Hi all, what happened to my installment/month after I offset certain amount of my total loan amount?

For instance,
300k housing loan, offset (pay more) 100k.
So what happened next?

My installment that need to be pay every month will be "reduced"?
Or remain the same but "I can pay off it earlier than contracted date"? (due to the extra 100k that I've paid up)

Please advise and gd night.

instead of calculating interest based on 300k, they now use 200k - thats all
but monthly payments remains the same. your monthly payments will go towards paying more for the principle.

yes will reduce the amount of time

Thanks man.

on top of what idoblu said, for most mortgage products now, the interest is calculated on a daily basis, so the date you make the advancepayment/capital repayment matters.

When you make any payment that offsets your principal, your monthly installment remains the same; but for every installment, the portion that goes towards paying off the principal INCREASES while the portion that goes towards payment of interest DECREASES. By making a large advance payment, you would pay more principal every month thus shortening your tenure from the original tenure.

This post has been edited by wild_card_my: May 10 2017, 07:19 PM

Thanks for the detailed explanation. I changed my mind to offset the loan amount since it won't lower my monthly commitment at all.

haha yeap, that is the predicament for some people. To be honest, if you have a lump sump of money you could have taken a lower magin, reducing your monthly installment and commitment in the CCRIS.

But sometimes money comes at a different time and you may not have the lump sum amount when you applied for the loan.

My advice would be to invest the money safely where it gives better returns than your mortgage rates, and when the time is right, invest in a higher return investment vehicle (shares, unit trust, etc.)

Disclaimer: Im not a UT agent nor a remiser.

Thanks pal, imno offset housing loan amount is overrated...

not necessary also la.... u can reduce your interest... you can clear off your housing loan earlier ma... if u are not good in reinvestment... this is one of the good deal la.... and the money is still flexible for you to use anyway... haha....

Instead of using the 100k to offset one shot... try contribute 10-20% more towards your monthly loan . It will make a huge different in the long run. And you will still have extra money in hand for emergency purpose and other investment opportunity needs in the coming years.

yes, good for own stay loan but not so good for investment purpose lo.

Thanks dude.
You means extra= continuously pay extra 10-20% of my monthly loan amount for long run?

Yep. I've been fiddling with this myself recently. For my case, if I pay 20% extra each month.. I can shorten my 25 year loan to 21 only and saved me >20k of interests.

http://www.bankrate.com/calculators/home-e...calculator.aspx





This post has been edited by alanyuppie: May 11 2017, 04:12 PM

opt for refinance time to time, beneficial to me at least

Now refinancing need to be pay back for max 10 years?
What's the benefit of refinancing (for you?), business capital or other investment vehicle?

good for own stay loan.

Any idea about UOB semi flexi loan?

Made few extra payment via online transfer to the loan account but all extra payment goes to advance payment collumn instead of deducting directly on the Loan Balance. And they skip the standing instruction I made when its due for next payment and deduct directly from my Advance Payment.

Does the advance payment collumn works the same as per payment to the Loan Balance? Does it helps to offset interest on the Loan Balance also?

For mbb, "advanced payment for withdraw"=offset loan balance.

But if use the 100k to offset one shot, the total duration will be even shorter then contributing 10-20% extra each month? And total interest paid is even lesser?

Offset one shot is better than a little bit a month. If you got 100k standing by doing nothing- why not?
For emergencies and other investments argument - that's the whole idea of a flexi loan anyway

Seems to me your advance payment is just sitting there doing nothing to reduce interest.

semi flemi loans are not the same from different banks
that's why I go for full flexi - you have to pay a small monthly fee but none of the flexi bs

I suggest you talk with the loan officer at the branch you'd borrowed from

This post has been edited by idoblu: May 12 2017, 07:38 AM

just think of it as a simple loan and return... why complicate things???

if you borrow 300k and you return 100k then you have a balance 200k...

the difference between semi flexi and none flexi is just that semi you can pay any amount when you have extra.... none flexi means you have to pay a fix amount every month...

The whole idea of flexi is you want to pay more to reduce interest charges
If you dump in a large sum of money but want to reduce your monthly payments then it's no longer paying more but merely paying in advance. In that case, refinancing might be better for you

Thank you mate.

To clear off your housing loan, all banks can do this already, you dont need to do full-flexi for this. Also, speaking on behalf of bumiputras and Muslims out there, there isnt anything awesome about full flexi-facilities, since you can always dump the money in ASB and/or tabhung haji, both of which give off higher dividends than housing loan rates at any time since their inceptions.

Full flexi may be useful for those running a trading business, where money goes in and out each day though.

I need to see the slip myself before making further comments

hence why i mention for those not good in reinvestment.... this is one of the simplest option... haha... i myself believe in my own investment capabilities... so flexi acc or not doesnt matter much to me... but its important for certain ppl... we have to think in a way different situation for different kind of knowledge....

An advance payment, or simply an advance, is the part of a contractually due sum that is paid or received in advance.

Then now u had paid 100k as "advance payment" that can be redraw, as long ur account status is still remain as "overpaid" even u pay RM0 also bank wont care what else "reduced" repayment u need? And u also had self answered it above.

This post has been edited by kradun: May 12 2017, 11:28 PM

Hi, my doubts:
1) the extra 100k only reduced the "loan tenures" instead of "installment per month"?
2) the advance payment of 100k will be deducted if I "didn't pay thw progressive interest/installment" that I supposed to pay?

Thanls for your feedbacks, gd9.

After u throw in 100k as advance payment mean u had pay few years in advance, whatever subsequent payment is going to top up on ur advance payment.

So if ur repayment is 1.5k per month then next month bank just auto deduct that amount from ur advance payment end up u left balance advance payment 98.5k lo. So if next month u just want to pay 1.3k it will top up into ur advance payment so it become total advance payment 99.8k.

Repayment from bank wont reduce, but u had paid in advance for few years ahead. As long ur account status remain overpaid, is up to u to remain pay rm1.5k, ur self reduced rm1.3k or rm0 also bank wont chase u for overdue.

This shall applicable to ur case since u mentioned 100k will treat as redrawable advance payment. Some other bank may have different treatment for such excess payment.

This post has been edited by kradun: May 13 2017, 10:24 AM

Thanks kradun, I'll ask mbb and update again.

If you want to make an advance payment then yes the next month you can pay whatever or don't pay at all as long as your advance payment covers it. But advance payment won't reduce interest as the principle remains the same.
So you are merely putting a 100k into your loan acct which does nothing but service the monthly installments

But if your 100k is used to reduce principle, then you better be making your regular prompt installments or you be at default

Btw not all semi flexi loans are the same. Some banks still need you to inform them you are putting in extra. If you don't inform, it is counted as advance payment

This post has been edited by idoblu: May 14 2017, 12:23 AM

My experience with OCBC, they treat my excess payment as advance payment, auto transfer such money on 1st of every month and the interest calculation is based on net amount after net off with such payment.

While for PBB, they use my excess payment to applied it directly into the principle account, so even i had paid in advance but it will still show my account status as overdue due to payment was not made after date xx/xx/xx.

Both are able to reduce interest with the excess payment, just that one able to treat such excess payment as advance payment, while another one just simply reduce the principle owing.

this one should be flexi loan?

they should write total loan or loan approved.

i am confuse with this word..