09/11/2015
10 things to consider when taking up a home loan in Malaysia
1 – Home loan Interest rate
Before applying for your first home mortgage loan you will want to shop around and see what average home mortgage loan rates are.
Loan interest rate will affect your loan repayment capacity. For example, when interest rate goes up, your repayment would be higher.
2 – Types of home loan
Traditional term loanYou are required to pay a fixed amount each month for the entire tenure of your home loan.
Flexible home loanThe more you save, the less interest you pay. Reduce your interest whenever you wish.
If you have a strict income or cash flow – a traditional term loan is a more appropriate loan.
If you prefer flexibility – the flexible home loan is recommended.
3 – Home Loan Eligibility
As a guide, your monthly commitments on paying installments for your house, car and other payments
should not exceed 1/3 of your gross monthly household income.
4 – Lock in period
A lock in period in a home loan is the period whereby there will be a penalty fee if you choose to pay off your home loan in full before the end of its tenure.
Lock in period is advisable to be as short as possible taking note also the penalty fee.
It is advise to compare the lock in period among the various banks in Malaysia.
5 – Fees and Charges
Home Loan application might involves professional and government regulated processes.
Additional Fees and charges are like professional fees and government charges that you need to pay.
6 – Banks and Mortgage Consultants
Do your own due diligence. Shop around before you decide on any financial institution.
Because you will be payment your loan up to 30 years, you should consider the following factors:
– How professional is the bank or financial institution in dealing with customer
– Does it offer quality service in terms of efficiency and reliability and transparency?
– What are the charges involved?
– What are the packages available that suits your needs?
– How fast when it comes to loan application?
7 – Home loan – Down payment
In general, you will have to pay a booking fee of 2 – 3% purchase price which is non refundable.
Loan financing is normally up to 90% property price. Hence you will need to have 10% in cash for down payment.
8 – Home Loan Sale and Purchase agreement
Upon signing the Sale and Purchase agreement, you will have to pay another 7 to 8% bringing the total down payment to 10% of the purchase price.
9. Margin of financing
The amount of financing provided by a financial institution depends on the market value (for completed properties only) or purchase price of the house, whichever is lower.
The margin of financing could go as high as 95% of the value of the house.
It is assessed on factors such as:
– Type of property
– Location of property
– Age of the borrower
– Income of the borrower
10 – Home Loan Tenure
Length of loan is up to 30 years until borrower age reaches age 65 whichever is earlier.
*Home Loan To You
