I have been tracking this closely with excel. The interest charge counted by daily-rest (not sure if this is the term).
Understand there are few types of mortgage loan where this method may not be the right formula for all. And of coz I confirmed with my banker before I throw extra $ inside, since is still under construction. And do monitoring every month making sure the figures appear in statement is what I expected to see. So it is good to check with your bank first.

I have a loan with Maybank and it is very difficult to check whether principal is being reduced. Don't know why they make it so unclear.

WRONG and RIGHT at the same time.

***********YOUR CASE IS DIFFERENT FROM TS CASE, BECAUSE UR STATEMENT IS ONLY FEW HUNDRED. TS STATEMENT IS FULL AMOUNT NEED TO PAY (MACAM VP-ED AMOUNT)*************

Let me tell you what is happening now.

There are advantage and disadvantage. But when the disadvantage falls on you, you will have a very huge headache and big burden.

This is the new tactic of the bank now , started by public bank, now not sure what bank follow suit. TS say maybank. maybe maybank getting on the thred.

thus,
have to make sure read fine print thougroughly to prevent from getting "trapped" like what happen to you.

Your advantage is that you save that interest, you are right no doubt.
You happy right, can save alot interest?

What are the disadvantage?

Let me tell u in simple term.

Disadvantage is when the developer KAPUT OR BANKRUPT. u have to serve FULL AMOUNTH WHICH IS RM3,000 FOR YOUR ENTIRE life., instead of just the progressive payment which is only RM300.

SECOND DISADVANTAGE- BAD FOR INVESTOR N FLIPPER
- if people take compress loan, GG orealdy, 2 unit need to FOCK UP full amount at one time.

THIRD DISADVANTAGE- THOSE WHO ARE NOT PREPARED OR CASH SHORT WILL BE SHOCKED TO THE BONE.
-they hear from other people that only pay progressive interest, so they thoguht they have more time to save up the money untill full disbursement. but mana tahu during progressive interest orealdi start to pay full amount

Two sides to a coin. depends on how u see it yeah.

This post has been edited by trust4you: Jan 25 2019, 10:19 PM

Why is it hard? One side is credit which are the monthly installments, on the debit side are interest charged monthly... the difference is principal reduction.

So, in short, just pay the Outstanding GPP?

Problem solved.


This post has been edited by Onioncapsium: Mar 1 2020, 05:54 PM

Standby 5% of the total loan amount. More or less

So what is the problem and how u solve?

May I know the amount to be disburse to Developer is determined by Developer or the Bank? Currently development at 2D should be 55% of the total price amount of the unit.

So I am wondering if I pay GPP now, is it 55% off the loan amount then x 30/365? or the disbursement amount determined by bank x 30/365?

For each stage of work done by the developer, developer will submit invoice to either you or the bank (assume 90% loan then it’s the bank) for disbursement. Invoice amount is based on the Schedule stated in your SPA. Bank shall only disburse based on the amount claimed by developer.

Note that developer might not claim the stages according to order, example if the drainage works are done first before your unit then they will claim stage 2g before 2d. You may refer to the current total amount you owe to the bank in your M2U account. It is not equal to 55% if claimed up to stage 2d. Note that the first 10% is downpayment paid by yourself and not disbursed by the bank, hence only 45% of the total property purchase price. Also you need to add in the MRTA amount if you finance your MRTA into your loan. If yours is semi flexi, you may also minus off any advance payment made into your loan account.

GPP (in other terms, progressive interest) is calculated on a DAILY BASIS as:
Total Owed to Bank x Current Interest Rate x No. of Days / 365 Days

Example:
Property Price: 500,000
Loan Amount: 90%, 450,000
MRTA financed into loan: 5000
Stage Disbursed: 2a(10%) + 2b(10%) + 2c(15%) + 2d(10%) = 45% of 500,000 = 225,000
Total Owed to Bank: 225,000 + 5000 = 230,000
Current Interest Rate: 4.0%
Therefore, GPP to pay on 1st Apr for the month of March = 230,000 * 4% * 31 / 365 = 781.37

standby 5% of the total loan amount for progressive payment??

Yes for total of progressive interest along construction period

Hello, just wanna clarify if the progressive interest is part of the total interest amount that the bank charges us? or is this additional interest charges?

What do you mean total interest amount?

Where did you get the figure? From the online amortized calculator?

If you are using calculator to get your installment amount and total interest paid over time, no that amount does not include progressive interest.

This is because online calculator does not take progressive interest into account, as every project has different completion time and will progress at a different speed.

This post has been edited by victorian: Aug 29 2020, 08:00 AM

Hi victorian,

Yes, I am calculating the total repayment I have to make on a monthly basis from P.Guru loan calculator.
So just to clarify:

Principal Amount : X
Interest Loan Amount : Y

The progressive payment doesn't deduct the amount of Y?

Sorry, first time house buyer :-D

Nope, X and Y is assuming you start paying full amount from first day, i.e for completed projects.

For under con projects, before you start paying x and y you have to pay z, the progressive interest that is calculated based on the disbursed x amount.

So the slower the completion of your project, the more progressive interest that you have to pay.

Thanks again. I supposed this is the "hidden" cost for newbies.

I read somewhere that we'll need to prep about 3-5% of the loan amount just to pay for this.

May I know if the breakdown are usually given by the bank?

To me, progressive interest has its good side as well.

It gives you more time to prepare before you start paying full amount. You can use the 1-2 years construction period to accumulate your budget for renovation.

Banks will not give you the breakdown. The schedule of payment is fixed and you can find it in your SPA.