Hi everyone, my brother had signed the Letter of Offer from a bank (Bank A) for housing loan but he haven't sign the loan agreement yet as they are still preparing the documents. He is refinancing his house loan with different bank btw.

He also submitted request of interest rate reduction to the bank (Bank B) that loaning him housing loan. Recently, Bank B called him up to offer him lower interest rate, just a bit higher than Bank A.

So, can my brother cancel Bank A's offer and continue with Bank B? What are the consequences? Please help! Thanks!

This post has been edited by Ice.Cold.Heart: Dec 18 2008, 09:26 AM

Just write to Bank A informing them that you are cancelling the Offer due to unforseedn circumstances. Your legal document is the loan agreement and not the letter of offer. So as long as you have nt sign tht piece of paper you are fine

just that easy? but Bank A had sent an evaluator to my brother's house to evaluate the property's market value (part of the process to prepare loan agreement). will bank A charge my brother on that? will bank A blacklist my brother ar? sorry for asking so many questions.. my brother seems to be worried just want to comfort him.

most probably u will have to bear all those cost.

i think mostly after they start with those document.. u cancel.. they will charge u

your offer letter will state what the penalty is. please go through it carefully. you should have gone through it before signing it. if i am not mistaken, standard chartered charges a 3% penalty.

anyway, no harm naming the banks. at least then people who have had experience with those banks can tell you what they are like when it comes to matters like this.

afaik, they haven't ask my brother to sign loan agreement yet.

I will have to ask him first. the penalty of the Letter of Offer is different from penalty of Loan Agreement?

Btw, Bank A is Alliance and bank B is CIMB.

I think they will penalty your bro so i think not really worth.

there will most probably be a cancellation charge. So see whether is it worth or not la, if the savings > cancellation charges, then still ok. That is why it is always a disadvantage if you only go to 1 bank to ask for loan.

In our case, we don't promote any banks but 1 application is sent to our 10+ panel banks (local & foreign). So one shot you get all the banks reply then you can decide for yourself. So cases like your brother can be avoided. Anyway current the lowest rate is BLR - 2.5% ie. 4.0% so if any bank is offering higher, then you know that is too much already. Ask your brother what is the offer he is getting at the moment?

This post has been edited by DannyOP: Dec 18 2008, 02:12 AM

Let me make it clear in case u are confused with my brother's situation.

My brother had been servicing his current loan for several years with CIMB. He is thinking of refinancing now. He did went through ur method and he picked the bank that offered the lowest interest rate, which is Alliance. He also used the Alliance's Letter of Offer to request CIMB to reduce the interest rate for him.

At first CIMB don't want to reduce for him, so he signed Alliance's LO and appeal CIMB again. God knows CIMB called him up after he signed Alliance's LO and offer him similar interest rate. So he is in a dilemma now.

Btw, he told me Alliance offering him BLR - 2.2%. His CIMB offering him a bit higher but he can save from moving cost and penalty because his loan still in lockin period.

since CIMB replied late, just ask your brother to tell them that if they still want his business, then ask them to absorb the penalty charges. Your brother did not do anything wrong since everyone in his same shoes also would have picked the bank with the lower interest, in any case 2.2% is still not that good offer.

Now he has 2 choices :-

1) Stick with CIMB and bear the penalty charges from Alliance
2) Change bank and bear the lockin charges

I would think since he has chosen Alliance, even at BLR - 2.2% it is still a good offer compared to his previous loan. Actually he does not lose out, just that he might have missed the opportunity to escape the lock-in charges.

This post has been edited by DannyOP: Dec 18 2008, 10:24 AM

hey DannyOP, that makes sense. thanks for ur advice~

hope my bro will pick the best choice!

no penalty. as long as u havent paid a single cent to the lawyer to prepare the loan agreement.

not true, when you sign the application form for certain banks there is a clause stating the penalty charges upon cancellation.

This post has been edited by DannyOP: Dec 19 2008, 02:03 PM

Yes there'll be some charges if u cancel after signing the offer letter meaning that u're accepting their offer and signing the loan agreement is the formality. U can think of it as kinda MOU and JV agreement situation.

There will be at least a minimum admin charges, valuation fee involved if u cancel. Which in your case i think it will definitely be lesser than the penalty from lock in. So I think u'll have to bear with it and learn your lesson. I don't think CIMB will absorb the charges from Alliance, u can try but a lot more easier said than done...

Hi I am first time buyer. Would like to check during the signing of bank letter offer, is it a need to have lawyer together? Or lawyer is just needed when signing for the loan agreement? Thanks.

letter offer no need... get office to explain..
most important to ask, if i sign later i dont want to proceed, what happen?

I want to cancel the housing loan from RHB bank but I have already signed the LO. Is there any penalty?

sure have, check the tnc....

for PBB, u need to pay RM2k


Attached thumbnail(s)

what rm2k? But but I haven't sign the loan agreement wor.

for PBB, although u neither sign SPA nor Loan Agreement, but once u since Letter Offer, u need to pay RM2k

This post has been edited by beyond86: Aug 1 2014, 06:35 PM

Signed LO d? Mati la. Penalty if u wanna cancel.

deleted

This post has been edited by rockrockrock: Aug 6 2014, 11:17 AM