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The amount of cash you put into principal can be withdrawn with some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 Minimal withdrawn amount is RM5k for Public Bank.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?

In (A), what is 'here' ? Is it same as (3) ?

Is it all bank is the same? because i ever hear some bank will classify the advance payment store at flexi loan account as a their *advance payment for next month payment, so its not ready reduct the principle. Is it this rumor right?

you are right from the term.. from my own experience perspective, i have 3 mortgage loan, 2 in HLB and 1 in MBB.. they are same.. im using semi flexi instead of full flexi.. mortgage loan interests are calculate in daily basis as far as i knew if you go to semi flexi & full flexi loan.. it not deduct your principal and it is serve as advance payment which you are right. but your interests are count based on (principal - advance payment) x interests rate..

unless you call to bank and ask them to use advance payment to deduct your principal.. (indirectly you cant withdraw it out anymore after this)..

Yes, when I say 'here', it means to the saving acc.
Which I feel may, it will be the scenario mentioned by ChuanHong below, the excess is considered as advance payment and not deduct principal..

Hi ChuanHong, I think I'm in the same situation as you.
If any extra payment is considered as advance payment, is it better to park all my savings there? Then withdraw when necessary?

for normal working people and the property is own stay.. yes.. i dont see the cons to not putting the extra money in semi flexi loan account.. i attached a screenshot about the actual transaction in my sample.. when u have a lot of advance payment, your monthly principal deduction amount will be increased, of course there is a factor of 30 days, 31 days for each months..

e.g. 03 Apr 2023 been debit 1376.67 interests in my account.. it is due to March have 31 days.. average per day is 44.41 for interests..when go to 03 May 2023, my account debit 1330.25 cause use 44.41 x 30 days in Apr.. which is around 1332.30 or exact number by bank is 1330.25... minor difference is based on when we pay monthly installment amount into account, and it will have minor difference due to your principal - advance payment is lower again..

my advice is pay a little extra is fine like my sample is 1955 for monthyl installment, but i paid 2000 every month.. slowly your advance payment will be accumulated after maybe 5/10 years.. if you have bonus every year, just lump into it.. when you need cash liquidity, just have to go to bank and fill up some form and cash out the money from your advance payment (but limited to cash out by thousands value, e.g. 1k/2k/3k/4k like that, cannot take out 500/1900).. and it incur small charges like RM25/50..



sorry as im not good in explaining all these in professional ways.. but i hope you guys can understnad my broken english..


Attached thumbnail(s)

Just a question, I've semi semi-flexi loan with MBB, would advance payment money be deducted? For example, I put in 10k as advancement payment (one-off payment).

This post has been edited by Gaia34: Oct 11 2023, 06:10 PM

Thanks for your advise ChuanHong.
I just checked my bank.. so apparently my acc is a 'current acc' with card..

Can I ask if your current repayment in manual? or is it auto-transfer from acc-to-acc like my case?
Reason I asked is because I am also thinking to pay extra abit every month, but my current arrangement is the 'current acc' will auto-transfer to mortgage acc.. so I cant really 'set' it to transfer more..

current account? are you having full flexi loan account? only flexi loan tied to individual current account. how long u have the mortgage loan? usually current account will have monthly/yearly fee.. check there is any small fee charge into your current account?!

it is fine to pay extra every month.. it will automatically reducing the interests on your loan.. the benefit of having current account is that you can make additional payment/withdraw money from your current account without having any pre-approval from bank.. but cons is there should have a minimum maintenance charge in monthly/yearly basis..

wont.. it will deem as advance payment.. it wont deduct directly.. loan instalment is automatically taken each month from advance payment as per pre-approved schedule.. e.g. your instalment must paid by every 5th of Month.. make sure you have enough money in account before 5th of month..

generally it should be all same.. except certain bank have a max cap of advance payment to reduce your interests.. e.g. your principal loan is 500k.. if you dump 400k into it as advance payment.. will it use only 100k remaining balance to count your interests?! not really.. some bank have a cap like 50%/70%.. this one you have to check with your banker/in your loan agreement..

This post has been edited by ChuanHong: Oct 11 2023, 09:26 PM

Yes you are right. I am having full flexi loan acc with my bank right now and yes there are a small fee charge for some maintenance/trx.
Ok, then I would just put most of my saving/liquid money into that acc, and it should be reduce the interest right?

Your monthly installments amount will used to pay off principal more than usual. In long run, yes interests reduced and you may pay off your loan earlier than your loan term.

For someone like me that don't know what to invest, I just lump my extra into loan account only as advance payment..

what if i loan 1M with cap 70%
if i just pump in 200k extra (haven't reach the cap amount of 700k)
then the amount that will go into principal will be 200k fully, or 70%*200k=140k?

hmm.. loan principal 1m.. advance payment 200k.. outstanding balance = 800k to multiply/calculate your interests..

lets assume advance payment cap is 70% = 700k of advance payment.. if you put advance payment 800k, 1000 - 700 (cap) isntead of 800k. ultimately = 300k to multiply/calculate your interests..

This post has been edited by ChuanHong: Oct 19 2023, 10:16 PM

Just got the answer today (from agent/runner not from the banker directly just to highlight)
for the package given to me
if cap at 70% repayment
loan 1M
u gt extra 200k and pump in, only 140k will count as principal
60k will be parked somewhere and will only return to u when u clear your loan

This post has been edited by 13af: Oct 19 2023, 10:40 PM

Yeah, banks are business man, not simply let applicant leverage their money buy property without earning interest.

I not 100% sure, but i know some generous bank are actually caps at 90%, and some like your 70% is normal. So if you are using outsource mortagage banker, dont just let the agent deal with it, you can actually liaise with that outsource learn and ask them which bank package is the most suit to your desire. Of course this is when your profile are accepted by all bank then you have more choice.

This post has been edited by Aldo-Kirosu: Oct 22 2023, 08:03 PM

what bank is this?

It's HLB.
Btw they created a current account, not saving acc. Just wanted to correct myself.

I curious for new property usually take how long start paying interest after signed SPA?

When loan was disbursed to developer, then need to start paying.

1. waiting developer presentation to request fund
2. waiting for lawyer to settle everythings included land office stuff
3. conventional loan and islamic loan have different time
4. Different bank have different timing as well

so overall, as fast 3rd month after signed SPA or half year after sign SPA.

you should minimize monthly payment because monthly payment = principal + interest. with minimal monthly payment your interest also min to a certain extend.

meanwhile save a sum of money externally and pay lump sum to the bank to knock off the principal to reduce the interest.

raising your monthly payment = more principal + more interest is not wise

I am using Public Bank,
My agent told me, I can only start paying the principle after lock period,
during lock period, can only pay interest...