booking receipt/letter of offer from
the housing developer
• Copy of the land title (if any)
• Latest bank statements (in the
absence of salary slips and/or form
J/EAdating back sixmonths/
savings passbook/fixed deposits
• Valuation report for completed
houses
(These additional documents
will be required for the
self-employed)
• Business registration documents
• Latest financial statements
•Other supporting documents
required by the banking institution
As borrowers, we have rights
aswell as responsibilities. It is
best that we read and be aware
of the documentswe sign and its
implications. Ask if unsure. Read
and understand all terms and
conditions of a loan. Observe
these terms and conditions,
enquire and clarifywith the other
party until you are satisfiedwith
the answer before signing.
Ensure you canmeet the
requirements andmake
payments on time.
As lenders or financial
institutions providing loans, those
on the other end have the right to
relevant disclosure of the borrower’s
credit standing. They also have the
right to take legal action in the event
of a breach of contract.
A
S
an entrepreneur and
one of four founders of
Saving Plus SdnBhd,
(the parent
company behind four
financial comparison sites -
RinggitPlus, SaveMoney,
JimatCermat andKreditGoGo),
Hann Liewpoints out that home
loanswere created for consumers
to own homeswithout having to
savemoney for up to 20 or 30 years
first. Therefore, all loans are
consumer-centric. However, he
suggests to keep inmind that banks
will never sell products that do not
make themmoney ... “whichmeans
that our job as a consumer is tomake
surewe get the best in a loan. No one
size fits all, so check the interest
rates and the overall deal for a loan
that will best suit your earnings and
lifestyle,” he says.
IN GENERAL
Looking at housing loans in general
and the buffet offering in themarket,
although the initial interest
is low.
2) Checkwhether the
rate is a fixed rate or floating
rate. For floating rate loans,
the interest rate charged
will move in tandem
with changes in the base
lending rate (BLR).
Therefore, ask how
your loan
repayment will
varywhen the
rates change; if
your loan
repayment can be
reducedwhen rates
go down or increased
when rates go up.
3) Also checkwhether
you can opt to leave the loan
repayment amount unchanged.
By choosing this, the tenure
of your loan can either be shortened
or lengthened, depending on the
movement of the interest rate.
DID YOU KNOW?
Common housing loan packages can be segregated into three categories
- term loans, overdraft facilities or a combination of both. BNM points out
the differences:
•
Term loan –
monthly installments are fixed for a period of time;
payments consists of the loan amount plus the interest
•
Overdraft facility –
credit line granted based on pre-determined limit;
no fixed monthly installments as interest is calculated on the daily
outstanding balance; allows more flexibility to repay the loan; interest
charged is generally higher than term loan
•
Combination of both –
example: 70% as term loan and 30% as
overdraft; for the term loan portion, regular loan installments are
required; for the overdraft portion, repayment is flexible
BankNegaraMalaysia (BNM)
shares some valuable tips to
considerwhen considering a loan.
1) Find out about rates offered
and the period of the offer. Look at
the overall deal that a banking
institution is offering, rather
than just the initial interest rate.
In some instances, youmay end up
payingmore interest in the future
DOCUMENTATION, DUTIES
AND RIGHTS
One’smargin of financing
depends on factors such
as the type of property,
the location, the
borrower’s age and his/her
income. This is the list of
documents banks and financial
institutionswill needwhen
applying for a housing
loan and before signing on the
dotted line.
Home
loans
>Scrutinisinghousing loans,
structures andprinciples
PART2
• Copy of your identity card
or passport
• Latest threemonths’ salary slips
• Latest income tax return form
(formJ or EA)
• S&PAgreement/deposit or
Please email your feedback
and queries to:
X
To note: It is compulsory to
purchaseMortgage Reducing Term
Assurance (MRTA) of which you
can pay off the one-off payment by
cash or include it in your home
finance loan. Perks and benefits to
this loan include Personal Accident
cover of up to RM50,000 and free
medical expenses of up to RM3,000
(conditions apply).
Another star point to highlight:
You can take up this loan for
property valued less than
RM100,000 and you canminimise
the initial down payment required
in getting your mortgage by
including capitalisation-related
expenses likeMRTA premium,
legal fees and valuation fees, into
the total loan financing package.
This loanworks well for those with
irregular income. Foreigners can
apply but for aminimum sumof
RM500,000.
3) CIMBHomeFlexi
Similar to loan number 2),
HomeFlexi fromCIMB is easy
to understand and allows extra
money onto your mortgage
when you can afford it. It also
allows one towithdraw excess
cash from the loan, direct to one’s
current account when needed.
On loan approval, CIMB can
finance up to 90%of the value
of a property for the first two
properties, and 70% for subsequent
properties. One can also opt for an
additional 5%of finance on each
mortgage that will go towards legal
fees, valuation fees and the
inevitableMRTA. This loan is ideal
for those active in the property
investment market. It covers
completed properties and those
under construction.
To note: One only needs to
service the interest rate for
X
X
X
properties under construction.
Risks: The interest ratemay
change as andwhen the BLR
fluctuates, resulting in higher
monthly repayments. Still, payment
alternatives can be discussed.
Star point: Depositing excess
amounts into your linked current
account can lower interest rate
charges on your home loan by a
significant amount. There are also
reward points you can collect with
your borrowings.
4) AmBank Flexi Home
Financing-i
This is explained as a conventional
Islamic term loan that is based on
the Bai Bithaman Ajil (BBA)
concept. Here, themortgage
interest is a variable rate pegged to
the base financing rate (BFR), with a
capped profit rate to save one from
the risk of a higher BFR.
To note: Subject to credit
approval and agreement on
payment terms AmBank is able to
finance up to 95%of the value one’s
house. Possible to opt for an
additional 5% financing to go
towardsMortgage Reducing
TermTakaful (MRTT) which is
highly recommended.
To highlight: AmBank has strict
policies on late payment, with
penalties. Failure tomake payments
for two consecutivemonths and
your interest ratemight be raised.
5) RHB EquityHome Financing-i
A dependable and semi-flexible
home financing plan that is
known for its low interest. It is
shariah-compliant following the
MusyarakahMutanaqisah concept
and is based on variable interest
rate pegged to the Islamic Base
Rate (IBR). TheMusyarakah
X
X
X
X
Mutanaqisah concept, also known
as the Diminishing Partnership, is
a contract between the borrower
and RHB, to acquire the property
together. As an example, if you
apply for and are approved for
90% financing, RHB owns 90%of
the share at the beginning of the
mortgage tenure and you own
10%. As you pay your monthly
installments, you are gradually
purchasing the bank’s sharewhich
includes a profit rate (loan
interest). At the end of the
financing period youwill own
100%of your home.
Good to know: One canmake
excess payments on top of the
monthly installments to reduce
the loan principle, hence the
interest. Possible to include
Liability Reducing Term
Takaful (aMRTT-like insurance),
House Owner Takaful (house
content insurance) and other
capitalsation-related expenses,
like legal and valuation fees, up to
10%of the property value, making
it easier to stay protected.
To note: It is not possible to
redraw surplus cash paid to
reduce the loan principal.
House Owner Takaful (house
content insurance) is compulsory
while Liability Reducing Term
Takaful (LRTT) is optional, but
strongly advised.
Other attractive bank loans to
consider include: Public Bank
ABBA Financing-i Home Loan, Al
Rajhi Home Financing-I and Bank
IslamBaiti Home Financing
among others.
Information retrieved fromBNM and
RinggitPlus websites with quotes from
industry professionals Hann Liew and
Alan Teo.
X
X
* Zeromoving cost packages
alleviate the burden of purchase or
re-financing as these costs are paid
up-front by AIA.
“Our maximum tenure for our
policies is 35 years or up to 70 years
of age, whichever comes first. Our
margin of financing is up to 90%but
take note that this applies to
qualified applicants, in line with
BNM’s margin of financing ruling.
“With the BLR currently at 6.85%
and expected to be on an upward
trend, a fixed ratemortgage is worth
serious consideration for concerned
house buyers,” shares Teo.
Moreover, the borrower is allowed
to pay in excess to reduce already
low interest charges. This package
is applicable to all Malaysians,
permanent residents, Singaporeans
and Brunei nationals aged between
18 and 70. Foreigners with a valid
work permit/registered business in
Malaysia or who aremarried to a
Malaysian, may also apply, along
with those under theMalaysiaMy
SecondHome (MM2H) programme
(terms and conditions apply).
2)MaybankMaxi Home
Flexibility
This loan is said to be able to help
onemanage their money efficiently.
It is based on a variable rate and
offers full flexibility in a housing
loan. One gets a home loan account
and a current account, with an
option for an overdraft that can earn
interest of up to 1.85% for a balance
of about RM5,000. You can also
deposit additional cashwhen you
can afford, to reduce your principal
borrowed sum, at the same time,
redraw themoney you overpaid
when you need to (terms apply).
Youmay also request up to 90%
margin + 5% forMRTA, legals fees
and evaluation fees if this is your
first home loan (terms apply again).
LOANS TO CONSIDER
1) AIATieredHome Loan
AIABerhad chief life operations
officer Alan Teo introduces AIA’s
TieredHome Loan&Fixed Rate
Home Loan Package 2. He says,
“Currently, AIA offers the lowest
long–term fixed rate plan in
Malaysia with its three home
loan packages. Our signature
package commits to a fixed
rate of 4.99%per annum, for
the entire loan duration. If a
house buyer is looking for zero
moving cost, our second package
at 5.39%per annum fixed rate
pays for the legal fees, stamp
duty, disbursement charges
and any valuation fees incurred
for loan documentation. Those
seeking lower initial installments
should consider AIA’s tiered-rate
package offering an interest
rate of 4.35%per annum for the
first two years, followed
thereafter with a fixed interest
rate of 5.15%per annum for the
remaining years.”
For existing policyholders of
AIA, including new customers
subscribing to AIA policies, there
is a newprogramme that was
recently launched, offering two
package options at lower fixed
interest rates (see table below).
Teo informs of the benefits of
taking up this loan:
* Good financial planning as loan
installments are within the
borrowers’ control and not
subject tomarket volatility and
interest rate cycles.
* Hedging of risks, whereby the
risks of rising interest rates is
now assumed by AIA instead of
the individual borrowers.
* Computation is based on daily
rest rates and pre-payment
helps the borrowers to save
evenmore.
SEPTEMBER 12, 2014
