Guys,

Any cons on those flexi loan whereby you can put in extra money and withdraw them anytime, and those extra money you put in will reduce your principal hence your interest amount?

For example your loan is 500k and the interest is 6.75% per annum, you dump it 500k inside hence your interest become 0 and you only service the loan amount every month.

Can it be equate to investing 500k and getting a 6.75% return?

The only cons I can think of is you can get better return if your invest your 500k elsewhere.

In answer to your question, yes - it's like getting 6.75% return. The only con I've seen so far is the lending rate is higher than a conventional home loan, plus the monthly maintenance fees.

put it this way, the 500K u put in as advanced payment to reduce the interest charge on loan amount, u only lose 3-4% for not generating interest from the 500K compared to put in FD. u put the 500K in FD n get 3-4% return and pay 6.75% to loan amount , which one is better now? flexibilty ?

Imagine this way pulak... you put 500k in FD after a year getting 4% interest and compounded back into 500k. now you hv 520k for next year FD. 2nd yr you hv 540.8k, 3rd yr you hv 562.4k, 4th=584.9k, 5th yr=608.2k.

so, you gain ~21% for 5 yr FD. of course you need to allocate your monthly sallary to service your loan. after 5 yr, refinance your property... boom!!!, your r millionaire.....

true also about the compounding interest.

So better put in FD?

You should understand the purpose for this type of loan.

Flexi Loan is more for business owner who is running business and could afford to pay extra $$$ generated from their business. The withdrawal flexibilty enables them to get the extra $$$ out whenever they need it for their business cash flow. If you are fixed income earner, very seldom you will do extra payment.

I dun see any advantage of this type of loan as interest rate are higher than term loan and you have to pay startup fees and maintenance charges.

Just for info, banks don't do losing money business.

A bank offered me BLR-1.8 for flexi loan. I think that is better than normal term loan interest rate right?

One should only consider flexi loans when they have plenty of cash in hand.

there's a term called "minimum charge"... banks are smarter than you think

cons is the interest rate is slightly higher than conventional loans...
well... that's my research based on last year, this year a lot of bank are offering BLR - 2%... darn...

Go for StanChart's Mortgage One... RM10 per month, unlimited transactions... some banks like UOB charge per transaction...

how does this minimum charges work?

not sure about the min charges. but most there will be a fee charged per month (rm10 - std chartered, alliance) and rm5 - ambank for flexi loan. 1 time setup fee of rm200. basically all your extra payment goes to your current account therefore no fees when you withdraw money from your account.

kenji, u mean a lot of banks offering -2 for flexi loan? i have yet to find -2 whole tenure for conventional - do let me know which bank?

If you guys really wants to know more, I had previously engaged in a huge debate with some in realestate.com.my

There's one forumer there which I deem quite good in his analytic skills:
marxdean. Quite informational from him if you can understand his points:

http://realestate.net.my/forum/viewtopic.p...6651&highlight=
http://realestate.net.my/forum/viewtopic.php?t=6445
http://realestate.net.my/forum/viewtopic.p...7555&highlight=

nope conventional, OCBC offering BLR-2% for KK Wetlands

thanks for the link.

The arguments that this marxdean guy put forward

1. Interest rate is higher (that may be the case few months back but now I believe the rates are same or even better than conventional loan)

2. Back to square one if we take out the additional amount we put in (Need to do some fine calculation first but I believe even if we put for like 1 month the additional money and then took it out, we do save on some interest in that one month)

What is your view b00n? Are u on flexi loan?

for the whole tenure?

I'm on flexi loan and I have my own reason for taking it.
One reason is because my wife's earning is base on incentive, thus whenever there's big commission we'll commit it to the loan.
I've my fair share of argument with this marxdean guy. But I do admire his logical explanation.
But long time didn't see him in that forum, nor did I log in for a long time also.

I am also on a Mortgage-One loan, and so far I am very pleased with the flexibility. I have not much info on the current flexi loans by other banks, and only some maybe outdated info of that offered by Citibank years ago. But I think a flexi loan is not suitable for everybody. It is suitable for people that
1. Wants to take a longer loan tenure (to reduce minimum monthly repayment) but has the intention to repay in full before the full tenure
2. Has the financial capability to pay an average monthly amount higher than the minimum amount
3. Has the discipline to act according to pt 2
4. Net positive cash flow every month, and income is much higher than the minimum monthly repayment

I see pts (1) intention, (2) financial capability and (3) discipline as necessary in order to benefit from the flexi loan, and (4) is optional. And I think the prior discussions in the other forum did not take pt (4) into consideration. Let's look at an example:

Salary: 100%
Minimum monthly repayment: 30% (this includes paying towards principle and interest)
Personal savings: 20%
Monthly expenses: 50%

I assume that all salary of 100% is deposited into Mortgage One, and the savings of 20% is also kept inside always reduce the interest. These excess payment of 20% per month also serves as emergency fund, and can be withdrawn at anytime. Remaining monthly expenses of 50% is typically not used up in a single day. For simplicity sake, I assume it is evenly distributed (ie. you "withdraw" from the bank an equal amount every day) and hence on average, 25% of your salary (50% / 2) is in the account to help to reduce your interest (but they do not reduce your principle, since at end of the month, they are fully withdrawn out). Therefore, a total of 30% + 20% + 25% = 75% of your salary is contributing to reducing your monthly interest and principle.

In a less flexi loan where penalty is incurred when withdrawn, then 30% + 20% = 50% is contributing. And in a conventional loan, only 30%.

Therefore, the Mortage One loan is working out very well for me. On average, I am keeping more than 2X the monthly minimum in the A/C (eg. if I need to pay 1000/mth, then I maintain at lease 2000/mth), I withdraw my expenses only when I need them (eg. pay bills only when they are abt to be due, but make sure I pay in full the CC), and so far, after abt 5 years of repayment, my monthly interest has reduced to <50% of what I started out with. And all these, with less headaches in how much to plan for emergency fund, and how much to prepay in advance etc. I also got hit with something similar to b00n, where a family tragedy needed me to withdraw close to total 20K within 2 month, but spread over a few times, but accessing the money was a snap, and no extra charges incurred.

Finally, I do not think the Mortgage One plan is so suitable for businessmen, as it is unlike an overdraft where you can withdraw up to your original principle. In Mortgage One, every month, the portion that is paying towards your principle is "frozen" and is not accessible anymore. This is how the bank reduces its risk. Therefore, towards the end of the loan tenure, you can only withdraw a small portion of the loan. For businesses that require more flexibility, other loans might be more suitable.

I am a new member here ... did u guy really understand your own loan package ?

* Do you know how to analyze the Loan Advertisement?

* Do you know how to analyze the Loan Quotations?

* Do you know how to analyze the Letter of Offer?

* Do you know how to analyze the Loan Agreement?

* Do you know how to analyze the Loan Statement?

*Do you know how to analyze the Principal Reduction?

*Do you know how to analyze the Advance Payment?

*Do you know how to analyze the Excess Payment?

*Do you know how to analyze the Late Charges?

*Do you know how to analyze the Revision of Interest Rate?

Please Don't ignore this Problems and Please read this Web page
http://mortgagereduction.com.my/blog

The blog looks familiar.....hhhmmm.... SUPEX related?........Bryan??.......

OMG.....they r finally here.............