Loan Amount (P): RM 300,000
Loan Years: 25 years
Interest Rate: 4%

We'll calculate the monthly payment (M) using the formula:







Then, we'll find the total payment to the bank over 25 years by multiplying the monthly payment by the total number of payments (n):

Total Payment to Bank
=

Total Payment to Bank= M × n

After performing the calculations, the total interest to the bank over 25 years is approximately

RM 175,095.


Add back RM 300,000 housing loan amount,it is equal to

RM 475,095 (total loan amount pay to bank)


Vs

Fixed deposit 25 years of yearly compound
= 300,000×(1.04). 0.25
= RM 780,000




RM 780,000 - RM 300,000
= RM 480,000 (total interest earned)

Principal	Interest Earned	Maturity Amount
RM 300,000	RM 480,000	RM 780,000

Only RM 5,000 difference.....

Can someone confirm this? - Housing loan is calculated on a daily rest basis, while FD is compounded annually.

If neither the loan nor the fixed deposit is touched, will the housing loan still cost more?

Therefore, is it better to clear the housing loan first before putting money into a fixed deposit?



It is better to put your money into an EPF account to enjoy a higher interest rate than an FD.

You can still withdraw the money to pay your housing loan if the need arises when you reach age 55.

Good?





So which one better?

This post has been edited by plouffle0789: Feb 8 2024, 02:26 PM

Interest paid on loan is tax deductible

Interest from FD is taxable

Depends on tour tax position

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

usually interst on loan > fd rate

so......

Clear loan first. If still got extra cash, put in FD.

tis is for company, individual where got tax for fd and where can reduce tax from interest.

Huh since when interest paid on loan is tax deductible?

can someone confirm… loan is daily rest, rate of calculation..FD is yearly compounded.. if neither is touched, loan will still cost more?
thus better to clear loan, correct?

Interest paid on loan can only be offset against rental income, not other income such as salary.

Interest from local bank FD received by individual is not taxable, it is tax exempt in Malaysia.

I guess you are rich and own company managing many properties purchase and rental collection.


https://www.propertyguru.com.my/property-gu...-malaysia-11868
https://taxsummaries.pwc.com/malaysia/indiv...%20tax%20exempt.

This post has been edited by vhs: Feb 8 2024, 06:12 AM

Loan interest if tax deductible, T20 will be happy lor. Get money back from Gomen and use it to pay off additional loan amount.

Lai lai, I sappot

wait what interest from loan is tax deductible?

Your math all correct but not use correctly.

1. You assume you have 300k in FD to get compounding interest but you compare this to getting 300k loan from bank. Note that if you have 300k to start with you wont need to get loan from bank the first place.

2. You assume FD interest rate equal to mortgage rate, which also untrue in reality.

3. You assume installment amount remains unchange over 3 years also untrue.

4. Your calculation of mortgage interest is using simple interest which also not the case in reality.

5. Property price may appreaciate abit over period of 30 years so really no apple to apple, FD rate also changes every year.

6. You buy a house for 2 purpose, own stay or rent out/investment, let say you ownstay, if you dont buy you have to rent, so you need to minus the rental from your FD interest to compensate in your comparison. Let say you rent out, you basically not paying (installment= rent collected), pay less than installment (installment > rental) or get rental income (rental > installment). When you sell the house, you get back the money.

It is tax deductible.

Rental Income - Interest From Bank - Maintenance Fee = Total Income To Declare to IRB.

Yes. I can confirm. If you have money, park it into your loan account will save more, even if loan rate = fd rate

Technically, bank takes the money you put in FD to loan it to someone else for profit …

If mortgage interest not higher than FD, what business is bank doing?

What were you expecting from a B40?
There are so many variables & situation.
No one shoe size fits all.
Like other member da ckp it really depends on the individual financial situation.

You are correct. I was saying, even if.

Which country is this for? lol both also not applicable in Malaysia

For me I clear off house loan. Reason is I'm guaranteed to save 4% or whatever the loan rate is. FD nowadays so low interest. Yesterday I had to nego back and forth with the officer just to get an extra lousy 0.1% 🤦🏻‍♂️

Where got so low loan interest rate and where got so high FD rate

The difference in reality is greater when every month money doesn't flow out to loans

This. Clear your debts, then the balance you save. Never do the opposite. That's how your debts keep piling up, while you savings dwindle.

Make it simple for you.

If you have paid more than 7 years of your 25 years housing loan then put money in FD better. Or throw 100k into the housing loan to reduce principle on loan and balance to FD.

Housing loan interest are loaded up front, not straight line. You paid 90% interest 10% principle on first few years.

Therefore trying to clear the loan after paying most of the interest is very welcome by bank 😬 and a bit unwise for you.

This post has been edited by WH4CockcooBird: Feb 8 2024, 08:15 AM

Put your money into EPF account to enjoy higher interest rate than FD. You still can withdraw to pay your loan if the need arises

I dunno, but I would prefer cash in hand

Housing loan is covered by insurance, so if anything happen to me, my family get free house and have 300k savings summore

Dunno, that's just my own opinion, though maybe not financially wise.

https://www.calculator.com.my/home-loan-calculator

u can do your math at here with assumption of totally no interest rate changes for entire tenure


just like if you have 400k loan vs 400k FD


This post has been edited by fantasy1989: Feb 8 2024, 08:53 AM

Buy ipong

Eh fd interest taxable kah, i cant find the column to declare in borang BE wor

in my opinion...ill rather debt free 1st

then only think about interest/profit


the word 'peace of mind' its really something

Depends on individual

Put half FD and settle half loan

Keep in EPF if have

If you have the $300k cash on hand and the house cost is $300k, house already finished built or buying subsale - buy in cash

If you have small cash on hand, house under construction will only finish in 3 years time, and you know in 3 years you will have good cash flow coming in - also opt to BUY IN CASH. You will be ask to made progressive payment throughout that 3 years span. You won't need to put up $300k up front

Put in USD FD,
then, hope that MYR continue to weaken while interest stays the same.

FD interest taxable?????????????

So clear housing loan better or put $ to fixed deposit better?

Why don't clear housing loan first?

Theoretically should put more into investment/FD instead of clearing housing loan first.

But ayam prudent type, cleared housing loan first. Ayam probably not the type to get rich, but can sleep soundly.

have some cash with you rather than all in housing loan.

its always good to have some emergency funds anytime in your life.

which one can liquidate fast?

Why not both? Have less housing loan principal while still having emergency cash?

How? Full flexi or semi flexi housing loan.

Ayam used to have full flexi housing loan, the money left in current account practically offset the full housing loan (zero loan interest every month), if need emergency cash, can still withdraw from the current account at will.

Care to elaborate on this statement " Interest paid on loan is tax deductible" . How and where?

I rather clear off house loan for the peace of mind.

wah you so generous pay tax on your FD interest

My reit and bluechip gv >6% return .
400k i can get div around 24k annual = 2k monthly .
If invest 400k high rise nett rental (after minus maintenance fees , repair , lapsap tenant , no tenant etc ) can get 2k per month ?
High rise now sell at future price , price stagnant few years ago , alot lelong unit , new condo build nex to u selling same price , after yrs ppl bother looking for old unit .

so when is the threshold you can start clear loan? See payment schedule for % interest % principal?

then your credit score will be stuck there lo.

if wanna apply new housing loan then hard already.

Kindly elaborate on how the credit score stuck.

eg you having housing loan 500k, you park your money at semi/fully fexi loan.

if you wanna apply another 500k housing loan, it will be hard, unless your income very high.

You mean you prefer to clear housing loan A first before applying for housing loan B is it?
Of course you can, my statement was about having only one housing loan.

Before apply, cash out the advance repayment first?

This post has been edited by Deathscythe@@: Feb 8 2024, 09:56 AM

if you use the property for rental.

can be used to deduct from your rental income.

only interest portion ya, not principal

This post has been edited by hoonanoo: Feb 8 2024, 10:16 AM

Tax on FD interest only applicable for company right? for personal fd interest is still tax free

Ya, it is getting harder to gain from property investment, only agents who selling properties can make money. Unless you just wan to diversify.

Many of my middle age colleagues have liquidated their property investment to pump into their EPF until over 1 mil, so every year can cash out some of the dividends for spending.

May I know which reits you bought?

You never put to KWSP also?

how to check our credit score?

have to buy from CTOS ?

poster prdkancil says that his reits get good return.

So how does reit achieve > property investment ?

Sounds interesting liquidate property to put money back into EPF.

I am thinking of doing this. If only I can find takers for my condo

This post has been edited by hoonanoo: Feb 8 2024, 10:33 AM

FD or other investment

Credit score is scam. Banks have different credit requirements

then I would not be able to evaluate my own credit rating?

I think next best guess is to look at my cCRIS

YTLreit , Sunreit and Maybank share .
I dint put into KWSP becoz i still <40yo and need cash/liquidity .

Not as simple as that, ccris are one of it. There are other requirements as well.

For us normal individuals, 1. Debt Service Ratio, 2. Make sure CC within 50% of usage, 3. No default payment.

If you’re high networth you will be treated differently.

ini law mana?

good ah this reits?

how do you evaluate them?

Is the property being rented out or own stay? If rented out, then I would size the loan to take advantage of loan interest deductibility to avoid rental income. Especially if you have a flexible mortgage.

If you're not investment savvy, then I would advise to top up EPF before placing into FD.

how do they do credit rating?

is there like credit rating A, B, C, D ? Standard measurement?

U can check here lur , juz treat it as low risk investment with steady div .

https://klse.i3investor.com/web/stock/overview/5109
https://klse.i3investor.com/web/stock/overview/5176
https://klse.i3investor.com/web/stock/overview/1155

I prefer tis portfolio thn UT , UT pay fees but fund mgr canot guarantee return if choose wrong example china portfolio GG .

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

For those who kept asking about tax deductable interest, see above reply. I do this every year. But not applicable if u dun declare Ur rental income.

A fundamental flaw in your illustration is that you assumed the interest to be paid to the bank is the same even if you put more than your repayment. This is not the case. You need to consider the interest after deducting the principal amount with the excess from repayment. This is where the difference comes to kick in and make you realise clearing the loan is better.

This post has been edited by Yenactiet: Feb 8 2024, 11:03 AM

So you just put some money on FD for emergency fund?

Pak Lah how many donkey years ago already, he also now suffered from dementia.

As far as I know, the current law regarding tax deductibles on loan interest is that IF the loan is taken out by a company in furtherance of a business otherwise, makan sendiri OR is there a change in taxation law?

Minta pencerahan.

This post has been edited by shaniandras2787: Feb 8 2024, 11:24 AM

ok thanks bro

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

lololol how the in the fuk out of nowhere need to mention pak lah? really dun understand /k at all nowdays or probably that fella got dementia too

lel

U go bursa choose the listed reits share, then see their dividend yield records, all doing quite good in last few years. Minimum 3-6% over pass five years if not mistaken. But REITs share is still subject to price risk. My friend suffered some capital losses when he sells his reits shares in December as he need cash to pay downpayment for new car, lol. But overall he received good dividend in past 3 years compare to FD.

And reits fund all invest in commercial properties, like pavilion reits which hold all the shops in their own mall with very good rental. Some even trading in warehouse and factory, or landbank, which record very high capital gains in pass few years. So far I don't see any REITS hold condo sell by developer la, haha. All these info are from my friend who really spent time to read their report, which I will never do that, lol

My colleague's condo was bought in 2006, although the price has doubled, but he notice the recent price is dampening, and rental also not doing well as more new condo with good furnishings were built nearby his condo, he won't dump any more cash to renovate his unit, so he has just sold it and put the gain into his EPF.

So if your condo was bought in recent years, then better just continue to hold it, and find good tenant. As long the rental can cover 80% or above of your monthly installments and maintenance, consider very lucky already

both run parallel. until certain point of time. you have both. house and fd.

if u dump into house loan, end up u only left house.

but, this subjective. If you only have small amount of money, why u dump into house loan? doesnt make any super big different.

the calculation already tell you what different you will get. bank is smart. They already factor in.

if your hosue loan is 300k, you have cash 300k, you put in house loan, it does not generate income, you still need to pay the monthly installment with zero interest charge on your loan account.

You can put 150k into fd, 150k into your loan account to reduce some interest. or any amount that you think is suitable for you.

unless you want full settlement. but you need to start accumulate 300k from 0.

no perfect answer for all this.

but pavillion damansara quite bad, no business.

good point on REITs, I will have a good look at it

any other REITs of interest?

TS, I'll go for this.

Deduct some interest while still have some cash flow to earn interest.

Buy house with cash

Extra put in FD

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?

Based on financial calculator from website. Look like FD 3% earn more than loan 4% ?

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.

This post has been edited by shaniandras2787: Feb 8 2024, 12:51 PM

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.

This post has been edited by Yenactiet: Feb 8 2024, 01:08 PM

Fucukyeemai
Go and search yourself in LHDN

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

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).

This post has been edited by Yenactiet: Feb 8 2024, 01:42 PM

UT is taxable la

Pay urself, buy a good handheld gaming this year

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

This post has been edited by Yenactiet: Feb 8 2024, 02:05 PM

Yes that's my understanding as well. FD interest is accumulating against the principle + all previous interest while mortgage interest is based on loan amount minus all interest paid + principle paid.

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.

FD interest automatically taxed 5% by default.