Before we introduce you to the banks with interest on loans in Malaysia, let’s take a look at how home loans are calculated and how high and low-interest rates affect borrowers.
Mortgage interest is calculated according to the compound interest formula (also known as ” rolling interest “), so don’t underestimate the difference of a few tenths of a cent, because when the interest is multiplied by the repayment period of your loan, you will find that small interest rate differences can cost you a lot of additional interest charges.
The so-called difference is the best adjective for this situation. If you can’t imagine the difference, that’s okay, let’s illustrate it for you:
Suppose you want to borrow RM500,000 to buy a house, the repayment period is 35 years, and assume that the loan interest will not rise or fall due to the Overnight Policy Rate (OPR) during these 35 years.
If the bank gives you 3.5% interest, the total interest you need to repay is RM367,910; if it is 3.0%, the total interest is RM308,185.
As you can see, a mere 0.5 percent difference is almost RM60,000. That extra amount of interest could be enough to buy you a new Nissan Almera, and it could also save you money for renovations or future home improvements.
Malaysia Housing Loan Conditions and Precautions
From the above information, the loan interest of BSN, Public Bank, Public Islamic Bank, Alliance Bank, and Alliance Islamic Bank is only 0.01% different, and the total loan interest is only about RM1250.
If the interest rate is similar, you do not have to choose the bank with the lowest interest rate, but more importantly, find a bank with the highest application success rate and the most suitable mortgage package for you.
At this time, through our Home Loan Pre-Approval (home loan pre-approval system), you can check your own loan success rate and the home loan package that the bank may give you.
If you are going to take out a loan to buy a new house from a developer, the developer may cooperate with several banks (ie panel banks) to provide mortgages to you and other buyers.
These panel banks have mastered the information about the project in advance, and have also formulated some housing loan packages for the project. Therefore, the approval process is usually faster, the interest rate of the housing loan package will be more favorable, and the loan agreement (loan) may be waived. agreement) related fees.
However, this does not mean that you have to apply for a loan with these panel banks, you can still check their loan packages with other banks for comparison.
For second-hand houses, the bank will determine the loan amount and interest that can be approved based on the location of the real estate, the valuation, the type of title (individual title, strata title, or master title), and the borrower’s financial situation.
5 things you should do before applying for a home loan
- Ask the bank for the Product Disclosure Sheet ( PDS ) of the loan, and read the terms and conditions carefully, including the type of loan, loan interest, and lock-up period.
- Learn about the pros and cons of different types of home loans (term loan, semi Flexi loan, and full Flexi loan), as well as their limitations on saving on interest and paying off your loan early.
- According to different mortgage packages, assess whether you can continue to repay the monthly installments after the mortgage interest increases in the future.
- Prepare income proof documents as required by the bank and ensure that your CCRIS report is well documented.
- After comparing the actual loan interest and loan packages of several banks or financial institutions, you can choose the most suitable application for you.
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