hi

i would like to ask regarding semi flexi loan. sifus opinion here are all welcomed

from calculator, if i intend to get housing loan of eg 300k

over 20 years, interest based on 4%:
- 100+k
- monthly payment 1800

over 30 years, interest based on 4%:
- 200+k
- monthly payment 1400


if i decided on the 30 years tenure and pay 1400 monthly but
however, after about 5 years, if i decided to pay 1800 as per the 20 years tenure (but still remained on the 30 years contract), does it mean in the end, the interest i eventually need to pay would be roughly as the 20 years tenure or will it be much higher since i have chosen 30 year tenure to begin with?

if i am able to commit to 1800 later, does it mean i have to do refinancing to change 30 years tenure to 20 years tenure?

or should i opt for 20 years tenure upfront to enjoy a lower cumulative total interest in the end?

bro, just take 30years if you're afraid you can't commit 1800/mth now. and you just pay extra whenever you can. you'll cut your tenure. most housing loan is using reducing balance rate (ie: your installment is based on your loan balance) and whenever you pay extra, it'll cut your tenure. find amortization calculator, it'll give you rough idea.

This post has been edited by flazeroth4th: Jan 19 2023, 09:56 AM

U can put 30 year but every month top up to pay for the loan. When making additional payment ensure to tell to pay to clear the loan not the interest. This is in case anything happened kena tangkap basah demoted n gaji reduced for example.

Correct when making additional payment ensure to tell to clear principal ya.

Take the 30 years when the bank still allows you to get such long tenure.

No matter how you compare it, the 30 years option will be better than 20 years option. Even though on surface, looks like the final repayment differ a lot but after 10-15 years, that amount different after taking into account of the inflation will become less significant.

You won't see it now because you have yet to see how value of money depreciate over time.

Do you mean we'll have to call the bank or someone & inform them to use the additional payment to clear the principal? I thought that was something automatic? Any documented process on this for Maybank?

My alliance bank have to go to counter and tell.
It can be money kept n use for the coming month mortgage payment
You ask the banker what's the process.

thank you for the replies

would the same be applicable to mudarabah commodity type (islamic) loan as well?

does it mean even if i can afford to pay up 1800 per month now, i should still opt for the longer tenure despite having a higher cumulative interest? (in this case an extra excess of interest of additional 100% - 100k (20 years) vs 200k (30 years)
- as long as during payment i request for the extra payment be placed in principle?

how does the breakdown of extra goes in?
example if i pay 1400 per month, a portion will go into paying the interest. so if i can afford 1800, does it mean 1400 i should allocate for (principle + interest) and then the other extra 400 should be into the principle? is this doable?

is there any difference in paying
1800 (interest + principle)
vs
1400 (interest + principle) + 400 (principle)
over the long term period?

paying house is not like paying car.

you drag the loan 30 years also no problem.

Houses, you tend to pay the principle faster then the loan will finish faster.

example, per year you paid additional rm20k then the loan principle will reduce thus your interest rates will go lower.

Conventional bank loans works differently from islamic loans. I would caution you to read the fine print and look at the schedule of payment in detail, especially if you intend to pay off earlier, before the tenure ends.

If borrower wants a safer net, go for max tenure. However, is good if borrower can make some partial capital repayments throughout the tenure.

Anyway, majority borrowers seldom complete the loan tenure, whether 20 or 30 years.

thank you for the reply

what about the poster above that mentioned islamic loan being different than conventional? in that case, would the duration of tenure be of importance? since early repayment may have different result? or islamic-based js basically just the same as conventional, only different in name?

can you elaborate more on the difference please and what kinda things to watch out for?

Make sure to get a flexi loan that you can pay off the principal amount. That was (gross calc at 4.1%) RM1 paid early is Rm2.1 after 35 years.

Better to stretch 30 years if the 20 years isn't a comfortable amount i.e. 1/6th of salary. 1/3rd of salary leaves no room for error unless you already have a nice savings (like RM50k in liquid assets) so in case jobless or wtv, loans are not affected.

Too detail to explain here.

Best would be to get some bank sales personnel to show you the payment schedule & explain the terms & condition.

But in general,Islamic home loans are more expensive and terms may not be necessary benefit us if we pay off earlier (from my experience, others may defer).

Take 30 yrs loan

Then pay 1400 as monthly payment
Then pay 400 and put reduce principal

Islamic loan dont have full flexi. The semi flexi capital repayment is cap at 30% of loan sum.

There is also a cap for interest rate and early settlement charges for lock-in period.

so sorry i don't get the bolded part. what does the bolded statement mean? can give an example please?

Any repayment amount exceeded 30% of original loan sum will be taken as advance instalment.

I think what you said there differs on bank products too. Not all islamic loans have such a low cap. Best to just check with the sales rep.