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.

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

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