Aaaah Thanks for the explanation! Hmmm, I guess I might just do that..

Thanks for the info! I might just sign up for the 200k.. And hopefully my budget will allow me to continue paying for 30 years!

Follow buggies advice take 2 loans 100k each instead for exiting strategy.

tq.

Bro, Your budget will definitely allow... remember, your income will also grow thru the years so it's only gonna get easier. By the tenth year, 1,200 will be chump change to you.

Be it business or makan gaji, if your income is stagnant for the last 5 years, you might wanna rethink your career path

When I was a fresh grad, earning 2k per month, i could still make the 1,200 payments. Now 15 years later, no sweat already.

So beginning a bit susah la... ketat pinggang sikit. But stick it out and the rewards will come.

Bro, Your budget will definitely allow... remember, your income will also grow thru the years so it's only gonna get easier. By the tenth year, 1,200 will be chump change to you.

Be it business or makan gaji, if your income is stagnant for the last 5 years, you might wanna rethink your career path

When I was a fresh grad, earning 2k per month, i could still make the 1,200 payments. Now 15 years later, no sweat already.

So beginning a bit susah la... ketat pinggang sikit. But stick it out and the rewards will come.

Just to add to what buggie had said,

Using his numbers with assumptions of 7%+1% divident, the methods are:

1. Pay only 1 year : Capital = 14.4k, Profit = 185.6k, Return = 1300% over 30 years, CAGR = 9.16%
2. Pay for 30 years: Capital = 432k, Profit = 1100k = Return = 254% over 30 years, CAGR = 4.31% (using year = 15 since payment is made every year up until the 30th year, not lumpsum at the start.
3. Save without loan 1150/month for 30 years: Capital = 414k, profit = 960k, Return = 232% over 30 years, CAGR = 4.07%(using year = 15 since payment is made every year up until the 30th year, not lumpsum at the start.

You will notice that if you service your loan faitfully for 30 years, you WILL get more money compared to saving monthly without loan (140k more), but some people might not be attracted by that number since the loan can take up your DSR quota.

If you only service for one year, your CAGR is much higher (more than twice), but since your capital is small (only 1st year payment), your final value also small.

At the end of the day, it depends on what your objective is. if you want to hit the 1M mark as soon as possible, use method 2. if you want to maximize your return, use method 1. With method 1, theoretically you have RM1150*12month*29 years extra cash compared to method 2 that you can either jolly or put in a higher return investment, so there's possibility for both win/lose.

This post has been edited by exitsortie: Nov 24 2015, 06:02 PM

What exitsortie explains here is totally valid. It all depends on your goal.

And your goals will be forever changing as you get married, have children, grow older, unwanted emergencies happening, health status, etc...

ASB loan is only 1 investment vehicle. There are also potentially higher returns investments albeit higher risks such as property or stock market or even your own business. And you have a finite amount of resources. So choose wisely.

For me, one of my goal is to reach 1m in liquid cash as soon as possible and ASB loan is just 1 way to get me there.

Having said that, adjust as your needs changes. If you find a good deal on a property and ASB DSR is getting in the way then by all means surrender it and get the property then revisit when you have the means again.

Agree.
But i advice to diversify the investment. At least there few other investment can cover one another if goes wrong.
I did invest property a lot too. It took me a while to get through 2+ props along with ASB loan. Bank dont like it.

thanks asb sifu
now my commitment is quite tight that i have to serve to 2 house mortgages.
i am thinking to take 100k first

to maximize / optimize the OPM and the loan, do u guys settle in the middle or fully serve the loan tenure till 30 years?

Yes. They usually surrender after 2 or 3 years and get back the amortized value of the insurance and installments paid. Then they retake the loan again for the full 30 years again.

The monthly repayments remain the same, dividends untouched and the loan extended They get a few thousand back to reinvest or top up the ASB if not full yet to reach the max faster

Basically like remortgaging .... Very technical stuff.... goes all the way down to the timing of these transactions so as to not lose even 1 month of pro rated dividend!

Thanks bro buggie for sharing

Hi,

I am interested to take asb loan (200k) after some readings done. Just wondering if is it good to take now, or early next year after they announce new blr (i am noy sure hows the blr things work).

Also, which bank is good for the loan?

don't think the BLR would make much difference. For me the earlier you take the loan the better.

As for which bank, i've always been using MBB, but i heard CIMB is quite aggressive now trying to sell this product. Suggest you check them out as well. Things to look for is Monthly repayment (lower is better), Lock in period (Less/no lock-in is best) and Insurance

Hope this helps

I tot take loan from any bank wont have any diferent.

I mean if take 100k for 10 years from MBB or 100k for 10 years from CIMB, the monthly payment is same, no?

If I just save 1200 / month, without taking loan, using your same basis of div each year, how much Will I expect to have after 30 years?

to quote exitsortie,

"Save without loan 1150/month for 30 years: Capital = 414k, profit = 960k, Return = 232% over 30 years, CAGR = 4.07%(using year = 15 since payment is made every year up until the 30th year, not lumpsum at the start"

But at 1200pm, by the 14th - 15th year, you would have deposited 200k. So i'm not sure if you will be able to continue after you reach that point since 200k is the limit. Someone please correct me if i'm wrong



This post has been edited by buggie: Dec 7 2015, 01:23 PM

hi bro, care to explain more? my lasb is already 3 years, and 25 yrs term if not mistaken.. should i surrender and retake new loan? is it better than serving till end of loan period?

if u found better loan rate why not?
if the current rate still the best i think u just continue with it.

Basically, the 1200 monthly payment to the bank is made up 2 parts - principle and interest. Principle belongs to you and interest belongs to the bank.

Usually at the beginning a any loan, the interest portion is higher than the principle. and towards the end, principle is higher than interest. for example, your first monthly payment will be made up of 200 principle and 1000 interest (not actual figures.

So if you terminate the loan after 3 years, you will get back the principle portion of the monthly repayments for the last 3 years. This should come up to about 7k upwards i think. The interest portion bank keep la.

So some investors will surrender the loan every 3 years (or 2) and reapply immediately. They get 7k to use as they please or to reinvest in ASB2 depending on their financial goals.

The year end dividend is unaffected because the loan is re-taken. but your loan tenure will reset to 25 years/30 years.

If you're young, and monthly repayments are the same or lower then do it.

This post has been edited by buggie: Dec 9 2015, 01:21 PM