Thursday, April 06, 2006

FPM Home Loan Planner

FPM Home Loan Planner contains a home loan calculator and a home loan repayment planner. (It is an Excel file. DOWNLOAD to your computer to use it. You cannot use the browser version.)

Home Loan Calculator

There are four variables in calculating home loan, i.e. loan amount, interest rate, monthly instalment and loan tenure. The usual home loan calculators found in the internet calculate only the monthly instalment in which users enter loan amount, interest rate and loan tenure. Under certain circumstances, i.e. exploring alternative loan tenure by changing instalment amount, such home loan calculators are cumbersome for use.

In FPM's Home Loan Calculator, users can decide what to calculate by providing data of any three variables.

Home Loan Reapayment Planner

The repayment planner contains amortization schedule and provides flexibility of calculation for staggered release of loan (housing project under development) and early repayment of home loan.

Some banks offer lower interest at the begining of the loan. Interest rate can be changed through out the period of the home loan.

Note 1: You can enter early repayment amount and interest rate in the respective columns.

Download FPM's Home Loan Planner here.

Sunday, January 22, 2006

Repaying home loan early?

Among various types of financing, home loan is the cheapest. Why would we want to repay it early? It is cheap financing! The "saving" from the lower monthly installments could be used, for example, for business, renovations, investing, etc.

This is the logic that most people use to convince themselves not to pay down their home loan. "Well, personal loan is more expensive then home loan..." This is the argument.

In fact they are right...only if their assumption of continuous income stands. In other words, the argument is logical only if there is no risk of losing your job!

After the 1997 Asia financial crisis, the financial institution that I worked for went through several major and minor corporate restructurings. I was lucky enough to be one of the survivors. However, going through the process of restructuring was not emotionally easy. I was constantly guessing whether I was in the next list to go and constantly counting my financial commitments, i.e. home loan. No matter how cheap a home loan is, when you have no income to make your repayment you are risking the shelter of your family.

Seeing your colleagues being retrenched at their late thirty or forty was depressing.

Today, after the announcement of merger of the company I am currently working for, I could almost see the looming of business process rationalization. It is still not easy. But this round, I know my family will have roof above our heads.

It is clever to think that home loan is cheap financing for many other activities in life...too clever to realise sometime tomorrow is not totally in our control. The best risk management practice is to pay off your home loan as early as possible.