Hi all,

Just want to ask from a noobie here, is top up refinance better or loan better?

Main agenda is to get cash for renovation of my new house (loan under my my spouse's name only).

So First option, if i refinance around rm300K+-(existing mortgage rm230k) from my house, i can have cash, and can settle my personal & car loan(total around rm40k+-). thus, i can take my exsiting monthly payment from both loans and cost it to future morgage payment. which i maybe no need add any new payment and i can extra rm20k-30k cash. however, ill have longer loan to settle.

but 2nd option, if i only use topup loan i only loan around rm20k-30k with less loan duration but for sure increase my monthly payment.

i like this 1st option but as this will take my 35 years of payment, i just want to have a second thought. is it a good strategy based on anyone that have experise in this field? THANKS

based on my exp. there is minimum gap between existing mortgage and market value needed before bank agree for refinance application..based on yours which around 70K sure not enough. better ask your bank 1st.

Of course go for number 1 if possible. House loan is flexi hence always if can always pay off early.
House loan interest much more lower than other loan too.

my concept is simple, though there are more factors to consider.

if you can borrow money to pay off some loans, then you have to compare cost of borrowing. borrow from a lender with lower rate to pay off lender with higher rate.

you'll have to convert your car loan to an annualized rate instead of the flat rate, then do a comparison. usually car loan has a higher annual rate.

another factor you may have to consider is liquidity. since you're doing renovation, you might want to keep cash in hand. for me, i keep my cash in a current account that will reduce principal of my home loan. so i keep my borrowing cost low but still maintain a level of liquidity incase i need to spend on anything. my home loan allows for this.

what is minimum gap means ya? do i need to ask more or less for my application to work?

just ask your bank's agent..last time i tried around 3 yrs ago with affin with no success. the only way might possible perhaps refinance with difference bank than current loan but they normally entertain title ready prop... just ask them no harm.

This topics has been asked over and over again until mod has to close the thread.

https://forum.lowyat.net/topic/5347146

Anyway to answer part of your question in bold ...

You need to minus another 10k for refinancing cost.

If let’s say your house market value now is RM 500k, but your loan is RM 300k, bank will not refinance the full RM 200k for you.

Most of the time it’s maybe 70-90% of the RM 200k. Check with your bank.

So if your house is RM 200k, but your loan is RM 180k, probably bank won’t refinance your house.