If you plan to buy a house, you’ll most probably need a home loan. However, getting a good home loan is actually pretty challenging. You’ll need to determine the kind of loan you need, and you’ll have to find out the interest rates so you can make comparison. Traditionally, that means visiting or calling up all the banks.
In Malaysia, there are generally two types of home loan – flexi, and non-flexi (or “conventional”). Flexi loans give you the freedom to reduce your loan interest with additional income, whilst non-flexi loans are more rigid and have the same repayment instalment throughout the loan period. Depending on what you need, you can opt for either. Personally, I believe flexi loan to be more beneficial.
In 2013, Bank Negara introduced a new regulation, which limits home loan period in Malaysia to a maximum of 35 years. If you are planning to purchase a more expensive home by stretching your loan period to 45 years or beyond, you should take note that you can’t do that now.
The calculation for monthly home loan repayment is different than the hire purchase or personal loans. It is based on principle loan balance (reducing balance) instead of total loan, which normally used in hire purchase or personal loan.
The advantage of principal loan balance over total loan is the total interest (profit) paid to the bank getting lesser as times go by.
For those who like to calculate the monthly home loan repayment on your own, you may use the following formula,
Alternatively, you may want to use an online home loan calculator.
Formula for Monthly Repayment
At the Monetary Policy Committee (MPC) meeting on 5th May 2011, Bank Negara Malaysia decided to raise the Overnight Policy Rate (OPR) by 25 basis points to 3.00 percent with immediate effect. The floor and ceiling rates of the corridor for the OPR are correspondingly raised to 2.75 percent and 3.25 percent respectively.
Following this, banks will Base Lending Rate (BLR) & Base Financing Rate (BFR) later. For those who have variable loans specially home loan, will have to pay more in their monthly installment. On the positive side, the increase also will raise the current fixed deposit rate. For the latest BLR & BFR rate kindly refer to Rate Page.
With immediate effect, Bank Negara Malaysia (BNM) reduces the maximum loan-to-value (LTV) ratio to 70% instead of normally as much as 90% from the value of the property.
The limit will be applicable to the third house financing facility taken out by a borrower. However, first and second home buyers are not affected by this new rules. They will continue to be able to obtain financing for their purchases at LTV of 90%
The measure aims to support a stable and sustainable property market, and promote the continued affordability of homes for the general public.
On Friday 15th October 2010, Prime Minister, Datuk Seri Najib Tun Razak tabled a RM212-billion budget for 2011 centred on four key strategies designed to transform Malaysia into a developed and high-income nation by 2020 with sustainable development, spearheaded by the private sector as well as focus on the well-being of the people.
The following are Budget 2011 highlights for Personal Finance and Investment.