Hi guys,

Just thought that this may interest those who are having monthly mortgage commitment and/or would like to squeeze some extra money out of it.

1. Request for rate review (means reduction) or current rate. Yes, you can actually request for the mortgage rate to be reduced. Some banks require you to write in (eg Citibank), but some (eg StanChart and HSBC) can do it over the phone. Just a call and you pay less everymonth, or pay the same and get your property clean in shorter time. Caveat: once the new rate takes effect, you will be locked in a fresh holding period (3-5 years). Usually at 3-5% penalty rate. If the property is for staying/long term investment, why not?

p.s. Has anyone got calls from banks regarding pre-approved loan? I got called up a couple times, and (this is what they said) they mentioned that if I buy new/refinance my prop the loan will be automatically approved. I'm trading carefully on this (in case it's just a big frog jumping around) , but imagine if it's true!

2. Refinance. Similar to the above, this can be done during or after the lock in period, or even if the prop is completely paid off already. Usually investors use this method to wring more money out of the equity increase in the prop. For eg. you bought a prop at RM100k and took out RM90k loan, after 3 years, the prop's price has increased to RM130k. But you still have abt RM80k(assuming) of loan. So what do you do? Refinance, and if you get 90% margin again, you will get extra RM130k-10%-RM80k =RM37k. This is EXTRA RM37k for you for other investment. Please please please do not use this method to get the money to buy car, vacation or anything which will be used and gone. Remember, drink the milk, don't eat the cow! It's healthier too!
Caveat: You assume higher repayment, so make sure your cashflow is not restricted. If -ve cashflow is generated by this mean, don't do it. Also, fresh lock-in period. Do check out competing rates, it's just so attractive nowadays...

The cool thing is, if you don't need the extra money now, just park it there. Don't touch it, and you won't get charged the additional interest (only applicable to flexihomeloan). I'm a very strong advocate of flexihomeloan, whether for own occupancy or investment. I'd love to hear contradicting views, let's exchange opinions here.

Also, more often than not, it's NOT worth clearing the homeloan prematurely, especially if you are into investment. Use the extra cash (bonus, rental etc.) to invest.

tq for the advise.... will consider these ideas in the next budget planning

Good stuff boss

The problem with properties all these while was due to its illiquid nature. But now, that problem can be progressively addressed thru refinancing. This is really having you cake and being able to eat it too

1) I request for rate review >1.5 years ago before full penalty period and the bank reduce from BLR+0.5% to BLR-1.25%. Few months later, home loan rate drop to BLR-2.0% Should have waited couple more months. Penalty period readjusted from that day onwards for another 5 years. Only RM50 admin charge, no other penalty/hidden charges.

2) I always dump in extra & emergency money into my flexi homeloan. e.g. Loan 200k, dump in 100k which can be taken anytime with ATM card or write a cheque. Sometimes will take out for equity investment and cover back later, as long as I have enough to last me 2-3 years if no income.

3) Remember to withdraw from EPF, which can be done once a year (better than the monthly). All the time, BLR-x% is always higher than EPF dividends, so it is better to park the money in the house rather than retirement fund. Both are locked in and unlikely for you to spend it.

However, take note (for my case) BLR now is 5.55-1.25 = 4.3% interest, compared to EPF dividend of 4.5%. So it may be better to park money in EPF for one more year before withdraw).

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From time to time, I get calls from banks offering loans. Unless they can give better offer and absorb the penalty, I'm not moving anywhere. Have to stay another 3.5 years for the current loan to lapse the penalty period.

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I don't fully agree property is illiquid. It depends on how much debt / liquid cash is needed. E.g. If the house is worth 300k, loan is 200k and dump in extra 100k cash. If the 100k cash is sufficient for liquidity, there is no need to hold other FD/Cash in bank account (i.e. dump all into flexi homeloan)

Funny as I just had this conversation very recently, ie liquidity issues when comparing between equity and property investment. You're right, the solution is refinancing; whether or not you need the money, still go and refinance, then keep the money in there, liquidity issue solved.

"1. Request for rate review (means reduction) or current rate. Yes, you can actually request for the mortgage rate to be reduced. Some banks require you to write in (eg Citibank), but some (eg StanChart and HSBC) can do it over the phone. Just a call and you pay less everymonth, or pay the same and get your property clean in shorter time. Caveat: once the new rate takes effect, you will be locked in a fresh holding period (3-5 years). Usually at 3-5% penalty rate. If the property is for staying/long term investment, why not?"

Note: the banks usually will not revise your rate to one that they are offering to the public unless you apply wth another bank and then show your current bank the l/o.

"p.s. Has anyone got calls from banks regarding pre-approved loan? I got called up a couple times, and (this is what they said) they mentioned that if I buy new/refinance my prop the loan will be automatically approved. I'm trading carefully on this (in case it's just a big frog jumping around) , but imagine if it's true!"

Note:I have not got any pre-approved loan calls but what these means is that they've actually screened you the 1st time. Meaning that they will not check your employment details. As for CCRIS n CTOS, they still do. (this is from my experience working in Std Chart) But then again, different banks may have different pre approved meanings.

i just called to RHB and ask about reduce the interest rate..
and the operator told me that they are preparing a new proposal to existing borrower..but cannot confirm anything yet..don't know the rate, don't know when they really post out the letter..
and i ask their rate now is BLR + -1.7%..

DriedIce,

Need your help form your experience in StanChart. They have this PartnerSolution company (or something liddat I can't remember), which called me up and said that they are the mortgage arm of StanChart, and are 100% owned by them. Can you confirm that this is true? How do I verify the one calling me (yes, one of them is from SC), is genuinely from this co, and not some random folk?

Thanks!

p.s. MortgageOne R.O.C.K.S.!!

meejawa,

Its Price Solution, and they are the sales arm for Stanchart.

Yup its price solution and its a subsidiary of std chart. based on your description of their promotion, no wonder i thought it sounded so familiar.

So yea, for their preapproved loan the only part that is preapproved is the employment verification part. There is still the CCRIS & CTOS part that they will need to check once you submit. No 100% approval on submission mebbe around 70%-80%?

No need to verify coz you should have received an sms/mail from std chart on this promotion. If not, call them up again and say u havnt got the sms/ mail. They will send it to you. Diff mailing system got diff benefits.

This post has been edited by DriedIce: Mar 18 2009, 04:52 PM