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

What is your goal?

My purpose is very simple - Pay less interest.

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

I can still manage to pay the monthly installment quite comfortably.

Do you want to increase your wealth?

Wah! can increase wealth. I don't understand???

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?

I happen to consult a staff from Hong Leong bank (very near office) at lunch time. He can offer me BLR-2.15% for 15 years i.e. 5.55-2.15=3.4%


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.

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.

EON rejected my request already.

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.
For savings account, if I bank in RM500 then take out RM500, no difference at all. This is the part I'm confused about flexi thing.


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).
Well explained. I totally understand now, though don't know how to calculate.

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.
Since not much difference, don't want to crack my head again trying to understand.