Dear all,

Need some advice...

Planning to buy a double-storey house still in construction. Developer will take 2 years to complete it.
Details of the purchase are as belows:
Selling price: RM 400K
Margin of finance: 90%
Plan to take MRTA
Duration: 20-25 years

My age: 34 years
Income: minimum RM 7.5K

I am a government servant. So I have options to choose from bank or take govt loan.

If govt loan, interest is fixed 4%. But will have to 'insurance' from one of their panels (something like MRTA i suppose)
If bank loan, currently rates I got is (RHB, Public Bank) BLR -2.2%, which is quite similar to govt loan anyway.

So... any advice which to take? My thought is since bank rates looks quite good now (my first house was BLR +), quite similar to govt loan, might be a good thing to take bank loan. Then can keep the option of govt loan to buy a next property when bank rates are not so good like nowadays.

I have used Alliance Bank's Save Link loan before. Any bank these days offer BLR -2.2% or better, with similar facility (interest based on remaining principal and further offset by balance in current account)?

How much will I need to keep aside for agreements (loan, S&P) and MRTA?

Is taking a longer duration better?

Wow that's a lot of questions. Thanks for your help.

Michael

This post has been edited by mhfw: Sep 14 2010, 10:02 PM

Hi Chris,

Thanks for the detailed input.

So you're saying, if just buying a house and get over with it, better to go for govt loan and get it over. If want to invest more properties in future, better to get the good BLR-x rates now, keep govt loan as backup for future use right. Hope I understand it correctly.

From what the officer in govt loan explained, govt loan is based on mortgage, interest calculated on reducing principal. Have the option to dump in money as well to shorten tenure.

Shorter tenure and pay less interest sounds more interesting. But will limit cash flow. Hmm.

Michael