METHOD TO REDUCE YOUR HOUSE LOAN

    Nowadays, house loan is the biggest concern for all Malaysia, correct? but no matter what or     how, we still need to buy a house (or more). Why? cause rent is the biggest wasting of money     that most people not aware too.

    yaa....it is a common things to hear, my money is not enough to but a house, to tell you the            truth money is never enough for human as long as they still alive and the neuron things still             moving in their head. 

So would like to share some tips on how to reduce installments. 

You don't have to pay extra installment. What you need to do is to refinance your home loan at the right time, and as frequent as possible.

The situation change from time to time. Example when taking up a mortgage in 2003, the banks offer very low interest rate during the first year of my mortgage. Then the second year interest rate is at BLR minus a margin (e.g. BLR - 2%). Then BLR plus a margin on the subsequent years.

At that time, the lock in period is 3-5 years depending on the different type of package you took up. If you settle the loan earlier and within the 3-5 years lock-in period, you will need to pay a 2-3% penalty.

So the trick is to refinance the mortgage when the period period is over, just to take advantage of the extremely low first year interest rate. Do not dare to try to pay on the penalty.  It is stupid to do that.

But nowadays, the situation is quite different. Most banks don't provide fixed-rate home loan anymore because they foresee that the BLR will be increased in the near future when the economy starts to boom again. However, banks still offer very attractive interest rate at BLR - 2.3 last year (2009). I can say Islamic  loan is the  best solution right now. No penalty and but you need to do some survey in order to find the right one. Dont  feel lazy to  send your application to multiple bank  eventhough you have money to pay the extra's

If you have taken up a housing loan during before 2006, it is a good chance that you will be able to get a better offer nowadays although starting 2010, Bank Negara had fixed the bank offer at BLR-1.8 to soften the competition.

What you need to do is:

FIRST - write in to your bank to ask for reduced interest rate.

Instead of paying BLR plus... get them to offer you BLR minus...

SECOND - at the same time, apply to refinance with another two banks.

Then show the offer letter from each bank to their competitors.

BUT NEVER EVER TO USE YOUR EPF MONEY TO PAY YOUR HOUSE MONTHLY PAYMENT.  You are wasting your money , eventhough your answer  is I can saved my money and put it to ASB. Common.....yup you can saved your money but EPF is still your money maaa....at least take some time to do simple calculation before you make such an idiot decision.  

For me , planning  and budgeting is the best thing that you need to do before you make any decision. Regardless what people think of your decision  (eventhough you need to pay komisen to the house developer clerk) but as long you can get a chearper house price  (+ the komisen) you still gain something. in order for you to gain something of course you need to loose something. It is a balance thing in our life. but pls make sure gain is more than to loose. Ciao