loan ?

That will depend on your income level. Up to 75%

This is on the lower side. For other banks the DSR can go up to 90%. Also, not sure about AIA's calculation of current commitments, will they follow CCRIS or can clients override that with the installments stated on the LOs? In my professional opinion, the rate is also on the higher side and you would be losing a lot with fixed rates in long term - not many will hold one mortgage for too long nowadays too.

I have a question here. I own 2 small shop lots (Fully Paid Up) and a Sdn Bhd Company without any properties.
1) Would it be advisable to sell these shop lots to my own company to unlock it's value an let the Sdn Bhd finance the loan?
2) Is it legal to sell own property to own company?