Hello,

I got a house loan:
Duration: 20 years
Amount: RM198k
Start: June 2005
Package: Renegotiated once in 2008 and reduced the rate to BLR-1.75%
Min years to pay to avoid penalty: 2008 + 5 years.

I did prepayment several times: RM30k, RM40k

with an outstanding amount of abt RM100k.

Now, the BLR has dropped and I thought of settling the loan 100% with the following considerations:

- At this time, ppl tend to keep cash as economy is bad. Should I pay or stay?
- If I pay, I might get:
-penalty 5%
-income tax could go after me also.
-not so much cash in my hand.

Should I re negotiate the interest again?

Share your thoughts.

re neg the interest lol

During periods of turbulence, its a great thing to have plenty of reserves

BLR has dropped, why need to settle earlier? Should keep the cash for investment.

if you had the cash then why did you take loan???

since now the rates are low, i would suggest to keep your cash

Continue your monthly repayment for now. It's important to have some reserves at least for now since you don't have much left after paying.

re neg ... what u have now is cheap cash in your hand .. only at 5 % per annum ...

dump in and save interest for short period, but not settle the loan. (may be leave 10%-20%) then continue your installment.
so that you won't pay such high interest for this period of time, and yet remain the liquidity of your cash.
prepare to take out (all) your prepayment whenever there is an opportunity to invest and earn more

THIS ONLY APPLY WHEN YOUR LOAN IS FLEXI-LOAN.

Your advice is the best! Thanks. Yes, thought of that but I have to becareful not let the loan finish off earlier when I do partial payment:
My constraints:

-the loan should at least drag for another 4 years to avoid penalty.
-with the continue dropping BLR (twice), my loan period could be shorten (if i prepay, even faster).
- keep the rest of the money as liquidity.

Thanks again.

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Added on April 7, 2009, 5:03 pmTo answer your very interesting question.
I didn't had that kind of $$ when i first bought the house few years back. I was even struggle to get the bank to approve my loan.
Now, I very luckily made some $$$.


This post has been edited by sunny2009: Apr 7 2009, 05:03 PM

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Added on April 7, 2009, 5:03 pm
To answer your very interesting question.
I didn't had that kind of $$ when i first bought the house few years back. I was even struggle to get the bank to approve my loan.
Now, I very luckily made some $$$.

[/quote]

Mind to share how to make the $$$ in short time? hehe

[quote=onnying88,Apr 7 2009, 08:34 PM]

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Added on April 7, 2009, 5:03 pm
To answer your very interesting question.
I didn't had that kind of $$ when i first bought the house few years back. I was even struggle to get the bank to approve my loan.
Now, I very luckily made some $$$.

[/quote]

Mind to share how to make the $$$ in short time? hehe

[/quote]


ehhh... your q not related so this is my last response to you .
Study hard>grad with good result>work hard also. Of cz pray hard...

It remind me bout kiyosaki.

if not mistaken,assuming your current outstanding is 100k, then your installment with BLR -1.75% will be 664 per month.

in order for you to avoid from penalty, you should remain the outstanding of 36352.39. (assuming other factors remain the same)

Seems like i am providing free service.

Hope it helps la.

BLR is 5.25 in Royal Scotland bank
best offer from allianz BLR - 2.2%

I would say

1) ask your bank to match that
2) asked for waiver of penalty to pay off the full loan amount or else you will default this loan before a certain date due to certain condition.
3) borrow from affin bank to pay off a big part of current loan, make it in a way that your total monthly pay out is the same but to 2 diffrent bank, you will find you save about 10-30% with today's rate

4) leave the loan as is now, buy Public Mutual Alpha-30 or KNM stock, 3-4 years later then settle the loan with cash, you will find yourself having some extra 10-30k

good luck dude !

If your loan is a flexi loan, you could pump in the money you have and leave RM1 as your outstanding balance. Interest will only be charge on the outstanding balance and you will have the flexibility to withdraw the extra prepayment anytime.

You don't even have to leave RM1. You just don't redeem the property.

depending on what type of loan is this, and which bank.

there's alot of ways of avoiding penalty and still reduces your interest charged to a minimal. but it really depends on what type of loan you took, and which bank. The method differs from a conventional, semi-flexi and a full-flexi; also the facility and repayment system a bank applied back then.

Still, best thing to do is avoid the 5% penalty. (5% penalty in 2005 sounds like one of the local bank...)

ask the previous banker (if he is still around ) what's the best thing to do.

hope the above helps.

Hello,

Thanks for your feedback. It is Public Bank. I guess they are pissed of with me when I negotiated the interest reduction.
My initial package

In 2005
Year 1 BLR-xx
Year2 BLR- xy
Year3 onwards BLR+1.5

Sorry, I cant rmb the xx, xy values.

Then in Year 3 I negotiated it to BLR-1.75 So, they imposed a new 5 years locking period from then....

I have no other choice. Can you give me a hint or so?

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Added on April 9, 2009, 8:43 amerr, the calculation missed out a little bit.
My monthly installment is RM1425. Can you help me to roughly estimate what should be the safest outstanding amount before I get penalized?
I m planning to do a small prepayment again.tq...

This post has been edited by sunny2009: Apr 9 2009, 08:43 AM

It all depends if your loan is a flexible loan or otherwise, read thru your loan agreement, it is all clearly stated there.

Hi, fyi this is not a flexible loan. Clearly stated the interest breakdown for the first 3 years. The calculation is still out.