Category Archives for "Financial"

Tips To Use Provident Fund To Buy Your First House

Every Malaysian who are employee of any company are required to contribute for provident fund which is a fund for own retirement as well as for buying a property. All of the Malaysian are allowed to use part of the provident fund to pay for their first house installment loan. Besides, if the contributor (the person who contributed for provident fund) is below age 55 and he/she has RM 500 in the second account of provident fund, then he/she is entitled to use the money to payoff their mortgage loan.

However, in order to able to use the money from provident fund, there is some rules and regulations that the contributors have to follow.

Case 1:

If you owe the bank RM 25K, but in your provident funds you have RM 60K, you will only be allowed take RM 60K out of your savings.

Case 2:

If you owe the bank RM 70K, but you only have RM 60K in your provident fund, you are allowed to withdraw all RM 60K.

Conditions for initial payment:

1. Purchase / construction for residential purposes.
2. Location must be within Malaysia.
3. Paid by bank loan or cash.
4. sale agreement is within 3 years from the date EPF accepted the application.
5. Withdrawal is permitted for first house and second house, if there is proof of sale of first house or proof of transfer of ownership of the first house.
6. Approved by EPF.
7. Purchase of land to build a house (Not more than 6 months between the contract for land purchase and building of the house).

Withdrawals are not allowed for the following purposes:

1. Purchase of land only.
2. Purchase of 2 houses and above simultaneously.
3. Renovation cost for existing house.
4. Purchase of third house.
5. Purchase through bank drafts.

Conditions for repayment of mortgage:

1. Purchase or construction of a house.
2. Located within Malaysia.
3. Purchased with a bank loan.
4. Mortgaged to the bank.
5. Property purchased under the owner’s name.
6. 1 withdrawal per year.
7. Withdrawal for repayment of mortgage of the same house.

Conditions for withdraw to help with spouse’s mortgage:

1. House built or purchased by the spouse.
2. Bank’s approval on mortgage.
3. House owned by the spouse or joint.
4. Marriage certificate or child birth certificate as evidence.

In conclusion, provident fund is not only for retirement but can also lower your burden on house repayment. If you use this method wisely, you are able to save your money to invest in something else in order to create wealth for yourself. Besides that, should you wish to purchase a second property, it is advisable to transfer the ownership of first house to your spouse then apply for withdrawal from your second account of provident fund. In such case, you are able to use your provident fund to purchase a second property, in the meantime, you are saving on stamp duty.

Source: WMAPROPERTY

It’s not about property ownership it’s about control! To get more details, visit 👉 Property Millionaire Intensive

What To Do When You Can’t Afford Your Home Loan Repayments

Being a homeowner is a joyful moment in life. BUT!!!!! How if you’re no longer to make home loan repayment? Do you have faith in yourself that you can still make your home loan repayment after 5 or 10 years? Due to the living costs are gradually increased in Malaysia, many youngsters and first-time homebuyers are feeling the pinch as they might not be able to continue to make the home loan repayments or even buy a house.

If you are one of them, you might feel upset and thinking of give up on this house. Listen to me, don’t give up so soon! There is always have several ways to solve any problems in the world. In order not to facing bankruptcy, continue read on to get these tips to rescue your current situation;

5 Useful Tips For When You Can’t Afford Your Home Loan Repayments

Ⓐ Restructure Your Debt

Print

If you have been facing the difficulty to cover your home loan repayments for 3 months or above, you financial might be overburdened. Don’t freak out although its sound terrifying. Listen up, here is a method to you;

The firs step that you need to do is inform your lender about your current financial distress and request a little leeway to solve your financial issues. While, the most importantly is discuss with your lender about restructuring your loan affordability;

Here is the 3 things that you have to discuss with your lender;

1.To extend your loan tenure

You may check with your lender whether can extend the years of your loan tenure in order to lower the monthly installments. Although this way will increase the total interest costs and repayments overall, but it can increase your affordability. As other say, if you get profits from one side, you will lose something at the same time.

2.To lower interest rate

For your information, in certain situation such as market/ economy changes, bank will adjust the interest rates. Hence, you must keep watching the market changes and seek advice from bank consultant if there is possible to adjust the interest rates for you which based on your current financial situation.

3. Consider to refinance your mortgage loan 

In fact, you can consider to refinancing your mortgage loan as your borrowing amount may be able to cover your outstanding loan. In addition, refinancing can offer you the better interest rates (do your homework that which bank is suitable for refinance loan or offer the lowest interest rates) and can also help to switch your current loan type and terms. (fixed or flexible)

Ⓑ Take Advantage of Your EPF Savings

EPF Savings

Every Malaysian should have a EPF savings if they’re employed by any companies. You have to fully understand what EPF is use for. EPF savings is not your retirement fund only, but it can also allow the contributors (if you started to pay for EPF, you’re officially as EPF member) to withdrawals from second account to pay off your home loan.

In another way, you can also withdraw a little amount to reduce the borrowed amount. This method can helps you to reduce your monthly installments and not affecting your retirement fund, so, don’t worry about it. For your information, you can also use your second account from EPF savings to help your spouse to pay-off the mortgage loan.

Ⓒ Rent Out The Extra Empty Room (if all the rooms are occupied, just skip this method)

Rent Out The Extra Empty Room

If you have an empty room, you can consider to rent it out to earn extra income. This tips can help you to reduce your burden on loan repayment by collecting rental with tenant. In addition, you can charge a higher rent (reasonable) if your house is in a major city/town, or nearby college/ university/office building.

Besides, all the things you need to do is clean up the room and provide the simple amenities such as water-heater, fan/ air conditioning and washing machine. This facilities are enough to attract potential tenant to look at your room.

Other than that, you should be aware of renting the room to a complete stranger. When you’re searching for potential tenant, you may try to reaching out to your friends or relatives first. Or else, do check on the tenant’s (stranger) background such as asking for references, employment details and etc.

Ⓓ Cut Down The Unnecessary Expenses

Cut Down Unnecessary Expenses

If you’re facing shortage of cash flow, it is advisable to cut-down the unnecessary expenses temporary. Such as;

  • Satellite TV subscriptions. For example, Astro, you may unsubscribe its package temporary until your cash flow turns positive.
  • Downgrade your internet or mobile data. For example: 10GB downgrade to 3GB. I understand that many people will gone crazy if their life without internet/ WIFI, so downgrade the internet/mobile date seems like a best choice for you.
  • Ignore the fancy stuffs temporary. For example: branded shoes, handbag and cloths. Put these things down temporary as you’re currently facing financial difficulty. Only buy those things if your cash flow turn positive.

Alternatively, you can sell off your belongings that still in good condition such as clothes, handbags, books and etc. And you can find a part-time job to sustain your financial needs in short period of time.

Ⓔ Sell Out Your House (If the above 4 tips are failed)

Sell Out Your HouseIf all the above tips are failed after you tried, unfortunately to tell you that you should consider to sell out your house to limit the effects of defaulting on your housing loan. Should you have been making monthly repayments for some years, says 5 years, there is some equity should has been built on your house. It can helps to reduce the outstanding amount and can also avoid Real Property Gains Tax costs (generally known as RPGT), if you’re making profits of over 10% or RM 10K, whichever the lesser.

By sell out your house, you may gaining from it at the same time. So, be wise to use those balance amount and buy again at a later time. So, don’t be upset about it.

Source: WMAPROPERTY

It’s not about property ownership it’s about control! To get more details, visit 👉 Property Millionaire Intensive

How To Check Your Credit Score?

Before you submit any loan application, you should check on your credit record before lenders do. It is important for you to understand your repayment history first before lenders rejected your loan.

There are 2 major systems in Malaysia that allow you to track your credit history which is Central Credit Reference Information System (CCRIS) and CTOS. Here we brief you steps by steps of how to check your credit records with these 2 systems.

Checking your credit report via CCRIS

According to Bank Negara Malaysia (BNM), there are only 5 locations in Peninsular Malaysia which is KL, Shah Alam, Johor, Kuala Terreggana and Penang while 2 locations in East Malaysia which is Kota Kinabalu  and Kuching. If an individual located in Ipoh or Melaka, they need to go to BNM’s HQ to print out their credit reports.

Forgot to mentioned, it is free of charge by just walk in into any branches of BNM, but do remember to bring along your MyKad (NRIC) and driving license. It just takes you a few minute with these 3 simple steps;

Step 1: Walk in into BNM and look for CCRIS kiosk

Step 2: Insert your IC for thumbprint verification

Step 3: Print out your credit report

Apart from that, you may wonder how if you are staying out of the BNM branches? Don’t worries, you can request your credit report via email, you just have to complete the application form together with the required documents and send/fax to them. Do note that it might takes you around 2 to 4 weeks to process your request of credit report via email. Here the simple guides to you;

Step 1: Type in BNM CCRIS [your e-mail address], then SMS to 15888, it will be charged @ RM 0.20

Step 2: Do check your inbox/ spam folder, a form should be attached

Step 3: Print out the form and complete it

Step 4: Mail, fax/ email the completed forms and required documents to bnmtelelink@bnm.gov.my

Do visit www. creditbureau.bnm.gov.my for more details.

Checking your reports via CTOS

CTOS will provides your credit reports in order to determine the risk by bank when you apply any loan and it is free of charge by the way. Here the simple steps for you to get your credit records

Step 1: Login to CTOS website and click at “Get Use ID” in right column (personal solutions)

Step 2: You need to register an account and fill in your IC no., email, tick the CTOS PDPA policy then click “Next”.

Step 3: Fill up the following details, you need to scan your IC back & front separately and save into file then upload. Once you fill up your phone no., click “Request Tac” then fill in the number that you received from SMS.

Step 5: Within 24 hours, you will receive an update via email about activate your CTOS ID.

Step 6: Click “Do Self Check” at self check section

Step 7: Read through the explanation and statutory notification, then click “Do Self Check Report”

Step 8: Fill up the details again at the acknowledgement and verification page, then click “Submit CTOS Self Check”

Step 9: A CTOS Self Check Report will send to your email

Do visit www. ctoscredit.com.my for more details.

Source: WMAPROPERTY

It’s not about property ownership it’s about control! To get more details, visit 👉 Property Millionaire Intensive

How To Secure The Lowest Rate On Your Home Loan

Finding the perfect home is one thing — finding the best mortgages rates is entirely another. Indeed, the mortgage application process can take a long time, be incredibly tedious and strenuous, and quite frankly, very stressful. Home mortgage lenders will go to great lengths to make sure that you will be able to pay them back, and you want to find those low rate mortgages, which will make a huge difference over the life of the loan.

Make sure you follow these tips for finding the best mortgages rates possible:

1. Compare, compare, compare
First, you must find your dream home. Since chances are that you were aided in your search by a real estate agent, you will likely be gently (or not so gently) nudged in the direction of a particular lender — but remember, you decide from whom you take a mortgage. That’s why it’s important to compare mortgages — as many as you can — to get the best deal for your unique financial situation. There are many mortgage rate tools that should help you make easy comparisons, but don’t be too indecisive — lock in a rate as soon as you are comfortable with the numbers, because getting approved for your dream house along with your ideal mortgage can be a long and arduous process.

2. Beef up the down payment 
Paying more upfront on your down payment can help you secure a lower interest rate, and save you more money in the long term. This can also be an effective way to counteract a low credit score, which can seriously hurt your chances of getting a good rate. Speaking of credit scores…

3. Clean up your credit score
When applying for a conventional mortgage, having a clean and high credit score is of the greatest importance. The higher your score, the fewer hoops you’ll have to jump through and the better your interest rate. You’ll have more loan choices in general, and adding a home loan to your cache — as long as you make your monthly payments — will only boost your score. This fact is another reason why it is crucial that you stay with your employer during the home buying process, as changes to your employment status can seriously affect your score and your ability to secure the best rates possible. (Read more: How To Check Your Credit Score)

Your dream home — and dream mortgage — are definitely out there!

Source: WMAPROPERTY

It’s not about property ownership it’s about control! To get more details, visit 👉 Property Millionaire Intensive

Pros and Cons of a Cash-Out Refinance

If you have a house, chances are that you’ve been told it’s your most valuable asset. And it’s true that your home can have a lot of value. However, the value in your home isn’t usually very liquid. It’s hard to transform the equity you’ve built up into cash.

One of the ways that homeowners with a good deal of equity in their homes tap into that value is with the help of a cash out refinance.

What is a Cash Out Refinance?

Cash-Out RefinanceWhen you refinance your home, you take out a new loan and use it to pay off your old home mortgage. You have a new loan, and it usually has a lower interest rate, or a longer term, or both.

With a cash out refinance, you don’t just get a loan for the outstanding balance on your first mortgage. Instead, you get a loan that reflects the equity you have in your home. If you owe $150,000 on your house, but it’s market appraisal says it’s worth $180,000, that means that you have $30,000 equity in your home. The bank might let you refinance your mortgage for $160,000, even though you don’t owe that much.

Now, you owe $160,000 on your home, but you only needed $150,000 to pay off the mortgage with the new loan. You get to pocket the $10,000 difference — and you can do whatever you want with the money.

Does a Cash Out Refinance Make Sense?

The biggest advantage to a cash out refinance is that it provides you with access to the value in your home. You get to tap into that value to some degree, and it’s often a source of capital that’s larger than you are likely to get elsewhere.

Refinance DecisionAnother advantage is that the interest rate on a home loan is usually lower than what you would get for another type of loan, allowing you to borrow at a lower interest rate. On top of that, your mortgage interest is often tax-deductible, so you get another bit of a break not seen with most other loans.

Of course, there are downsides to a cash out refinance as well. One of the biggest cons to a cash out refinance is the fact that you are stretching out your repayment for 30 years. When most people borrow $10,000, they pay it off over the course of three to five years. Stretching it out could mean paying more in the long run. If you pay off $10,000 for 30 years at 4.25 percent, you will ultimate repay $34,856.35. Compare that to getting a five-year loan at 10 percent. Your total payoff would be $16,105.10. The tax value of the cash out refinance probably doesn’t offset that amount.

Another con to a cash out refinance is the fact that you are securing your loan with your house. That extra $10,000, when borrowed independent of your home, is unsecured. By getting it through a cash out refinance, you are suddenly putting your home at risk.

For most homeowners, a cash out refinance isn’t the best path. While it can be convenient, and it can help you out of a jam if your home is the only thing of true value that you own, the reality is that a cash out refinance often costs more than you think — and comes with other pitfalls.

Instead, consider your other options, and rethink your “need” to get the extra money from your house. Many people get a cash out refinance to pay for vacations or to consolidate debt. Usually, there are better ways to cover these costs than securing them with your home.

Source: WMAPROPERTY

It’s not about property ownership it’s about control! To get more details, visit 👉 Property Millionaire Intensive

What You Need to Know About Home Loans

Do home loans become a little too much for you to consume because it involves big money? We’ve broken down all the essentials you need!

If personal loans are loans you take out for personal use, home loans are loans you take out specifically to buy a house. On the surface it sounds pretty straightforward, but there are some important wrinkles unique to home loans that’s worth exploring.

You Have to Put Some Money Down Yourself

First off, the bank won’t lend you all the money you need for your new house (with exceptions; more on that later). They will usually loan out 80% to 90% of the home’s purchase price to a borrower. This means that you have to come up with 10% to 20% of the property’s market price yourself before applying for said loan so you can buy the house.

Why don’t banks just loan you 100% of the money you need like they can with personal loans? The short of it is that historically, when they did, it hasn’t been profitable for them to do so. Houses are expensive and people often take 20 to 30 years at least to pay off their home loan. That’s a long time for a bank to wait on their returns. It’s also a long enough time that borrowers’ financial standing might change such that they may not be able to continue paying the loan, which means further losses on the banks’ part if they default.

To protect themselves from these risks, banks only elect to lend out a certain percentage. Big enough to make the loan worth it, but also just short enough to make the borrower commit to the loan.

Your House is Used as Collateral

Another difference between home loans and personal loans is that there are no unsecured home loans. The house you’re buying is always used as security. That is to say, if you can’t properly pay your dues, the bank can take the property over. This, together with the maximum amount of 80%-90% of the market price that the bank is willing to loan you are used to ensure that the bank doesn’t lose out too much by lending you money for your house.

What About That Exception You Mentioned?

Oh yeah. That’s referring to the My First Home Scheme or Skim Rumah Pertamaku set up by the government back in 2011. Aimed at assisting young adults to own a home, it allows homebuyers to obtain 100% financing from financial institutions so they can own a home without needing to have the 10%-20% down payment on hand.

There are specific conditions you have to meet to fit into this category of course. Also, if you’re borrowing under this scheme and not paying any down payment, it means you have to pay back 100% of the market price for the property you’re buying. This means a longer loan term, naturally.

Ah Okay. So What Kinds of Home Loans Are There?

There are three kinds, generally:

Term Loan

This type of loan uses a fixed interest rate that’s applied over the tenure of the loan. This means you pay the same amount every month plus interest. The good thing about these loans is that you pretty much know what to expect.

Fully Flexible Loan

This type of loan allows you the freedom to make additional payments as and when you’re able. Also, the interest rates are calculated against the reducing balance of your loan. In other words, the larger your payments, the lesser total interest is incurred over the tenure of your loan. You can also withdraw you over-payments without hassle as the loan is usually linked to a current account.

Semi-flexible Loans

This type of loan is a bit of a mix between the two. You’re still allowed to make additional payments, and those payments go toward reducing the interest rate for that loan. However, withdrawing over-payments requires a formal request from the bank, and you’re likely to incur some charges for doing so.

Documents! Which Ones Do I Need?

documents

It depends on the bank and the loan you’re going for. You can call them ahead to know what sort of documents you need. The ones commonly asked for are:

  • Photocopies of your NRIC (or passport for non-residents)
  • Income statements (3 or 6 months depending on the type of loan)
  • Proof of your other existing loans (e.g. car loans)
  • Personal details of your guarantor if your application requires one
  • Booking receipt of your desired property
  • Educational qualifications
  • Latest EPF or LHDN statements

If we’ve missed out anything you’ve learned from experience with home loans, be sure to drop us your thoughts in the comments section below – we’d love to hear from you.

Source: WMAPROPERTY

It’s not about property ownership it’s about control! To get more details, visit 👉 Property Millionaire Intensive

Mortgage LTV Ratio & Margin of Finance for Home Loans

In Malaysia, it is normal to expect 90% LTV ratio for a residential mortgage loan (more commonly known as a housing loan). But Bank Negara closely regulates the LTV ratios for residential mortgage loans to prevent uncontrolled speculation.

  • If a person has 2 or more existing residential mortgage loans, LTV is capped at 70% for the next housing loan

Additionally, there is a My First Home Scheme (Skim Rumah Pertamaku) to help first time home buyers who qualify for the scheme to obtain up to 100% LTV.

Aside from Bank Negara regulations, it is also common for banks to limit the LTV ratio for the following types of home loan applications based on their internal credit policies:

  1. Purchase for investment
  2. More than 1 existing housing loan
  3. Land for custom built houses
  4. Developer projects that have been known to give discounts to customers

Commercial Property Loans

Bank Negara does not impose a LTV cap on commercial property loans. However, it is more common to get only 85% margin of finance as banks are more cautious in financing commercial properties. But 90% margin of finance is still possible.

Do note though that banks tend to be more picky with the types of commercial property being financed, and may curtail the margin based on its usage (E.g. Office / Serviced Apartment / Shop Lot / Shopping Mall).

Foreigners & Nationality

Banks are more cautious with those with less ties to Malaysia. So foreigners tend to have more LTV restrictions on their home loans.

Nationality Place of Work & Residence Exepected LTV ratio
Malaysians Abroad Up to 90%
Singaporean Singapore Up to 85%
Other Foreigners Malaysia Up to 80%
Other Foreigners Abroad Up to 50%
MM2H Application Malaysia My Second Home Up to 80%

Legal Fee and Valuation Financing

Aside from financing the property, it is common for banks to allow up to 5% additional margin of finance on the loan to finance the borrower’s loan documentation and valuation costs.

Source: WMAPROPERTY

It’s not about property ownership it’s about control! To get more details, visit 👉 Property Millionaire Intensive

Using Hard Money Loans for Real Estate Investments

Investing in real estate can be a lucrative avenue for building wealth, and it’s also an effective way to inject some diversity into your portfolio. While real estate investment trusts (REITs) and real estate crowdfunding allow you to invest passively, some investors may prefer to own property directly. If you’re not comfortable parting with a substantial amount of cash up front to purchase real estate, a hard money loan may be the answer. While this type of loan has advantages over traditional financing, you should be aware of some potential downsides.

How Hard Money Loans Work

Hard money loans, sometimes referred to as bridge loans, are short-term lending instruments that real estate investors can use to finance an investment project. This type of loan is often a tool for house flippers or real estate developers whose goal is to renovate or develop a property, then sell it for a profit. Hard money loans are issued by private lenders rather than mainstream financial institutions such as banks.

Unlike traditional bank loans, the ability to obtain hard money financing isn’t determined by the borrower’s creditworthiness. Instead, hard money lenders use the value of the property itself in determining whether to make the loan. Specifically, lenders focus on the “after repair value,” or ARV, which is an estimate of what the property will be worth once the renovation or development phase is complete.

property-asking-price

The Pros

There are several good reasons to consider getting a hard money loan instead of aconventional mortgage from a bank. Here are the main benefits this lending option offers to investors:

  • Convenience Applying for a mortgage is time-consuming, particularly thanks to new regulations on mortgage lending implemented as part of the Dodd-Frank Act. It can take months to close on a loan, which puts investors at risk of losing out on a particular investment property. With a hard money loan, it’s possible to get funding in a matter of weeks. That’s important if you’re funding a large-scale development project and can’t afford deviations from the timeline to completion.
  • Flexible terms Because hard money loans are offered by private lenders, it’s possible for investors to have more room for negotiation of the loan terms. You may be able to tailor the repayment schedule to your needs, for example, or get certain fees, such as the origination fee, reduced or eliminated during the underwriting process.
  • Collateral With a hard money loan, the property itself usually serves as collateral for the loan, but again, lenders may allow investors a bit of leeway here. Some lenders, for instance, may allow you to secure the loan using personal assets, such as a retirement account or a residential property you own.

7-things-to-consider-if-you-wish-to-become-a-real-estate-crowdfunding-investor-2

The Cons

Hard money loans aren’t a perfect financing solution, and there are two primary drawbacks to consider:

  • Cost Hard money loans are convenient, but investors pay a price for borrowing this way. The rate can be up to 10 percentage points higher than for a conventional loan. Origination fees, loan-servicing fees and closing costs are also likely to cost investors more.
  • Shorter repayment period The purpose of a hard money loan is to allow an investor to get a property ready to go on the market as quickly as possible. As a result, these loans feature much shorter repayment terms than traditional mortgage loans. When choosing a hard money lender, it’s important to have a clear idea of how soon the property will become profitable to ensure that you’ll be able to repay the loan in a timely manner.

The Bottom Line

Hard money loans are a good fit for wealthy investors who need to get funding for an investment property quickly, without any of the red tape that goes along with bank financing. When evaluating hard money lenders, pay close attention to the fees, interest rates and loan terms. If you end up paying too much for a hard money loan or cut the repayment period too short, that can influence how profitable your real estate venture is in the long run.

Source: WMAPROPERTY

It’s not about property ownership it’s about control! To get more details, visit 👉 Property Millionaire Intensive

5 Common Housing Loan Mistakes To Avoid

Every day there are people just like you and me made mistakes in their home loan. By acquainting yourself with “5 common housing loan mistakes to avoid” article, you can save thousands on your housing loan. Read on so you can avoid these pitfalls.

APPLYING 1 BANK AND THAT’S IT

Banks love if you can be extremely loyal to them. Some typical customer that have the home loan, car loan, credit card with one bank and will continue to go back to the same bank without knowing that the bank does not have mercy and will take every chance they have to earn more money.

Example, Andrew has a car loan, credit card and personal loan with ABC bank. Since now Andrew is buying a new house, he need a home loan and Decided to go back to ABC bank, he is comfortable with ABC bank and has so many facilities for them. In the same time, Andrew feels since he is a loyalty customer to the bank, he should get proper treatment, perhaps a better interest rate.

However, what Andrew do not know is bank will have different thinking. Bank nature is to generate profit. Apparently, the bank will think of to maximise their profit.

Well, the truth is for the individual bank, either you are their customer or not. They are offering the same to you. It makes no different.

Question, why you want to continue to be loyal? Why not explore more and get cheaper interest rates?

However, there are a small number of banks that give slightly better for their customer too. For you to know, you just have to apply more application, do not stick with only one bank.

Submission to one bank only is too cliché, give yourself more option and chances to view more offer.

UNSTEADY PROPERTY VALUATION

If you are buying completed property, as you know that property valuation is compulsory to all the bank.

During submission of home loan, bank officer will have verbally check the property valuation and submit to the underwriter for approval.

After approval, the bank’s letter offer will be sent to the customer for acceptance. Let’s said; you accepted the offer. And happily sign the Sales and Purchase Agreement.

Suddenly, when valuer site visits the property. The property value drop. What should you do?

Firstly, you can’t cancel the purchased because you already sign Sales and Purchase Agreement. If you do, you will be penalised by the seller. Besides, you already spend 10% to pay the seller and SPA lawyer fees already paid.

This show how crucial is the property valuation. While, there are ways to avoid such issue.

At the early stage, during application of housing loan, let said you have applied five banks and the property purchase price is RM500,0000.

Bank A: Property valuation RM500,000

Bank B: Property valuation RM480,000

Bank C: Property valuation RM470,000

Bank D: Property valuation RM480,000

Bank E: Property valuation RM460,000

Bank A is the only one can get the value and other banks unable to get, this shows that the property price is slightly higher than the market price.

If you are going to accept with Bank A, you should know that there are changes the property value will fall, and you have to be prepared to top up the different.

Alternatively, you can suggest the bank to ask the panel valuer to visit the property first before signing the letter offer, and this may cause you minimal fees ranging RM200 to RM500 upfront.

If you do not have any extra cash, we do not encourage to proceed to purchase the property. You might at risk losing 10% deposit and SPA lawyer fees. It is wise not to proceed ahead.

READ AND UNDERSTAND YOUR LETTER OFFER

Yes, read your letter offer is not enough. You must understand the terms and conditions as well.

Always know the additional fees incurred, late payment interest rates, ceiling rate for Islamic loan, instalment amount, daily rest or monthly rest facilities, etc

The general rule, if it doesn’t appear in your agreement, it doesn’t take effect or apply to you. All the details information on your facilities lie on your letter offer, not loan agreement. The loan agreement is a standard bank loan documents, and its will start effect if customer stop making payment to the bank.

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UNDERSTAND LOCKIN PERIOD

Lock in period should be very straightforward terms in the letter offer. However, the bank can be very tricky at times when given out the lock in period and percentage charge for a penalty.

For example,

3% on original loan amount effective from 3 years of 1st disbursement.

Or

3% on original loan amount effective from 3 years of full disbursement.

The key point here is “1st Disbursement” & ” Full Disbursement”.

Well, for sub sale and refinancing cases both terms might have differences in few months period. However, for under construction case, this will be an enormous impact.

Under construction cases might need 3-4 years to have full disbursement. For example, if 1st disbursement happens in the year 2014. And full disbursement occurs in the year 2017. The penalty period started to calculate in the year 2017 + 3 years. Indirectly, it means you are serving three years + 3 years penalty lock in which does not sound fair at all to the customer. But, do the bank officer tell you this?

BEWARE OF HIDDEN FEES

In bank letter offer will typically state every fee that available. Normally, the bank will have RM200 processing fees which sometimes can be waived and at time not.

Or withdrawal fees amounting of RM25-RM50 that can waive for certain banks or account opening fees of RM200 for every account.

For all the full flexi product there will be a maintenance fee of RM10 monthly. However, you can opt for a semi-Flexi home loan to avoid such fee imposed.

Another pointer is to make sure the loan well finances your lawyer fees for loan documentation. For the selected bank, the finance amount might not be sufficient, and the customer will need to top up later.

Most people can’t afford to make home loan mistakes as they could cost ten thousands of dollars. If you’re one of those people, make the effort and pay attention to the details of home loan packages, this is unlike any other purchase or loan with which you’ve ever dealt, so avoid common mistakes to ensure the process goes smoothly.

Good luck!

Source: WMAPROPERTY

It’s not about property ownership it’s about control! To get more details, visit 👉 Property Millionaire Intensive

How Much Can I Borrow?

How much can I borrow? 

This is the most important question to ask before purchasing any house. There is no point of buying a house and your loan is not approve right?

If you like old school, we can share with you the way to calculate your entitlement. This may not be 100% correct because every banks may have their own calculation and guidelines. But, this can use as a guide.

First, write down all your commitments:

Car Loan installment: RM 1000

Housing Loan installment: RM 1200

Personal Loan Installment: RM 500

Credit Card min payment: RM 5000 (Outstanding) x 5% min payment = RM 250

Total commitment: RM 1000 + RM 1200 + RM 500+RM 250 = RM 2950.00

Secondly, check out your latest payslip and look at your net income.

For example, net income is RM 10,000.00

Normally, bank will use Debt Service Ratio (DSR) to calculate your entitlement.

Healthy DSR will be less than 70%.

For example, net income RM 10,000 x 70% = RM 7000.00

Your existing commitment and new installment cannot exceeded RM7000.

If your commitment is RM 2950, your new installment should not exceeded RM 4050 ( RM 7000-RM 2950 = RM 4050)

So, how much you can borrow with installment RM 4050.00?

Now you have to work backwards, if your age is 30 yrs. The maximum tenure now offer by bank is 35 year or up to age 70 years, whichever comes first.

With 30 year old age, you can still entitle for tenure 35 years.

Interest rates offer in the average of 4.40% or 4.50% per annum.

Key in this information, in your mortgage calculator.

Start with key in your loan amount RM300,000, rates 4.50% and tenure 35 years. And click calculate.

You will get installment per month. If the installment way far from your installment amount RM 4050, just keep add in your loan amount.

I manage to get RM 858,981.44 loan amount for installment RM 4050.00

If RM 858,981.44 is 90% of loan amount, the purchase price you are entitle to purchase is RM 858,981.44 / 90%( max margin) = RM 954,423.82

So your entitlement of purchase price is house not more than RM 954,423.82

Source: WMAPROPERTY

It’s not about property ownership it’s about control! To get more details, visit 👉 Property Millionaire Intensive