hi all,

assume i bought a property that is ready 4 years later, can i opt to pay extra to clear my principal loan amount during progressive interest stage.

example first four months, progressive interest is RM300 monthly. can i pay RM1300 for the first 4 months, where the RM1000 deduct my overall principal amount?
if yes, will my actual loan service (after 4 years and VP property) reduced, means instead of monthly RM2200 (assumption), it will be reduce to lower that amount because i cleared some principal amount during the 4 years progressive interest stage ?

This post has been edited by talzer: Oct 22 2019, 05:24 PM

You need to know what type of loan u taking..
full-flexi, semi-flexi or conventional.

each have different type of payment term.

assume is full-flexi

Parking, would like to know too, because I remember last time, cannot pay principal before full disbursement of loan (i.e. during construction period).

Full- flexi is a type of loan where the interest in calculated on dayly basis.
U still have a fix amount installment to pay every month.
On top of that you can pay to your loan principal if you have extra cash.
The amount of cash you put into principal can be withdrawn with some
charges. Minimal withdrawn amount is RM5k for Public Bank.

If I am not mistaken...

This post has been edited by zetra06: Oct 22 2019, 05:27 PM

Public Bank dont allow. but certain bank allow.

i mean to clear my principal during progressive interest stage, not put into my flexi account to reduce loan interest (and progressive interest)

not sure which bank that you mentioned, but as i know , u can still paid for principle even under construction, but the method of paying will be different.
example. ur progressive payment is 300 but u decided to paid 1300 whereas 1000 for principle, so u need to paid the 300 first, den select paying principal amount by 1k or when to counter and paid for that....of course, depend on bank as each bank have their own policy

2nd , ur monthly installment wont be reduce even u paid a lot on principal , just u will settle ur loan earlier, if u decided to lower down your loan, u can go to re-finance with lower loan amount..

correctly me if i am wrong as some information was taken from my banker when he explained to me during my signing

You cannot pay more than what is released from the bank to the developer.
In your case, in your first 4 years, you can only pay off whatever loan the bank has released in stages to the developer.

Eg : if the bank only released RM40k in the first 10 months to the developer, you cannot pay RM50k in the first ten months.

Your question is specific and is better to direct to your bank for an answer.

Also refer to your LO and LA for insight as to what you can do.

during progressive any excess payment will not reduce principal, only goes into advance payment

but you can go to bank to submit lump sum to reduce principal

Hi, I am also wondering. Bought my property a year ago, installment is around 1500 per month. Earlier this year I have extra cash and made 30k into the principal via walk-in bank. But my monthly installment is still 1500 and has not decreased. Just wondering how it works.

Will need to refinance the loan due to the party charge is different. From 3rd party charge change to 1st party charge. But still subject to ur existing bank allow u to do direct transfer or not.

Paying off principal reduces your overall loan amount and interest, but it does not change your instalment as your instalment is already part of your legal financial obligations (through loan documents and letter of offer) and is reported for your CCRIS. If want to lower you need to redo the documentation, call your bank to see if you can restructure your loan to reduce instalment amount (or refinance at a different bank with lower interest rates).

Thanks for the response. appreciate it.

Let's say the property is 300k, and after the lock period which is usually 4 years, and I have the extra amount of cash in hand, can I pay it off and clear the load/installment by that?

If you die² want to and you're able to fully settle the loan in full then can clear, although unless you are really cash rich, it's a strange decision to make in terms of credit health and overall liquidity, IMO.

Because home loan interest rates are not so high that it justifies not using that money to invest elsewhere, when such a large amount is involved. Home loan is also considered a form of healthy credit if you make repayment on time, will help with future credit application.

Even EPF dividend rates better than home loan, would only recommend that kind of full settlement if the home is not profit making/you want to dispose of the property/your DSR burst already and you have difficulty with credit.

you can.. any excess payment consider as advance payment.. whether reduce your principal and debit credit your balance depending on your loan type.. fixed rate/semi flexi or full flexi loan.. mostly should be semi-flexi loan which will consider as advance payment.. some bank have a cap like 50%/70%.. i knew MBB didnt have this cap, so if you have 200k on hand and dont know what to do, put into the semi flexi loan treat it as advance payment, then when you pay monthly installment 2k, maybe 1500 reduce principal and 500 for interests rather than 500 principal, 1500 interests if without 200k advance..

for semi flexi loan, will advance payment reduce the interest?

yeah.. interests are count in daily basis.. and it did..

e.g. your monthly payment is 2k.. it will split into principal & interest payment.. if your advance payment a lot, the ratio of monthly payment 2k will be go to principal more than interests.. indirectly it will reduce your principal balance more and help to shorten the loan term..

my suggestion to normal people is extra pay extra RM50/100 per month is very good for own stay purpose.. it will shorten your loan term for few years for sure.. assuming your house loan is odd number like 1943 per month, you pay 2k straight.. surplus 57 a month is good.. if got big lump sum and considering either FD/throw into mortage semiflexi/flexi loan, and dont plan to take out the money in short time, just lump into loan account instead of FD.. the only cons is that when u want to take out the money, it will incur an amount like RM25/50 depending on bank.. full flexi is fine cause it go to current accounts straight..

Hi Gurus, I want to check with you guys on my loan repayment arrangements with my Bank.
Currently my bank's process for mortgage repayment is;

1) Bank created a special saving acc
2) Bank instruct to deposit the monthly installment amt into this acc, and it will automatically-credit to the Mortgage acc
3) Bank said if I have extra, I can deposit excess/extra into this saving acc, and the interest % will be calculated daily. (Excess money can be withdrawn anytime with some charges)
4) Aside from No.3, if I wish to pay extra on principal amount, I need to give 1 month notice to bank and arrange accordingly with their officer.


The above said, my questions are :

A) I asked bank if I want to pay extra monthly, what should I do? since I cannot pay to the Mortgage account directly. Then my bank advised me to just deposit the excess money here and the interest will be reduced.
B) Have any of you come across similar arrangements with your banks?