Fair warnings to the young bumiputra graduates. If you are thinking of buying a property in the next 2 years, do not get the ASB loan yet. Otherwise, I am all for it as after 2 years the dividend from ASB can be used to offset the loan commitments.

My general advice to young people who havent got a house and IS PLANNING to get one within an immediate future (2 to 5 years) is to avoid getting the ASB loan.

First of all, the loan will appear in your CCRIS and it will be considered as your commitment by all the banks except for, and with great credit-record on your side, the bank you took your ASB loan from.

The dividends from ASB can be used to "cancel" the commitment from the ASB loan, but most banks only accept an average from 2 years return, meaning if you take the loan today (at the end of the year) your average 2-year return will be lower come 2 years from today, and for those who havent received the dividends for 2 years in a row wouldnt be able to use it the dividend to "cancel" the ASB loan commitment.

A house is a necessity, an ASB isn't so much.

Remember, it's always important to cater to your basic needs of:

1. Food/drinks
2. Clothing
3. Shelter

And;

1. Basic 3 to 8 months savings as an emergency fund
2. Insurance
3. Investment.

Even as a mortgage broker I sometimes tell my clients to not buy a house before they have their emergency fund and insurance already set in place

This post has been edited by wild_card_my: Nov 18 2014, 02:31 PM

I may be biased since I am managing a lot of funds for my clients and none of them involves ASB and they are earning more than 8% per annum anyway:

1. My advice would be to cut your loses, and get out while you can. You will incur some loses but your cash flow would be in better shape especially when you dont even yet have a house to stay. If you keep on renting for the rest of your life, the rental prices will increase along with the capital appreciation and you will see your loses there. Ive done the calculations on paper comparing ASB loan and housing loan for rental before on THIS VERY THREAD a few months ago... look it up if you will

2. For short term periods (2 to 5 years) the differences between investing directly into ASB based on the instalment that you would have paid to the bank for the ASB loan are not too different (not to mention the upfront cost of insurance and what not). So once, or if you decide to cut your loses by surrendering the the ASB loan, you can always invest to ASB directly. By using an ASB loan you are depriving yourself other loans that are more crucial such as the housing loan, one that should be a priority for a house-less lad like yourself.

I mean, if you already have 3 or 4 houses, 1 for staying and the other 3 for renting or flipping, then it would be very apt for you to weight the difference between getting an ASB loan and buying another property using a housing loan, but hey what did I say about this house-less lad again?


All in all, I blame the bankers who are less concerned about the clients financial well-being, lack of empathy for the working classes, and commission-minded predatory tactics. ASB loan has its pluses and minuses, but you wont be hearing the latter from the bankers.

This post has been edited by wild_card_my: Nov 18 2014, 02:45 PM

Wait, how did you know that the ASB2 return will be similar to ASB? It's a new fund and it hasn't even shown its first 5-year return yet.

Even after the annual report, we still have to look for at least 5 year investment performance. ASB tend to give lower dividends when the unit trusts are giving higher returns, and maintain the dividend rate when every other UT funds are losing their money. What does that tell you?

Just a gentle reminder to you lots that if you are planning to buy a house withing 2 years, refrain from getting the ASB loan.

The ASB loan will be recorded in your CCRIS as are other loans, and it will be calculated as part of your personal commitments. As such, for most people it is either buying a house with a loan or buying 200k ASB units with a loan, however, you cannot LIVE in the ASB can you? ANd you still need a house and you will continue renting.

I'm honestly tired of seeing clients who couldn't make it for their mortgage due to their ignorance on this little fact. ASB loan agents like we have in this thread will only talk about profits/returns and interest rates but never really care about your financial security as a whole.

You could, but you would already have paid the insurances and in the event of not realizing the LASB getting in the way of your mortgage application, by the time I come back with the results of the failed mortgage application, the client would be left with little time to terminate the LASB and come back to me with the letter. Keep in mind that after paying the booking fees, the client would have 2 working weeks (3 calendar weeks plus minus) of paying the rest of the 0% deposit. Time matters and if you do not know about this it will stress you up.

During the mortgage application interview I would always as if they had an ASB loan, and if they do I would include the commitment and they will usually turn out to be getting in the way of the mortgage application. And most of the time they would express their disappointment of their "bankers" for not highlighting this little fact.

So I am doing that now. I doubt most people know about it due to the amount of cases that I am getting and the ceaselessness of these young people. I dont blame them though, I blame the LASB agents who are too aggressive thus and thus overlooking these important points.

As for 2 years, I mentioned that because most banks would consider your dividend from ASB only after 2 years, and this dividend can be used to cancel out the commitment generated by LASB

This post has been edited by wild_card_my: Nov 27 2014, 10:56 AM

You are correct, but as the person who see young people everyday to interview them for their loan application, it's disheartening to see that not many of them are aware of the pitfalls of an ASB loan. They never realized that it would get in the way of their loan applications. As such I posted here for their very own awareness because I am sure many of them are scouring this thread.

You would be surprised. Sometimes CCRIS problem, CTOS problem.. the worst is the ASBL problem la, because by right a number of them would already get the loan if not for the avoidable ASBL problem.

Month 1, year one. How to calculate:

Monthly bonus dividend = [ 1 months / 120 months ] x ASB bonus declared for that year % x lowest minimum balance of that month

Repeat this calculation for each month of the year, from January to December.

Why 120 months? Essentially, the bonus will only realize itself for the money that has been in the fund for more than 10 years! Because that money you put in 10 years ago would be getting 1/120 of bonus for that month for that year for the next 10 years, 1/120 x 120 = 1, hence you would realize the bonus is 120 months!

Dammit this is the most difficult concept to explain. I can explain pretty much anything, but ASB is a weird-ass fund.

This post has been edited by wild_card_my: Dec 2 2014, 03:46 PM

Wouldn't say lower, but the fund itself is less agressive. As such it may actually lose less in the event of a downturn. Mixed asset is akin to Balance fund by those UTs, their returns are definitely lower but more consistent on average (pulling this out of my ass here)...

True but it limits the number of banks that you can apply to. Not to mention that when buying a developer property, the nunber of empanneled banks may be limited. In my opinion it is an unnecessary disadvantage that adds stress to an already stressful process of purchasing a house

You can terminate the ASB loan at any time, even if there was a lock-in period, in which case you would need to pay a penalty. I dont know if you have such a clause in your agreement, please read you LO on this

You will probably get your money back and some. How to calculate:

Addthese:-
1. Your dividends earned for this year will be posted in January 2015
2. plus RM30,000

Minusthese:-
1. The total outstanding you have with maybank (would be a reduced sum by now since you have been paying the installments)
2. Penalty or administrative charges, if any

And Im sure if there was any insurance payable, it would have already been added into the total loan taken (that means you are borrowing more than just 30k, perhaps 30.5k). Or it is already deducted from your total borrowing (thus, you would own less than 30k ASB units). Whatever it is, you would still make some money.

Anyway, Ive been telling people not get the ASB loans unless you are prepared by knowing the pros and cons of ASB loans. But given that you are already earning a year's dividend, and can probably pay off the monthly installments using the dividend, why are are you quitting now.

Oh wait, 15 years is too short a tenure? You now think that you should have taken 25 years tenure?

Noted. But come january you will earn your first ASB dividend and you could simply use it to pay off your next years ASB commitment. Although Ive done some calculations, since you took it for 15 years your installment for a year is higher than the total dividend that you will receive (assuming it is at 8.5%)

Id say it is up to you, but let this be a warning to those so eager about getting the ASB loan that it's not all rainbows and candies. At least some learning is in place before subscribing for the ASB loan.

Yes it will. The same goes with your application for a mortgage

However, once you receive your dividends, you could use that as part of your income. If you need to buy a car ASAP I would recommend to hold-off on the ASB loan application for the time being.

No body knows what the reate is going to look like, but chances are it will be similar to what we have right now as far as the effective interest rate goes.

That is only for those funds that has been in there for more than 10 years. For those funds that were bought only this year gets about 1/120 * the number of months it has been in the fund.

It is true~

But you need to prove that the dividend has been deposited into your ASB book, or if you could show the ASB statement to prove the dividend.

Some banks require 2 years consecutive dividend for it to be considered as part of your income too.

Yeap, ASB dividend, just like any other dividend from other funds like Public Mutual, fixed deposits, Tabung Haji, etc, can be used as part of the income.

However, it is important to note that the income has to be proven. For those who subscribe for the ASB loan next year, for example, would not be getting the ASB dividend statement until January 2016, as such, the commitment from the ASB loan would be without any dividend to counter with.

Yes. Dividends would be calculated based on the minimum balance of unit for each month... divided by 12 multiplied by the announced dividend. Since it is close to the end of the month I suggest you terminate it on 1st january so you can enjoy full months dividend for December.