I'd need quite a large sum of money for education purpose soon, and I'm wondering how this home refinancing thing works. I get pretty confused as in some threads, some claims that their BLR are around 1.8%, while other threads it's around 5.55%. I guess these both are totally different thing, but I just couldn't understand.

My house is at least 20 years old. How do they determine the market value of it, and how much will the banks be willing to borrow? How do I calculate the interest rate and installments per month?

Say I'd like to borrow RM240k, in 20 years term, how much would be the monthly installments, roughly?

This post has been edited by -Teddy-: Mar 1 2009, 09:05 PM

Hi Teddy, u need to make sure a few things are in order :

1. U have a job today that pays you min 3.6k a month now

2. Dont quit your job yet until you secure and executed your refinancing package

3. Your house value is min 300k today.

I don't have a job yet, my mom does. My neighbor sold his unit a year ago at 270k, don't think it will reach 300k anytime soon. How about the interest rate?

how old is your mum and how much does she earns today?

43 years old. I'm unsure but what if it's 6k? Would it be good enough?

Optimistically speaking and without knowing the debt levels she has today, if its 6k p/m and she's 43, she'll barely qualifies for a 200k max loan for 10 years. She has to make sure that she can keep her job over the next 10 years or she'll loose the house.

suggestion --> You should opt for a much cheaper education pogram, and work pt to fund your studies.

What about for 20 years?

What if I already have the amount needed to pay the installments for 2 years? Then after 2 years I'll graduate and get myself a job with decent salary that will be able to pay the installments without much problem? All I need is just to get the loan out and I should be good to go.

to know your house market value

Call the bank, tell them you wanna refinance.
Let them have your address, the size of the house. Any renovation done.

Or call valuers directly providing the same information.


to know if you are eligible for the loan
Maximum loan tenure is 30 years or up to age 65 (most banks)
A very simple way to calculate if your income if enough or not

Current commitment (car/houses/personal loan/credit cards/OD etc) + monthly installment for the house = 50% or less than your monthly income (generally it is calculated that way by banks)

btw, pai .. how did you come up with the conclusion of <RM200k?


Anyway, for TS information

Loan of RM240k for 20yrs tenure @ 4.5% interest rate ...
Will come up with a monthly installment of RM1520 +-

And BLR = Base Lending Rate, which is 5.95 now.
BLR - 1.8% = 5.95% - 1.80%

The minus part are 'offers' from banks. Each bank differs

This post has been edited by ed0gawa: Feb 28 2009, 01:32 PM

that sounds very optimistic..you do know that we currently have 60,000 unemployed grads rite? what happends if u dun manage to get a job with "decent" salary after you graduate...can your mom sustain for 1 year while u look for a job? how about 2? 3 years?

sry for being blunt, just giving you worse case scenario

I guess my mom can sustain the installments for quite a while. My course will take only (hopefully) 18 months, and if the interest rate is low enough, my savings can sustain the installments for 2 years or slightly longer. By that time I should be able to get a job hopefully.

I'm willing to take the risk.

then go for it, education for yourself is probably the best investment

hi Teddy,


have you look for other alternative?

Interest rate for housing loan might be at 26 years low for now, but remember it fluctuates with global economy conditions.

If you are looking for ways to finance your education fees, i suggest you look at education loan, or just ask is there any company wiling to give schoolarship.

Or u can work out an agreement with the company. Take their schoolarship, in return you'll work with them for a period of years after graduation.

It not going to be easy with the current recession taking its toll on the world but i think its better if you give it a try. For the time being if you still wish to re-mortgage the property you can just proceed with the application first.

No harm sourcing options for the time being.

Let me know if you need any help. You know how to get me.

This post has been edited by merce: Feb 28 2009, 03:21 PM

Yup, I already know what alternatives they are for me now, but I see this as my best option.

I wanted to become a pilot, and MAS and AK is having cadetship program where they pay the course fees for you, and in return you will be bonded with them for 15 years after graduating while your salary will be deducted to cover the course fee back. The thing is places are very very limited, therefore competition is high.

What I can do is, join a local flying school as a private cadet, then while at it, still apply for the airline cadetship. If I got in, the airline will pay the fees while I continue my training.

If I were to go for another course first instead of piloting, then apply for airline cadetship while at it, I would have waste a few years, plus the fees for the alternative course and living cost. By that time I think my savings will go thin and might no longer be able to pay for the installments with it, if I were to still refinance my house after that few years. Plus, the fees for piloting would probably be raised into an extremely unaffordable level, from 2006 to 2009, the fees has been raised to near 100k, that's crazy.

jwrx is right, education is the best investments one can have as it will affect my entire life. I would rather take up a loan and struggle for several years to make my dream come true than choosing a cheaper course and suffer for the rest of my life doing something I don't like.

Anyways, thanks all for the valuable information. Much appreciated.

P/s: I'm not sure if I'm right, but I see education loans offered by banks have higher interest rates than home loans. On RHB's study loan page, it says "BLR + 1.25%", meaning 5.95% + 1.25%? If yes, it make no sense to take up a study loan. Anyone mind to enlighten me on this? Thanks.

This post has been edited by -Teddy-: Feb 28 2009, 03:43 PM

The odds of a 43 years old lady, just decent income level, very bad global conditions, to get 90% MOF in todays environment is very slim.

I think banks will most likely fund max 70% MOF (assuming 270k is the fair valuation) at 15 years tenure. Monnthly installments should be approx 1.6k p/m.

Well, refinancing or mortgage has lower interests rate because you are mortgaging your house.
If you don't pay up, say bye bye to your house.
While education loan, erm... they give u the money while asking for nothing as collateral that explains why the interest rate is higher.
Banks says bye bye to the money

Pretty true.... with current economic situation, it is really hard to get a loan ...

But ofcos, TS might get lucky as well
Assuming his mother work is stable.
Has a favourable track record.
The house is at favourable location.
Bla bla bla...

Well, never try never know. Since TS had actually 'planned' a lil ... what i would suggest is try to apply for it. And see how it goes from there.
Being approved does not means that you must sign, TS don't be duped into signing the Letter Offer or Agreement, you still have your rights as consumer

RHB Study: http://www.rhbbank.com.my/personal/loans/study_loan.shtm

The first package requires collateral, but still the interest rate is BLR + 1.25%. But then they can loan up to 100% of property value.

You mean I can apply from all the banks first, but only sign the one with the best deal?

flight school huh?

i used to dream to become a pilot before, but unfortunately i dont have the privilege of being the child of a rich family...

yeap private flight school tuition fee is ridiculous! couldn't agree more.

give me a call next week and i'll see what i can do.

for the time being, give me the details of the property ie adress, built-up, renovation. i'll check the market value for you.


Regards

Woo... sry for that, didnt knew that there were collateral needed...

For 2nd question, yes.. you can apply from 10000 banks and only choose the best deal.
But there are cons too..
Let's say you apply bank A, B , C ,D ,E

Bank A rejected/lower the margin before B C D E makes their decision. There are chances the other banks will follow suit. (sometimes)..

But at the same time, you can tell the banker, ' Hey, XXX bank is also processing my loan, so you better be fast and give me a better deal.. '
something like that...

When should I start applying for the loan if my intake is late. Would it be stupid to apply now if my intake is in November 09? If the loan is approved, but I'm yet to be in school, then I have to start paying installments already while sitting at home. That will thin my savings that are intended to be used to pay installments while looking for a job after I have graduated.

If I apply too close to my course commencement date, I'd probably have to fork out some money first to get into the school. Then if the loan is rejected later, I would have no money to sustain the tuition fee and will be kicked out of the school.

Is it possible to apply now, don't take the loan even it's approved, and only take the loan when I need them? Will the previous approval still be valid?

Mortgage transaction requires 2-3 months to complete, till the disbursement of money.

If you are lucky then it will take less then 2 months, but that hardly happens.

Application may take from a couple of days to a week time for approval.

After that it might take a couple days more for the officer to generate the Letter of Offer and present it to you, assuming that there are no further amendments on the terms and condition.


For semi-flexi account;

If you really want to remortgage the house for money, apply the loan 10 or 20% higher from the amount you desire to obtain. Once the money is disburse to your account, use the 10-20% extra money to pay as Advance Installment or request a Standing Instruction, to cover the installment for a year or 2. For the remaining money, dump it back as Capital Prepayment/Withdraw-able Prepayment. Then you will have the money ready when u need it. Ask your officer to help you plan all these. Different banks has different ways of playing with the account and their features. Check for for withdrawal charges and whether their Advance Installment offsets the principal or not.

Now for a full-flexi account;
This is a different approach. With the money disburse to you, dump everything back into your loan account (or current account if they have link accounts) Ask for a Standing Instruction for your installment. This would off-set the principal and minimize your interest until you utilize the money for study.

Hope the above helps

Good luck.

This post has been edited by merce: Feb 28 2009, 10:23 PM