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Advice needed for refinancing

 
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snow1



Joined: 30 Nov 2008
Posts: 11

PostPosted: Sun Dec 28, 2008 11:21 am    Post subject: Advice needed for refinancing Reply with quote

Hi all,

Need your advice on my current interest to refinance from my current bank.

New bank is offering me 4.5% interest rate after BLR (flexi-mortgage loan), and my current bank is also reducing my interest rate from 5.5% to 4.8% after BLR (term loan).

My question is: is it still advisable to switch to new bank with 4.5% interest rate? The outcome for refinancing to the new bank is that i would have to pay a 3% penalty to my current bank....is it still worth it?

My friends keep saying that flexi-mortgage is a more interesting package to take, however after much calculations, i dont think i have much savings of interest. So, do you think is still worthwhile for me to switch to the flexi-mortgage loan?

Appreciate your expertise here...thank you!

Snow
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Merce



Joined: 01 Apr 2008
Posts: 112

PostPosted: Mon Dec 29, 2008 11:19 pm    Post subject: Reply with quote

Hi Snow1,



My question is: is it still advisable to switch to new bank with 4.5% interest rate? The outcome for refinancing to the new bank is that i would have to pay a 3% penalty to my current bank....is it still worth it?

-Can you kindly provide the details of your current loan and the offered loan package? Details such as loan amount, interest rate(current vs new), terms and condition etc etc.

I can run a simulation for you to find out the difference of interest paid in the long run with the given details.

My friends keep saying that flexi-mortgage is a more interesting package to take, however after much calculations, i dont think i have much savings of interest. So, do you think is still worthwhile for me to switch to the flexi-mortgage loan?

-you mentioned that you have done your own calculation of interest between flexi loan and term loan, so i'll assume you understand the different between those 2 well enough. So the one part which differentiate them would be the human factor; will you withdraw the additional payment and how often?

my PoV on flexi loan is that it's a great package for business owner, especially sole-proprietor. They get a great deal of cash flow with only RM 10 extra charge per month and a cheque book too. However if you are not familiar with accounts, you may prepare some panadols before you go through your loan statement in the end of the day. Rolling Eyes

For employees, i would suggest term loan or semi-flexi term loan, unless you are very well-paid, have low commitment and VERY good control over your money. People tend to spend if the money is easy to reach, for new set of furniture, stereo sets, cars, indulge etc etc. Also another good thing is, there's only 1 account and 1 very straight forward loan statement. Bad thing is... its not flexi. (dOh! Laughing )

Hope this helps,

Let me know if you need anything else.


Regards,

Merce Chua
Mortgage Sales Executive
OCBC Bank (M) Berhad
019 - 913 1127
ChuaCChie@OCBC.com
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snow1



Joined: 30 Nov 2008
Posts: 11

PostPosted: Wed Dec 31, 2008 9:36 am    Post subject: Reply with quote

Hi Merce,

Thanks for your reply. Please refer to my replies to your answers as below:

-Can you kindly provide the details of your current loan and the offered loan package? Details such as loan amount, interest rate(current vs new), terms and condition etc etc.

I can run a simulation for you to find out the difference of interest paid in the long run with the given details.

Snow: My current loan amount: RM235k. New loan amount with another bank RM245k (because have to include penalty fee charged by existing bank).

Current interest rate: 5.5% (will be reduced to 4.8% after they know that i am refinancing)
Refinance bank interest rate: 4.5%

Appreciate your expertise and comments whether is it good enough for me to refinance?

By the way, does your bank pay for penalty fees for new customers
whom would like to move away from their exisiting bank home loan?

Thanks,
Snow
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ckeenkheong85



Joined: 13 Apr 2007
Posts: 9

PostPosted: Thu Jan 01, 2009 9:28 am    Post subject: Reply with quote

Hi Snow1

Let me give you a simple illustration from your loan, from your situation above. Take your current loan RM 235K, your penalty is 3% which equivalent to 7K++.

Your loan RM235K, currently paying loan A for 4.8% which translate to RM1,233 payment for a 30 Years Payment. As if you wish to re-finance, to new loan B, let said 4.5% which translate to RM1,191 (which save for you RM42)

Overall the total interest for Loan A is RM204,928 while Loan B is RM190,175 which means u save RM14K++ over there which also cover your whole penalty as well. But if your loan is a Flexi Loan, you can enjoy more reduction.

Let me know if you are interested with it, as we are mortgage broker, we can offer you all the banks loan package available in the market and save your time from surveying each bank and trouble plus our service is FOC.

Hope to hear from you soon.

Regards,

KK Cheong
Financial Consultant
(017-569 2117)
keenkheong_85@hotmail.com
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jwgan822003



Joined: 28 Oct 2006
Posts: 59
Location: Kuala Lumpur

PostPosted: Fri Jan 02, 2009 3:41 pm    Post subject: Reply with quote

Apple to Orange Comparison:

Existing Loan RM235,000
Interest 4.80%
Loan Tenure 30 Years
Monthly Instalment RM1,233
Total Interest RM201,550

Refinance RM245,000(RM235,000 + Penalty + Admin Fees)
Interest 4.50%
Loan Tenure 30 Years
Monthly Instalment RM1,242
Total Interest RM195,225

# You pay higher instalment after refinance because your loan amount increase, but you pay less interest because you interest is 0.30% lower than existing loan.
# You can save RM6,325 if you make you loan instalment over 30 years time, which I think most of the borrower won’t do so.

Apple to Apple Comparison:

Existing Loan RM235,000
Interest 4.80%
Loan Tenure 30 Years
Monthly Instalment RM1,242(make extra payment RM9 to make it the
same with after refinance monthly instalment
RM1,233 + RM9)
Total Interest RM197,869

Refinance RM245,000(RM235,000 + Penalty + Admin Fees)
Interest 4.50%
Loan Tenure 30 Years
Monthly Instalment RM1,242
Total Interest RM195,225

# You can save RM2,644 if you make your loan repayment at RM1,242 the same amount for before and after you refinance your existing housing loan.
# If you refinance you loan out from your existing bank then you will save about RM2,644 over 30 years.

* My suggestions is:
- if you going to make instalment for this loan over a long term period then is viable to refinance. (3% penalty take 10 year to cover back
= 10 x (4.8% -4.5%)
- you can make extra payment to reduce the principal n the interest to shorten you loan tenure.
-what purpose of this property(if for investment then is not advisable to refinance because you need to pay the penalty again when you dispose your house)
- if for own stay in long term then you can choose to refinance to save the interest(RM2,644 over 30 years)
But you need to go through a lot of procedure like apply a loan, sign loan agreement and wait for the bank to disbuse the loan.it take bout 3 months to completed the process.

Just some opinions from me

Any further enquiries please do not fee hesitate to contact me

Edwin Gan 017-235 9199
edwin.gan@choice1.com.my
..choice1.com.my
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Merce



Joined: 01 Apr 2008
Posts: 112

PostPosted: Sat Jan 03, 2009 7:22 pm    Post subject: Reply with quote

Hi Snow,


My apology for the late reply.

Do forward me your email add to my OCBC mail if you wish to have a full copy of the simulation. It shows your yearly amount of interest and principal paid over 30 years.

However my simulation result is as what Edwin has posted above. With your currently loan revised to 4.8% you will be paying a total amount of RM 201,550 over 30 years. Should you refinance you will be paying a total amount of RM 195,225 over 30 years. (Assuming the its BLR -2.0% after refinance)

You saved about RM 6,325 over the 30 years, and about RM 2,686 on the 10th year.

Frankly, not much of saving from the looks of it. And more over you have to bear the penalty charges and all that. (and probably loan agreement and stamp duty if you were to choose nZMC)

Personally, I don't usually advice ppl to refinancing their property during lock-in period, unless there's a difference of 1% interest rate or higher. 0.3% just wont give you enough saving through out.

Edwin ask a good question in his post, (which i forgot to ask, as i jump to the conclusion that this house is for your own staying Embarassed )
Quote:
-what purpose of this property(if for investment then is not advisable to refinance because you need to pay the penalty again when you dispose your house)


If this is for investment(flipping/trading), then its not worth the effort as you may sell the house anytime in the future.

If this is for your own occupation, you may consider to refinance your property... preferable after lock-in period.

Quote:
By the way, does your bank pay for penalty fees for new customers whom would like to move away from their exisiting bank home loan?


-Nopies, we don't. Cool I'm pretty sure none of the banks nor financial institutes do this, but you may check around just in case i'm wrong =p

So i would say, wait till the lock-in period ends. Cool

Hope this helps.

Do let me know if you have further inquiries.


Regards,


Merce Chua
Mortgage Sales Executive
OCBC Bank (M) Berhad
019 - 913 1127
ChuaCChie@OCBC.com
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Merce



Joined: 01 Apr 2008
Posts: 112

PostPosted: Sat Jan 03, 2009 9:12 pm    Post subject: Reply with quote

In which i've also forgot to ask...


what are the new terms and condition if you choose to revised the rate from your current bank? (how many additional years of lock-in, etc etc)

4.5% of interest rate for the new mortgage loan package would translate to BLR -2.00%. For RM 245k of loan amount it's very likely to be a nZMC package. Can you provide the details of the package? ZMC or nZMC? and what may be the terms and condition applied other than its a flexi-loan??


Regards,


Merce Chua
Mortgage Sales Executive
OCBC Bank (M) Berhad
019 - 913 1127
ChuaCChie@OCBC.com
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snow1



Joined: 30 Nov 2008
Posts: 11

PostPosted: Sun Jan 04, 2009 12:36 pm    Post subject: Reply with quote

Hi all,
thanks alot for all of your help and advise...i really appreciate your kindness and help Smile

Hi Merce,
Regarding to your questions:

1) "what are the new terms and condition if you choose to revised the rate from your current bank? (how many additional years of lock-in, etc etc)"
Snow: I will be locked in for a total of 5 years

2) "For RM 245k of loan amount it's very likely to be a nZMC package. Can you provide the details of the package? ZMC or nZMC? and what may be the terms and condition applied other than its a flexi-loan?"
Snow: Sorry, could you please explain further what is ZMC and nZMC? What is the difference between these two?

All i know that this is not a flexi loan... Embarassed

3) Edwin ask a good question in his post, (which i forgot to ask, as i jump to the conclusion that this house is for your own staying Embarassed )
Snow: This is for my own staying purpose Smile

Thanks again,
Snow
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Merce



Joined: 01 Apr 2008
Posts: 112

PostPosted: Sun Jan 04, 2009 9:23 pm    Post subject: Reply with quote

snow1 wrote:


2) "For RM 245k of loan amount it's very likely to be a nZMC package. Can you provide the details of the package? ZMC or nZMC? and what may be the terms and condition applied other than its a flexi-loan?"
Snow: Sorry, could you please explain further what is ZMC and nZMC? What is the difference between these two?




ZMC (Zero Moving Cost)
-Where the bank or Financial Institute agrees to absorb all the legal charges, which includes Loan Aggreement, Stamp Duty and Valuation Fees for loan applicant should he/she agrees to take their loan. Normally they would covers all the mentioned fees, but certain banks has a capping for 2% maximum for this. Basically you dont have to pay anything for this package. Just take the loan and pay the installment.

nZMC (non Zero Moving Cost)
-As oppose to the ZMC, loan takers would have to bear for the Loan Aggreement, Stamp Duty and Valuation Fees, which may varies due to the amount of loan applied. For the loan amount of RM 245k, you Loan Aggreement, Stamp Duty and valuation is estimated to be roughly around RM 5k. However,because the bank doesnt need to absord any of the fees above, they tend to give a better rate for this package, usually an additional -0.1% to -0.4% to the ZMC rates.

Hope the above helps,


Regards,


Merce Chua
Mortgage Sales Executive
OCBC Bank (M) Berhad
019 - 913 1127
ChuaCChie@OCBC.com
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stevenyeee



Joined: 03 Jan 2009
Posts: 2

PostPosted: Tue Jan 06, 2009 6:41 pm    Post subject: Refinance Reply with quote

Hi Merce,

Good evening. Can u give advice on which bank can give me better interest rate for refinancing my house?

Current int: blr + 0.35 = 6.85%
i borrow 101k fr Maybank since 2004, already 4 yrs + and the principal amount left 80k now. My tenure is 15yrs, which left ard 11 yrs. Monthly payment rm860.
I understand that my lock in period is 5 yrs. Can the penalty fee included inside refinance loan if i switch now?
For refinancing is there still attractive interest like BLR-1.75 ?

thanks,
steven
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Merce



Joined: 01 Apr 2008
Posts: 112

PostPosted: Thu Jan 08, 2009 10:54 pm    Post subject: Re: Refinance Reply with quote

Hi steven,


Sorry for the late reply.

Quote:

Good evening. Can u give advice on which bank can give me better interest rate for refinancing my house?


I cant really advice which bank is giving better interest rate here, conflict of interest. (My bank might be watching... we do have a team that keep watch on the internet for any article related to the company... Stalker! Razz Razz Razz )


Quote:

I understand that my lock in period is 5 yrs. Can the penalty fee included inside refinance loan if i switch now?
For refinancing is there still attractive interest like BLR-1.75 ?


If the margin of finance is still within approval range, yes you may finance additional money for the penalty. BLR -1.75% for nZMC packages is still available at the moment, but not for ZMC thou.

Do give me a call when you are free, better for me to go through the details to see what's best for you consideration.


Regards,


Merce Chua
Mortgage Sales Executive
OCBC Bank (M) Berhad
019 - 913 1127
ChuaCChie@OCBC.com
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ys126



Joined: 23 May 2007
Posts: 440

PostPosted: Fri Jan 09, 2009 2:36 pm    Post subject: Reply with quote

hi snow,

actually for your case, if you refinance now realy not much of savings on the interest payable. Because the loan amount and also the different of only 0.3%.
If you want can just wait for another 5 yrs (after the new lock in period) Wink
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ys126



Joined: 23 May 2007
Posts: 440

PostPosted: Fri Jan 09, 2009 2:41 pm    Post subject: Re: Refinance Reply with quote

Hi Steven,

May i know where is the property located? What is the project name?
To be frank, for loan amount below 150k the interest rate is not so attractive. But BLR-1.75% sure can get in my bank lo. Wink
do feel free to email me if you need further info. Wink
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