Title talk about house loan vs fd
You pulak blow water about other types of loan.
Go create another topic lar

only certain property loan period (if I not mistaken during pak Lah time), the loan interest is tax deductable.
If yourself doing the tax filing, you will notice it

Base on the scenario TS mentioned, if put FD 300k with 3% interest , after 30 years would be RM 737,052.66.

Interest charged on 4% mortgage loan would be RM 213,452.43 over 30 years.

437k interest earned (3%) - 213k interest charged (4%)  = earn 224k cash if put in FD for 30 years.

Something is not right, can someone clarify this?

err.... you sendiri quoted my reply and then derailed the discussion and then now accused me of blowing water and talking about "other types of loan"?
i merely stated the current position of taxation law regarding loan interest deduction and then asks you to support your claims with facts but you tak boleh and then now play victim asking me to stick to the topic of "house loan vs fd"?

:sigh: sudah la - further discussion with you also no point since you already salah fakta and undang-undang already. go on leave la you.

An amount limited to a maximum of RM10,000 is deductible for
each basis year for a period of three consecutive years of
assessment beginning from the date in which the interest is first
expended.
Conditions for eligibility:
(i) an individual who is a citizen and resident;
(ii) the purchase of the residential property is limited to one unit only;
(iii) the Sale and Purchase Agreement has been executed from 10
March 2009 to 31 December 2010; and
(iv) that residential property must not be rented out
Where:
(a) 2 or more individuals are each entitled to claim deduction in
respect of the same residential property; and
(b) the total amount of interest expended by those individuals
exceed the amount of deduction allowable for that relevant
year,
there shall be allowed to each of those individuals for that relevant
year an amount to be determined in accordance with the following
formula:
Where;
A = total amount of deduction allowed for that relevant year;
B = total interest expended in the basis year for the relevant year
by that individual; and
C = total interest expended in the basis year for that relevant year
by all such individuals.
Section 46B

1. the 213k interest charged in your example is just the simple sum of all interests, since your FD interest is as at the end of 30 years, you need to accumulate all the monthly interests in 213k interest charged from mortgage to the end of 30 years to make an apple-to-apple comparison (same financial position)

2. 213k interest charged is gonna be lesser than FD because mortgage interest is based on reducing balance, not accumulating.

I don't understand point 1. Can explain more please?

eh? i tot UT and FD is tax free one? no ah?

this 213k interest charged is the sum of interests charged at month 1, month 2, month 3, and so on, without considering time value of money.

since the given FD interest amount is as at the end of year 30 (i.e. month 360), you need to bring those mortgage interests from month 1, month2, month 3, and so on to month 360.

for example, month 1 interest is 1k, with interest rate 4%, in order to bring this month 1 interest's position to month 360 position, you need to accrete interest on it, i.e. 1000 * 1.04^((360-1)/12), and do the same for all other interests before summing them up. -1 is because month 1 interest is as at the end of month 1 (so only 359 months left).

Thanks for taking the time to reply. I've been trying to understand but still struggling. Why do you need to bring month 1 mortgage payment to month 360? The mortgage is reducing balance right?

If it is the time value of money, then shouldn't it be inflation adjusted? But then since both the FD interest accumulation and mortgage interest payment is over 30 years and both are not inflation adjusted, then the comparison is somewhat apple to apple already?

because the original poster was trying to understand why the mortgage interest is much lesser than the FD interest we could get at the end of 30 years. and the reason to that is precisely what i mentioned, all the interests at mortgage technically stop accreting interests once it's incurred, that's why the total interest paid to mortgage is lesser than the FD interest we earned at the end of year 30. it's due to the compounding effect in FD.

the reason why inflation rate can be omitted because both sides (mortgage and FD) should be inflation adjusted, hence there's offsetting impact already. it's akin to comparing 100/1.03 vs 90/1.03, it shouldn't matter in the comparison even if we don't consider inflation rate. i take 3% as the inflation rate since it's commonly used

Interest paid on loan is tax deductible

Interest from FD is taxable

Depends on tour tax position

1. the 213k interest charged in your example is just the simple sum of all interests, since your FD interest is as at the end of 30 years, you need to accumulate all the monthly interests in 213k interest charged from mortgage to the end of 30 years to make an apple-to-apple comparison (same financial position)

2. 213k interest charged is gonna be lesser than FD because mortgage interest is based on reducing balance, not accumulating.

Even if your mortgage interest is higher than your FD, it doesn't mean you should clear your loan because over 30 years, you may gain more from fd.

this is provided you have more than enough capital to back the loan.

otherwise, it's still better to clear the loan quicker by paying more than the repayment set.

Pay urself, buy a good handheld gaming this year

The interest charged on a housing loan is likely to be lower than the interest earned on a fixed deposit (yearly compounding) because mortgage interest is based on the reducing balance, not on accumulation.

How to calculate number 1 if we use chatgpt?