Currently taking Public Bank housing loan BLR-2% throughout whole 10 years tenure. As per title, which option is better to clear off my house loan? Will it be cheaper in the end if I pay extra every month or pay off 1 lump sump after the 5 years lock in period. Any advice? Want to plan ahead my financial income for better usage

pay the earlier the better. work on ur calculator u will notice.

I pay extra every month .. you hedge BLR increase

You can actually pay up to certain amount during the 5yrs lock in..

i think
AMBANK allows you to pay up to 90% of the loan amt (anything less than 10% balance, you'll have to pay some fee)
UOB i think u are only allowed to pay erm, certain number of installment...

So if u have the $$ now, throw the max u are allowed to (without getting penalty)
Hmm, even if u get penalty, it is only 3% mah.....

put it this way, whatever u pay extra every month will help to reduce ur loan interest next month n next year, just imagine how much u save from putting extra 1000 every month in 5yrs time compared to lum sump of 60K at the end of 5yrs.

Take flexi loan and put a lump sum of money into the account every month.

i noticed flexi loan so far is the best..

If you have the money to dump in the current account to offset the interest that is ...
Generally those Flexi loan will have a higher interest rate compared with conventional loan.
For people with lots of money coming in and out all the time, Flexi loan is good.. as even if the money is in the C/A for a day, it still reduces the interest by a bit ....

But if do you not have the $$$ to dump in the C/A (or do not need to withdraw the extra money all the time). Conventional loan has lower interests.
But ... 0.1% or 0.05% interests make not much differences if you are planning to pay extra every month (unless your loan amount is millions)

withdraw all from EPF account 2 n make lump sum payment is another option. Continue paying normal installment though...

So, it is actually possible to pay more than what is monthly stipulated in a conventional loan right? And the amount may vary as long as it is more than the minimum?

Yes yes, it is possible to pay prepay. T&C applies.
Different bank different T&C.

Example, for properties under construction where bank haven't really disburse the full loan amount, some bank do not allow you to prepay during that period.

And ofcos, prepayment amount... T&C applies too... i just came across a brochure stating atleast RM100 above minimum payment (forgotten which bank, and i believe the brochure might be outdated)

Too bad I'm taking conventional loan. Not a flexi-loan.

this week i talk to alot of bank about my home loan, most of them now does not need you to write in before giving the extra payment. but they have requirement about the amount of the extra payment to be like in the multiple of hundreds or thousand depend on their policy.

Due to competitive nature of Home Loans, you can opt for zero moving cost home loans which offer a better interest rate compared to the one you took and opt to move from conventional to flexi. With zero moving cost, they usually have a clause that you can't settle the loan within x number of year (usually 5 i think). But what you can do is move the $$$ u wanted to use to pay off the loan to the current account, and basically dont pay a single cent of interest for as long as your loan tenure is. The cash in the current account can serve as quick liquid asset in case you need it for investments etc. So with flexi loans, its better to leave the cash there instead of paying it off.

Every bank has their own T&C and policies, so .. choose the one with a suitable T&C/policies which suits your lifestyle better instead of going for a loan which offers 0.05% lower interest but with a T&C/policies that sux.
The 0.05/0.10% makes not much differences. Sometimes the fees/penalty imposed is more than the differences of the 0.05/0.10%.

sometimes getting a Non ZEC with better interest (somewhere around 0.2%) where the legal fees are financed to the loan is actually a pretty decent deal too.

I heard if u pay extra every month the bank will charge u penalty....true or nt????

knwong,
honestly, conventional loan is better than flexi loan.
usually flexi loan interest rate will higher & u need 2 pay the service charge for the current acc per yr..
there's not such thing that u loan rm100k and dump in rm100k in the acc, there will b no interest charge.. anyway, u can try it if u think got such thing.. juz spend some time then u will c the truth..
i'm taking public bank loan also.. how much u afford to pay extra per month?? there's actually a few way 2 do it in order 2 save the interest if u understand ur agreement t & c. (pm me if u wana know more detail)

ed0gawa,
regarding the zec or fmc, really have to ask very detail.. cos some bank although they say zec, but they have limit.. if more than that, they will ask u to pay urself.. exp. the total lawyer fees, stamp duty, bla bla bla is rm8k, some bank will help u 2 pay rm5k only, the extra rm3k u have to pay urself. then u have 2 think... zec better or without zec worth it?

Thats exactly what I am doing. I pay 0 interest every month. Each month they auto deduct the installments from the current account and all 100% of it goes to the principal. Its a benefit you enjoy with flexi loan not conventional. No other hidden costs and if there was, then I'll just settle the loan.

I'm very curious about your statement...coz I'm looking housing loan now...I had chekc CIMB, Alliance Bank, PB, Citibank, OCBC, HSBC, AM Bank....
some bank charge is cheaper like PBB but normally is RM10 each month and need to pay RM200 for open current account(not returnable).

Exam: If I plan to get a loan RM150k for flexi loan(daily interest) with non zero cost...
Prinsipal housing Loan RM150K
Current Account: bank in RM50k,

They told me that the prinsipal housing loan will deduce to RM 100K...and base on your RM100K to do interest calculation.
then you will shorten you housing loan period and also deduce the interest.

Since it is daily interest, you can bank in your salary into that current account to deduct the daily interest.
When you need money, just withdraw it anytime in anywhere.
Normally bank will tied up 5 yr but no set any amount for your prepayment.

Accidenlly, you hv Rm150k, You can bank in RM150k into your current account immeadialy. Don't hv interest charge.
but you will need to pay RM 10 for everymonth until 5yr.
After 5yr, total pay is RM600.
Still reasonable.

That is what they told me....
Anyone of you find out any HIDDEN problem?
As I know that, Bank have the right to change the BLR -/+ X%....mayb few year they change your BLR +2%....

Thx.

http://www.myrealestate.com.my/viewtopic.p...der=asc&start=0
http://www.myrealestate.com.my/viewtopic.p...der=asc&start=0

It is make me very very confusing.....
is it good or not? mean Alliance Bank just reduct that particular interest on that month?
Or should we find the loan which is only one Home Loan Account rather than 2 account (Home Loan account and Current account)?
what is the different if our daily interest reduct from our Principal Loan instead keep in Current account(Home Loan).?
Can anyone explain more?

As long as its flexi regardless of whether one a/c or two a/c it already saves you interest. It just that different bank has different method of setting up their flexi loans. If you have time you read a couple of more times the post again and you would understand the way it operates.

geekine90,
loan : 100k
current acc : 100k
interest : 0% ( exp: normal 6%, bcos of the 100k in current acc, so 0%)
repayment : rm600 monthly
tenure : ?? ( 100k / 600 = 167months settle )
outstanding : ?? ( exp: already paid 10mths, means 100k-600*10 = 94k )

is this the calculation u doing?
i was thinking that way also, but the truth isn't that.. although the statement v receive monthly is written that way ( interest charge ).. but the outstanding still remain like conventional loan. u can try 2 check it out.

This post has been edited by smcg: Jul 3 2008, 02:45 AM

The outstanding amount reduces by the full monthly installment amount each month when the auto deduction from current account happens. Previously, a portion goes to interest, and another to the principal to reduce the outstanding amount. Now 100% goes to the principal and 0 goes to interest. Basically, the outstanding loan balance amount now reduces pretty fast as fast as your current account reduces heh. For my case I don't get charged for a monthly fee as well for current account. I believe there is a small yearly service charge like normal current accounts, but I haven't noticed it (gotta look through past statements to confirm). My flexi loan is with Citibank btw.

if u say u never get charged except for the monthly service, then the calculation will be same like what i post. which means the money u pay for your installment should b 100% deduct ur principal loan amount. but anyway, if u got time, maybe u can go to citibank n check ur outstanding balance instead of just referring ur past statements, then maybe got some different. cos any question, u can ask them on the spot.
anything just pm me..

This post has been edited by smcg: Jul 4 2008, 12:49 AM

Well the outstanding loan amount is clearly printed on each months statement. It reduces by 100% of the monthly installment payment monthly. So its pretty clear what happens to the outstanding loan amount each month. Also I've confirmed that there is no monthly service fee that I get charged for. My experience with flexi loan has been great. I just hope that with my track record of denying the bank from making lots of interest $$ from me, that future HP loans I apply for wont be impacted.

thank's for sharing.. may i ask u something.. according to your calculation, how many months u think u can settle the loan??
my sister-in-law also using citibank flexi loan. but the monthly statement he pass 2 me and the inquiry from citibank is totally different (outstanding amount).. that's y making me so confusing n doubt the bank charging... i'm actually looking someone who loan 100k n dump in 100k to clarify the problem.. since u r doing that way, can u do me a favor?? get the inquiry from citibank beside referring the monthly statement to prove our flexi loan calculation is correct..

interest is calculated on daily basis isnt it? using financial calculator... u will save more by paying more monthly compared to one lump sum after a period of time.

Actually the number of months till you settle the loan totally flexible. If you look at the statement, the calculation will be:

Outstanding amount - monthly principal deduction = New oustanding amount

Number of months will be outstanding amount/monthly principal deduction

But its not so relevant as you can settle anytime if you wish.

Attached is my flexi june statement which I hope makes things clearer for those who are opting for flexiloan.

Btw. The 0.12 interest i got charged this month is because I used the current account to make an instant online payment for my credit card and then topped up the current account with a check deposit to avoid credit card late fee (lost track of time last month heh). So that was like a 1-2 day gap where by current account balance droped below the loan amount. Else its usually 0.00 instead for interest.

This post has been edited by GeekinE90: Jul 5 2008, 08:20 PM


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According to BNM's statistic, conventional loan save a lot more than flexi loan. Imagine you have 100k in your account and your car is acting weird, breakdown a lot, will you endure the agony of a frustrating car or sell then buy a new car? Yes, conventional you can withdraw but the hassle of 1 week notice and RM50 per withdrawal will force you to do it when you really need to. But Mr. GeekinE90 is special case though.