If you plan to
buy a house, you’ll probably need a home loan. Home loan is a Secures loan
offered against the security of a house/property which is funded by the bank’s
loan, the property could be a personal property or a commercial one. The Home Loan
is a loan taken by a borrower from the bank issued against the
property/security intended to be bought on the party by the borrower giving the
banker a conditional ownership over the property i.e if the borrower is failed
to pay back the loan, the banker can retrieve the lent money by selling the
property in auction.
To get a good
home loan is actually pretty challenging. You’ll need to determine what kind of
loan that you need, the interest rate that been offered by the bank, the
duration of the installment and others. Traditionally, you’ll visiting, calling
up and search in internet all bank.
In Malaysia, BNM
have introduced two types of home loan which is flexi home loan and non-flexi
home loan. For flexi home loans give you freedom to reduce your loan interest
with additional income. Meanwhile for non-flexi home loan or also known as
conventional loan are more rigid and have same repayment installment throughout
the loan period. Compared between these two loans, many of customers prefer to
use flexi hosing loan.
In 2013, BNM
introduced new regulation, which limits home loan period in Malaysia maximum up
to 35 years. But if you are purchase an expensive home, you loan period will up
to 45 years or beyond. These days, home loan rates can differ greatly from bank
to bank. For a typical flexi home loan of RM500,000 rates can be anything from
Based Lending Rate (BLR)- 2.4% to BLR-2.2%, which translate to difference of
tense of thousand in Ringgit value.
In
conventional bank basically they will use fixed or variable rate. But mostly
the bank will may charge combination of these two rates. Most home loans especially in Malaysia used
variable interest rate loans, with the interest rate tied to the base lending
rate (BLR) of the banks. Payment is made over a set tenure by installments.
Since the contract is not based on an absolute value (eg. A sale price), the
sooner the borrower can pay down the principal, the cheaper the amount of
interest paid. The loan contract for conventional financing is known as a Loan
Facility Agreement.
As I
mentioned earlier, the borrower prefer to choose flexi home loan. It is
because, this Flexi Home Loan has
provided a great flexibility to a borrower. This is because that product comes
with a linked current account. The borrower has the option either to withdraw
or make extra repayments any times they like even though do not inform the bank
beforehand. Those who have extra cash flow can have benefits in using this
Flexi Home Loans. This is because the loan installments are automatically
deducted from the linked current account each month. So the balance will go
towards reducing the amount owed on the home loan.
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