if loan 200k, need wait 3 years finish.

how much interest would i have to pay , until the house is ready in 3 years?

It depends on the amount of money release to the developer.

During construction period, borrowers are require to pay progressive interest. These amount of money are serving interest only. No capital reduction here unless you choose to start your installment.

Progressive interest are calculated and charged base on the amount of money release to the developer.

Assuming the bank has release RM 40k, and your interest is at 4%.

You'll have to pay [(RM 40,000 x 4%) / 365 ] x number of days in the month*

or RM 135.89 (assuming that month has 31 days.)

As more and more money is released, you are require to a higher amount of interest till the completion of the construction.



I'll try to run some simulation for you, will update this post probably in a few days time. (do remember to remind me... )

The simulation may help, but it is still speculation only. So bear in mind to use it as reference only.


hope the above helps.

This post has been edited by merce: Mar 24 2009, 11:34 PM

There are many different packages available, shop the banks and ask the loan officers to explain to you.

some package has 1st year zero interest, means you do not need to pay anything in first year, or all amount you pay in 1st year will deduct the principal.

this only available for the strong-base company...like sp setia, sime and etc.

---

Added on March 26, 2009, 10:06 amhi, how was the simulation?

This post has been edited by cedrickang_8: Mar 26 2009, 10:06 AM

let me run some simulation for you all.

So let say the project progress is 30% at first year, 30% at second year, and last 40% at third year.
For under construction loan, the developer will request money from your bank base on the progress.
If the project completed 30%,then devoloper will ask your bank to release 30% from your loan and so on.

So the bank will also count the interest base on the money that already release.
Let say the interest rate is
1st year 1%
2nd year 2%
3rd year 3%
And thereafter BLR-2

For the first year,
30% released mean 200k x 30% = RM 60000
So the interest will be RM60000 x 1% = RM600 per year
So everyday interest will be RM600 /365 days = RM1.64 per day
so for Jan you will need to pay RM50.84 (31days)
Feb you will need to pay RM45.92 (28days)
and so on

For second year
30% + 30% = 60% released
200,000 x 60% = RM 120000
So interest will be RM120000 x 2% = RM 2400 per year
So everyday interest will be RM2400 / 365 = RM6.58 per day
so for Jan you will need to pay RM6.58 x 31days = RM203.98
Feb you will need to pay RM6.58 x 28days = RM184.24
and so on

For third year
30% + 30% + 40% = 100%released
So interest will be RM200000 x 3% = RM 6000 per year
So everyday interest will be RM6000 / 365 = RM16.43 per day
so for Jan you will need to pay RM16.44 x 31days = RM509.64
Feb you will need to pay RM16.44 x 28days = RM460.32
and so on

So in this case, your total interest for 3 years is RM600 + RM2400 + RM6000 = RM9000

Bear in mind all the money that you pay before the full release will 100% INTEREST only. Or else you request to pay more to principle.
When the bank already fully release the RM200k, they will send you a letter to inform you and let you know you need to start paying the installment already.
And the lock-in period will only start counting when full release for normal case. You can check it in your LO.
Mean if your lock-in period is 5 years, then your lock-in will start count on the third year, so total lock-in for this loan is 8 years


Let say your monthly installment for 30years is RM1000 per month,
I STRONGLY suggest to everyone to start pay your monthly installment RM1000 once you start paying from the 1st day.
This is because you enjoying 1% interest, why not start pay now to reduce more principle?
If you pay RM1000, minus the RM50.84 first month.
You can reduce you RM40000 by RM949.16 already
mean the next month you own the bank RM40000-RM949.16 = RM39050.84 !
And bank calculate interest base on RM39050.84 for second month, reduce interest summore!

People always happy to pay interest only cause they feel very happy to own a house by paying so little.
But do you know when your house finished, bank will start count interest with RM200k. All you pay before is nothing.


This all is just simulation only, rate and amount is not so accurate.

Cheers,
Onn

This post has been edited by onnying88: Mar 27 2009, 01:26 AM

Based on amount released, RM60000 or total loan amount?

I have questions. As follow,

1) Does it mean if the bank release RM60000 in the first year as in the simulation, if we dump in RM60000, no interest charged for the released RM60000?

2) Let's say one starts paying instalments, bank released RM60000, in let's say 6 mths, the RM60000 is repaid, until the next release, the borrower does not need to pay anything to the bank as the first release already repaid?

Thank you.

---

Added on June 15, 2009, 10:52 amHi,

Any ideas?

Thanks in advance.

This post has been edited by yhgoh: Jun 15 2009, 10:52 AM

Theoretically it's correct. You don't have to pay a single cents of the interest.
You can double confirm with the bank.

Hi All,

I have a query regarding the "progressive interest" imposed by the Bank. I am getting the loan done for the property that is completing next year (currently at 20% completion).

When I met with the mortgage officer and he have calculated for me how the progressive interest is calculation. However, upon showing the calculation to the developer. The developer is telling me that I don't have to pay soo much for the Progressive Interest charge. Now I'm asking you guys cause I don't know which is correct.

Does the progressive interest charged by the bank is calculated from each drawndown, e.g :

Developer tells me
1st drawdown 10% 50k = interest charged on the 50k with the BLR given/annu
2nd drawdown 10% 50k = interest charged on the 50k with the BLR given/annu
3rd drawndown 10% 50k = interest charged on the 50k with the BLR given/annu
..... until 90% drawndown

Banker tells me
1st drawdown 10% 50k = interest charged on the 50k with the BLR given/annu
2nd drawdown 10% 50k = interest charged on the 1st drawdown 50k+2nd drawdown 50k with the BLR given/annu
3rd drawdown 10% 50k = interest charged on the 1st drawdown 50k+2nd drawdown 50k+50k drawdown with the BLR given/annu

I'm abit confused now cause I'll end up paying close to 10k culmulative for the interest for 90% according to the schedule given with the calculation given by the Banker.

The cost of the condo is about 400k.

Appreciate if you could shed some light on this.

Banker is correct.

I think this applies to certain loans rite only? unsure of the packages now.
But under construction loan usually cannot clear the principle 1st until 80% disburse or something like that?
so even you are paying rm1k permth, it doesnt clear your principle during under construction properties?
Sorry if i missed out your meaning

---

Added on September 21, 2010, 7:14 pmya i would think banker is correct.....i paid more than 20k worth of progressive interest for nearly 2 years be4 i can start reducing my principle on my 200k loan last time (blr was much higher then).
under construction interest can be quite a sum
Better pray your developer faster charge the bank until 90% so that u can faster start paying of the principle too

This post has been edited by mIssfROGY: Sep 21 2010, 07:20 PM

alamak. thanks everyone for the reply.. NOW I know who is right.. gonna burn a hole in my pocket even before the place is completed.

thanks for this info..
but bear in my mind, when u buy under construction property, its mean you buy at cheaper price compare to completed house.
Now i'm going to calculate my progressive interest payment.

Cheers!

The loan that I got lock in period is effective approved loan date meaning that for the under cons. of 2 years + 1 year after completion = total 3 years

If I manage to serve more than 70% of total loan owed, I'm still required to serve 1% interest per annum.

anyone has further info on SCB MortageOne home loan.

too many question but the ladies that serve me more less like MIA. regret!

bump to this thread...

i understand that payment paid during construction period is for interest only...

assuming my loan interest during construction period is rm2k per month...if i pay 4k, will the extra 2k reduce the principal, or merely for the payment for next month's interest?

i want to pay extra to reduce principal but maybe not every month; like if i have additional money then dump into the loan...will it automatically reduce principal or merely paying for the interest?

and do i need to inform bank that i'm paying for the principal?

aih confused...care to help anyone?

Some banks will take the extra to reduce principal, some other will carry forward the amount for next month.
Some bank need you to inform them every month that this extra payment is to reduce principal. You need to ask your banker la which one is your loan package that u signed

full flexi or semi flexi? Full boleh, and if semi, u need to call to transfer

taiko mai ukh ah ? coi lai wui oh?

This post has been edited by InF.anime: Nov 27 2013, 04:10 PM

hi ...can help me to calculed the progressive interest ?
my loan rm 480k , and bank give me BLR minus -2.4

mean for the 1st bank disburse the money to developer
then i will need to pay the interest on 4.45%?

My project will be complete on 4 yrs time. =(

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tytty

First it’s easy to do calculation but it’s hard for u to really estimate...
Y?

Coz the real schedule not really the one given by developer. So timing of developer claiming each stage is more critical for this calculation

Also depending of which floor you buying... lower floor faster claim by developer. Higher floor is slower claim. So actually if the floor price different not too much, perhaps go for higher floor more worth it.

Another factor also based on the BR. Each change will change a lot in ur calculation...

You only can estimate a rough figure but what’s the point?

If own stay, perhaps park more money in the account will do to reduce interest
For investment, just make sure ur rental can cover them it will be good, best can cover more to reduce interest.

What if the project is delayed not completed in time? Do owner have to pay the extra progressive interest ? Let say for months ?

there is liquidated and ascertained damages that should have pay to you in the event developer construction got delayed more than their expected months stated in your SPA..

Delayed is not too bad.

If abandoned , and developer run away, you still have to pay interest every month.

Know your risks!

Maybe you can read this article :

https://hartabumi.com/cara-pengiraan-progressive-payment/

It includes some infographic as well

Read somewhere SD handover Elmina without water & electricity, meaning the 15% being released without following the guideline?

Dear all,

Need some clarification from experts:

1. I was wondering what is the approximate completion rate for 4-year time of under construction project? For 3-year project, we can say roughly 30% for the first year, followed by 30% for the second year and 40% for the last year. Any experience for four-year project?

2. If my loan is fully-flexible without any lock-in period, should I pay in full starting on the first disbursement? Isn't it risky if later the developer abandons the project?

3. In the case of the bank pulls back the loan offer prior to the first disbursement due to some circumstances (bad ccris after second check, having other house loan, resign the job etc), are we able to cancel the purchase of that property or the developer will charge us a penalty until we get a new LO and sign the agreement from other bank?

yes. assume 10% payment (48k) you will need to serve interest 4.45% p.a. aggregate to monthly per month.


when the next disbursement (usually 15%), then the amout will add on to 48k and total will be charged at 4.45% interest divided by 12 months to give you monthly interest payable.

read your spa.

as long as developer provided the hardware necessary for the utilities.

not everything developer can do. TNB and Syabas need to provide the rest.

it has been an issue lately for TNB and Syabas. the reasons given ranging from 'tnb and syabas new to strata title landed' to 'run out of meters'.

all big developers like Sime and Setia have been building homes forever. they cant be negligence on their parts to fail to apply for utilities.

everything in life is numbers related.

think about it.

Don't have Elmina SPA

But thanks for sharing.

Question, if my loan is 500 000, so at the 3rd years, total money disbursed will be around 80%, so is it I need to pay 400 000 *4.5% = 18k per year.

So, it looks like the total progressive interest I have to pay for a rm500k project will be 20k ++.

Is my calculation correct?

Why people keep telling me buying new launching is better than sub sale, can save that save there but I don't see it. The progressive interest might even more than all cost involved for a subsale project.

Correct me if I am wrong.

This post has been edited by warrenbuffett: Apr 1 2019, 09:31 PM

yes you are right above

new launch is 'better' than subsale bcos

1. banyak freebie and lower entry cost, misc fees all pau by developer.
2. you can bet on the final completed price and hopefully it can be flipped for much higher price (only during good times)
3. bragging right for ' new' paint smell.

Buying an under construction property in Malaysia, otherwise known as New Development, means that the development will have a Payment Schedule - unlike subsale developments which involves applying for loans from different banks and property buyers evaluating the properties.

The Payment Schedule is a payment scheme that is applicable only to new and ongoing developments. As compared to subsale developments where the payment goes directly to the previous owner, in the case of new developments, the payment goes directly to the developer.

Depending on the stage of the development, the payment that needs to be made to the developer depends on the stage of the development’s completion. The payments are broken down into 5 main stages:

Signing of Sale & Purchase Agreement (SPA)
Various completion stages of the development (to be elaborated further below)
Vacant Possession
Submission for subdivision of building
Final payments


1. Signing Of SPA
The SPA is one of the first; and most important document; that a property buyer will sign upon purchasing their property. It is the document that dictates the blueprint of the property that the buyer is purchasing, and all the details of the property from the number of parking lots (if it is a high rise development) to the number of power sockets in a unit. These documents are always signed in front of a lawyer, who will explain to the purchaser all the terms.

Upon signing the SPA, the property purchaser will need to immediately make 10% payment on the property.



2. The Completion Stages
Upon signing of the SPA, the purchaser may or may not need to begin servicing their instalment immediately.

a) Ground Level

The payment differs based on the type of property title, whether it's Residential, such as condos and landed houses, and Commercial, such as office buildings and shoplots.

For Residential Title:
If the land is not even cleared yet and piling of the building has yet to begin, and if the property is a residential development protected under the Housing Development Act (HDA), then the property purchaser will not need to begin payment.

For Commercial Title
This is where a residential title and commercial title development differs in payment. While a residential property buyer need not begin payment if piling has not begun, commercial property buyers may have to being servicing their loan immediately - depending on the terms and conditions stated within the SPA.

The payment for both residential and commercial developments are however the same, at 10% of the full instalment rate, once the development begins its piling and foundation works.

Constructing the wall

b) Structural Framework

The structural framework is where the concrete framework and floor slab of the development begins. This is where the actual construction of the development begins. In the case where the purchaser had an 80% loan, they will only begin their loan repayment from this stage. At this point of development, the developer will claim 15% of their monies from the bank.

Thus the purchaser will continue to make the same amount of payment, until the development reaches their floor. Hence purchasers that bought units on the lower floors will need to begin their next stage of instalment earlier than the purchasers who bought units on the higher floors.

c) Walls with Door and Window Frames Placed in Position

This is the stage where the development has reached the purchaser’s floor. At this stage, the purchaser will also need to start paying an additional 10% of their loan.

Roofing for the house

d) Roofing, Wiring and Internal Telephone Trunking and Cabling

When the development reaches the stage of fixing the wirings, the purchasers will then need to up their instalment by 10%.

e) Sewerage Works

Following the fixing of the wirings, the developer will then begin sewerage works on the development. The additional instalment at this stage will be 5%.

f) Internal and external plastering

Beginning the plastering of the development, the purchaser will then need to begin an additional instalment of 10%.

Drainage system by the road

g) Drains serving the building

Upon completion of the plastering, the developers will then begin building the drains that serve the building. Another 5% will be added to the instalment at this stage.

h) Roads serving the building

When the developers begin building and fixing the roads to the development, purchasers will need to begin paying an additional 5% of their instalment.



3. Vacant Possession
At the Vacant Possession stage, the development will be completed. The purchaser will however not be paying the final sum of the instalment yet, until they get Vacant Possession of their unit. At this point of time, the water and electricity supply will also be ready in every unit.

As soon as the unit owners obtain the keys to their unit, they will need to begin serving full instalment to the bank - of an additional 12.5%.

Approximately within 6 months of the development’s completion, the unit owners will then need to pay their Memorandum of Transfer (MOT) fee. After completing the payment of their MOT, the unit owner will then be in full possession of their unit.

just whatsapp your banker to come up with some figures , im sure he will assist u promptly simple + cepat

The last 20% only be payable when yr property is vped.
And the 1st 10% is payable when you sign spa.

Therefore at best progressive interest payment if you are on ltv90 only limited to 70% of the property price.

How do I calculate cost of goods sold for Schedule C?

sch C of what Act?