Infographic on "A Guide To Home Loan Refinancing"

It took me a while to finally find time to upload this informative infographic.

This infographic, from iMoney, (with their permission to display) provides a complete and concise information on Refinancing Home Loan:

• Benefits and reasons of refinancing your home loan
• Key considerations before you make a choice
• How to go about to refinance your home loan

As I wrote in my previous post "Reduce Your Home Loan Interest Rate", there is definitely a chance for big saving if your current housing loan was obtained earlier than 2009. Many people are still stuck with pre-2009 high interest rate housing loan. Read this for strategy to reduce your interest rate.

However, once you have decided to go ahead with refinancing, this infographic is useful. What are the outcomes you want in refinancing your home loan?

• Lower installment amount?
• Shorter repayment period?
• Free up cash by increasing your loan amount as the value of the property had increased?

The infographic illustrates how you can reduce your loan installment amount and save interest expenses. There are some good advises in the section "How do you go about in refinancing your home loan?" on pitfalls to avoid and steps to be taken. You may find the original inforgraphic on refinancing home loan here.

Courtesy of: iMoney.my

More resources:

• Housing loans comparison websites
• Download a home loan planner
• Reduce your existing home loan's interest rate
• Should we repay home loan (and not property loan for rental property) quickly?

Compare and calculate home loan offers

If you are looking for a website that provides comparison of home loans offered by different banks, you may find these two websites useful.

iMoney.my 

This Islamic home loan comparison and sourcing web tool is simple, just
1. Enter the amount you want to borrow, and
2. Enter the tenure of the loan (year)

And you will be able to see a list of banks with essential features of the loans offered, i.e. interest rate, calculated monthly repayment, total interest (profit) paid for the entire tenure of loan and lock-in period. You can click on "Apply Now" button and fill up a simple application form through the website for someone to contact you on your selected home loan.

I like its simplicity. Many users will find that it is easy to use.

Beside home loan comparison (currently focus on Islamic loan only), iMoney has many good financial articles and comparison tools of various financial products, i.e. fixed deposits, credit card, etc.

Loanstreet.com.my

Loanstreet is a website focuses on property loan. Its property loan comparison and sourcing web tool requires users to provide a bit more details, but it also provides more information. Not only you can choose the type of property up front, you can refine the search result with type of rates, i.e. fixed rate or floating rate,  flexi or non-flexi loan, etc.

This is how its loan comparison and sourcing tool works,
1. Enter the type of property, value of property, financing margin and tenure of loan.
2. Refine the result by choosing more options, i.e. type of rates, type of repayment, Islamic or Conventional, Completed or under construction.

The outcome is that you can see a list of bank loans offered by various banks with essential features, i.e. rates, tenure, lock in period, full flexi, etc. You can select offers and click on "Apply Selected Packages" button and fill up a simple application form through the website for someone to contact you on your selected home loan.

I like this tool because it is more delicate in terms of functionality. However, a small group of users with little interest in financial terminology may find it complicated.

It also has many good guides on property loan.

Both websites above are impressive and useful.

Negotiate With Banks

One thing I realised about getting a property loan is that interest rate offered by bank is always negotiable. When you use such comparison tool, you should not feel intimidated by rates listed in the comparison list. You need to contact them to find out more and negotiate if you are interested.

The rate that the bank offers to you usually determined by a few factors:

• Type and locations of property and/ or specific project
• Your credit records kept by Bank Negara Malaysia's Central Credit Reference Information System. (Read more about CCRIS here.)
• Your income level
• Whether there is Mortgage Reducing Term Assurance, MRTA (Read more about MRTA here.)

A good credit history record, high income and a good piece of property that the bank feels comfortable with can help you to reduce your rate by 0.1% - 0.3%.

Other Sources of Home Loan

There are other financial institution that offer home loan, i.e. insurance companies, Malaysia Building Society Berhad (MBSB), KWSP (EPF), Koperasi Loan (a type of personal loan with interest rate lower than housing loan), etc.

As far as I know, home loan offered by insurance companies can be really cheap but with fixed tenure and fixed interest rate. They may not be as flexible (in term of early repayment, advance payment and withdrawal of advance payment) as we need them to be.

Lastly, there is one good article here on avoiding common home loan mistakes.

Other resources:

• Download a home loan planner
• Reduce your existing home loan's interest rate
• Should we repay home loan (and not property loan for rental property) quickly?

Reduce your homeloan interest rate

Homeloan Rates Reduced in 2008, 2009 and 2010

In early 2009, Bank Negara Malaysia ("BNM") reduced the bank interest rate significantly (by 40%) and increased the liquidity of banking system to prepare for the anticipated economy downturn of the world.

I remember Malaysia's homeloan interest rates went down significantly though gradually in the year of 2009. (Meanwhile, prices of house went up gradually and significantly in 2009 to 2011.) It went down to as low as 3.5% - 4.0% (BLR less 2.3%) from previous height of approximately 6.0 - 7.0%. It was a very significant reduction. It cut household's homeloan interest cost, one of the largest expenses of middle class households, by 1/3.

Banks would not informed you or reduced your homeloan interest rate

However, if you had a homeloan earlier than 2009 then, there was a catch: your bank would not offer or inform you of the new reduced homeloan rate. They would continue to charge you based on your original homeloan interest rate that probably hovering between 5.0% - 7.0% (BLR plus 2%).

It surprised me to find out recently that, even until today, some of my friends and colleagues are still carrying these pre-2009 homeloans with high interest rate. What they did not know is that they can reduce the interest rate and instalments.

Method To Reduce Your Homeloan Interest

• Check with other banks their homeloan offer. Get two banks' offers.
• Call your bank to reduce their rate, or else you would switch your homeloan to another bank.
• At this point, your bank would most likely agree to reduce your homeloan interest rate and in return would want to tie you down for at least 3 years.
• You can agree and the rest is just paperwork
• If your bank refuse to reduce your interest rate, then switch to another bank. Some banks even offer free legal fee for switching of loan. Here is an useful infographic on refinancing your housing loan.

Why didn't I write about this earlier?

I used to think such thing is just so straight forward, like "Bank Negara had reduced the interest rate, the banks had a lower homeloan interest rates... and come, let's talk to the bank officer to reduce our rates!!" And sooner or later most people would know and ask their banks to reduce their homeloan rates...and so I thought.

Apparently it is not the case. Many people do not know this even after 4 years since 2009. So I write now. Hope it helps. If you still have an old homeloan, check your interest rate and talk to your bank to reduce it. The saving can be huge.