Need advice on housing loan...

Got a RM128k housing loan from EON bank at BLR-1% for 15 years. [estimated pay bank RM190k in total after 15y]

Already paid 18 months but since other banks have better offer I am thinking of refinancing but I don't know how to count. Whether I'll lose or gain considering the following extra charges.

-EON will charge me RM5000 + 3 month interest = RM6500(condition from the agreement)
-Other bank that I'm going to refinance will have all kinds of fees
-Extra lawyer fees

I asked the lawyer he advised me to refinance after 5th year to avoid penalty. Is he correct? Can anybody help me count the rough amount.

Thanks.

This post has been edited by cactuscch: Apr 13 2009, 05:01 PM

If you're going to stay or keep the property for more than 4 years, refinance. ALl calculations will point to breakeven around or slightly before that. But remember, you need to get back something for your time to wait here (for the breakeven). SO I suggest to go for full flexi package, zero cost or not up to you. But if the diff is 0.2 or less, take zero cost.

Yes, I'm going to KEEP the property.

Can you explain your last sentence. 'But if the diff is 0.2 or less, take zero cost. ' I don't get it.

Many question need to be answer before can get better calculation.

What is your goal?
Do you want to ease your monthly cashflow, and do not mind ended up paying more in total? or
Do you want to increase your wealth?

Legal fees are susbtantial, maybe RM2000+. For new purchase we can check here : http://www.churassociates.com/index.php?op...pper&Itemid=167

How better is the other banks deal?

Do you want to refinance at a higher amount and invest the difference in other property or investment?

Anyhow at first instant I kind of agree with your lawyer to refinance after 5 years, since there will be no penalty and your property most likely appreciate more and therefore you can refinance much higher price and invest the difference. Of course assuming you can invest in investment that will generate better return than the interest change. Banks are very competitive now, so I do not foresee a major difference in interest rate offered.

This post has been edited by vergas: Apr 14 2009, 03:25 PM

His advice is similar to what you said vergas - refinance at higher price RM200k for 15 years. He said something that I don't quite understand............'If you have money, just put in the account, the interest you saved is much more than the return you get from fixed deposit!'. Can somebody explain in simple language or any guide I can read to know more.

I'm going to use some usual assumption here. Substitute as necessary.

1. You are refinancing within lock-in period. You have 2 options; either restructure your loan with EON to get better rates, or go fresh with a FULL FLEXI plan.

2. If you refinance with other bank, go full flexi. This is the best type of mortgage out there, forget the "better rates" that you enjoy using conventional loan. If you dump your salary into the full flexi and then take out money to use as necessary, you will actually pay LESS in total.

3. In 2. above, you need to pay penalty, say 3%, and let's say the difference between the interest of new and old loan is as the following assumption: for eg EON gives you BLR-1%, and new loan gives you BLR-2.2%, so diff is 1.2%. This means you save 1.2% a year, it takes 2.5 years to breakeven. In layman's term, if you switch bank with the above scenario, after 2.5 years you pay the same total. For EON you pay higher monthly, for new bank you pay less monthly but need one lumpsum of 3%. But remember you are going to enjoy this low rate many years after that (unless you refinance again, which you need to do this calculation again).

4. Zero cost or not?Take the zero and non zero cost mortgage rates, then compare the monthly installments. You will be surprise that diff of minus 0.2% is almost negligible, that's why I say go for zero if the diff is little.

if you refinance now, u need o face the 3% penalty and the legal cost.

secondly, your rate is minus 1.5% now, which actually is not that bad. but, u need to know that if you want to get a better minus rate, this will also depends on the location of the property and also the amount of loan, and the value of the property and loan tenure

Already ask the bank to calculate for me whether refinance can save more interest. But after settling the penalty & legal fees, I'll end up break even UNLESS I refinance at higher amount and dump in money (finally I understand you meejawa) to cut down th interest of the principal, then I'll save more.

i also have a same problem with you....
loans 150k for 15years (PPB-interest 5.80%) after 21 months installments (EVERY MONTH RM 1,250) UNTIL NOW STILL -139k (Is look like nothing i pays for)

AFTER I LOOK-UP FOR THE STATEMENT (EVERY 6MONTHS) WOOOO...
INSTEREST RM700 -------- LOANS RM 500 (AROUND FIGURE)
1 year insterest for around RM8K

so last month i go to the bank add some $$$$ to pricinpal account (to deduct interest , save a lot )

THE FIRST THING I SAW THE BRANCHER MANAGER FACE-OFF AND TRY TO GIVE OPTIONS TO ME,
---- HE TRY TO OFFER ME DEDUCT INTEREST FROM 5.8% TO 4.1% (NICE BUT STILL HIGH)
---- REFINANCE WHEN I SOME NEW INVESTS

THEN I TELL THE BRANCHER MANAGER ...NO way (CAUSE I HAVE MONEY NOTHING TO USE AND YOU GIVE ME THE OFFER NOT GOOD ENOUGH)
SOME MORE WHY THEY JUST TELLING ME NOW CAN ADJUST INTEREST --
cause i want to add some $$ to pricipal acc. then you tell me by the way to make my long long term loans.

IN MY HEAD IS, I WILL full SETTLE EVEN PENALTY 3% (IF HAVE EXTRA MONEY)

You teach me how to count? this figure
150K x 3% = RM 4.5k one shot
1 year interest for RM 700 x 12 = RM8.4k
one shot full payment

This post has been edited by nonamemacau: Apr 15 2009, 09:53 PM

Glad you did have some answer, on this:


A way to increase wealth is to reinvest the extra money in a more productive investment, it may be another property to be rented.

I am just afraid all this refinance and re-refinance at the end will only make the bankers and the lawyers richer.

Do the new 'cheaper' bank loan have other catch, eg penalty interest if refinance again etc? Are there monthly fees, hidden charges? I'll be careful if I were you. Remember, banks need to protect their interest too. Good luck.

---

Added on April 17, 2009, 10:11 amThis seems reasonable, since EON is BLR -1 and HL BLR -2.5, assuming they use same BLR the difference is 1.5%, times RM128k your loan amount gives 1920 interest per year. Just rough calculation, actual should be lower since part of your payment will reduce the principle loan amount hence, lower interest. 1920 times 3 years to go (before 5 years no penalty clause) gives RM5760. So the interest saved is lower that the penalty that EON changed so better wait 5 years. You also have to pay more legal fees therefore best to wait.

This post has been edited by vergas: Apr 17 2009, 10:11 AM

Hi all,

I'm having a near similar problem and wondering whether to refinance or stay put.

I called up the bank and checked my remaining balance which was RM57k at interest rate of 7.35%... my monthly repayment is RM700 the total borrow is RM85k at 23yr repayment period.

My target is to have the repayment faster... i wonder should i refinance, stay put or look for other means with much lower interest rates?

add: there is no more locked in period for my loan atm. many thanks to all sifu's

This post has been edited by chanti-sama: Jun 9 2009, 02:41 AM

TS did u bought MRTA with EON bank? IF YES then u going to have a big mess when refinancing from EON bank to other bank. they will just charge u and suck all ur blood out b4 u refinance to other bank. believe me

No need to calcualte,straight again it tell me you SHOULD refinance it now. 7.35% is way too high of interest rate now.
You can easily get BLR-2% if you refinance now. But the condition is you have to take NZEC or FEC package.
But still, you still can save alot of interest and reduce your monthly also.

If you need more detail calculation, just give me a pm.

---

Added on June 10, 2009, 1:05 amWhy would you say so?
Don't you know there's a surrender value for the MRTA? What's wrong to refinance with a MRTA?
What will be the big mess if TS refinance?
Mind to tell more what else EON will charge,before we believe you?

This post has been edited by onnying88: Jun 10 2009, 01:05 AM

If I refinance using the same bank. Is there any legal fees involved?
I'm currently having UOB loan, now want to refinance the same bank but better rate. So I want to know what is the expenses involved?

They give me BLR-2%

Refinance mean you change the loan from Bank A to Bank B. So you can't refinance within the same bank. You just can ask your current bank to revise the rate. Expenses will depent on the bank also on how they wanna charge you on those penalty, legal doc and etc. Same bank they just revise the interest rate but with fresh lock-in 5 years again without any charge. Some they give special discount for the penalty. So the best answer is to ask back your current bank.

All the best

Regards,
Onn

Is there any legal fees involve? My bank said because same bank so no need legal fees.
But my lawyer said it might involve some charges.
So which one is true?
I'm using UOB loan.

Now is proceeding.

Yes, normally the bank wouldn't charge you the legal fee to revise the rate. But they might charge you some penalty fee if the loan is still under lock-in or processing fee. You can ask the bank to clarify.

Oh I see. Thanks for your help.
I will call the bank tomorrow and ask them to contact my lawyer for clarification.
I think the lawyer who prepare my SNP and Title Transfer wanna earn some money here.
Any opinion??

For sure the lawyer will earning from you as you are using his service also.
Just ask for discount when you paying the legal fee. Normally can get 20%-30% at least.