21/04/2020
Get your dream home with excitement & satisfaction by understanding basic knowledge on loaning.
PART 4 - Types of Property Loans
Loan offered by conventional and Islamic banks (refer to photo below)
As for government loan (LPPSA loan), it is one of the benefits to government staffs. The interest rate is lower than other types of loan.
What are the things needs to pay into attention during accept a loan?
1. Types of loan offer
It is a must to understand the types of loan offer by bank. If you have fixed predicted cash flows and want some flexibility in your loan to pay-off the principal, a semi flexi loan will suit you. On the other hand, if you have substantial cash on hand and want flexibility in paying off your loan, a flexi loan is suitable for you.
2. Interest rate
Choose and compare the for the lowest interest rate offer. As for Islamic loan, no interest ('riba') is charged as it will be profit based on Islamic Based Rate ("BFR").
3. Margin of finance
Different banks offer different margin of financing, it is important to understand the margin requires to cover your property and cash to cover the shortage of financing. It is advised to choose a loan that has sufficient margin to cover your intended value of the property exclude down payment.
4. Lock in period
Each of the loan offer will have a lock in period or penalty for early settlement for a stated period. E.g. 3 years. Normally, the penalty can reach to 2% to 3% of the principle loan amount. Thumb of rule, choose a loan has shortest lock in period and lowest penalty charges.
5. Fees & charges
It is a notable fees and charges offer in a loan package, such as, fee for withdrawal, late interest charges and payment of loan stamp duty.
6. Bank
Last but not least, comfortably of bank take into consideration in select a loan as you will dealing with bank on a frequent basis. It is wise to choose a loan package with the intended bank.
