FEATURES OF HOUSING LOAN AND FEES INVOLVED

Buying property is a really tough decision these days. And housing loans play a main part when you decide to purchase a property as it plays a crucial part of any property purchase because this alone will affect the affordability of the homeowners to have their own properties. There are even some customers that are unable to get their loan approved, due to CCRIS blacklist and CTOS blacklist. This is why you need to know the different types of loan, so that you can choose the right loan that is suitable for you individually.

Types and Features of Housing Loan

And to be able to help you consider the perfect loan for you, you will also need to understand and know the features of the loans such as full flexi, fees by the bank such as set up fees, monthly maintenance fees, early settlement penalty, and lock in period and also interests that accompanies them.

Conventional Financing

In conventional housing loan, a borrower agrees to repay the loan amount together with interest over an agreed loan period. In terms of loans, borrowers pay an interest based on the outstanding principal amount been borrowed. Payments in the end will be made over a set of tenure installment.

Semi-Flexi & Flexi

As in increasingly competitive environment here in Malaysia, banks are forced to be innovative at offering products that benefits both parties, as in flexi home loans.

Flexi loan gives great flexibility to the borrower as it allows the customer to take out and put in the money in the loan account as they please without incurring any additional charges afterwards. This is achieved by a tied up loan account to the Current Account. Installment amount will be deducted from the Current Account monthly as scheduled.

Besides that, there is semi flexi loan which does not allow you to withdraw the money as you please. However, if you are in need of emergency funds by applying from the bank to withdraw the funds, subject to approval from the bank. Other than that, additional amount paid will not go in as pre-payment account, and depending on which banks, some banks allow the prepayment to reduce interest charges, whilst some does not.

Interest Rates Features – Fix Rate/Variable

Most banks in Malaysia will normally charge either fixed or variable interest rates or possibly the combination of both interest rates for conventional housing loan where interest rate commonly tied with the base lending rate of the banks. Fixed rates will only cause the interest rates to be higher considering the possible increase of the base lending rates in the future.

Islamic Home Loans

On the surface, it might have look similar to the conventional housing loan offering but they are basically based on different perspective and principles.

Islamic housing loans are non-interest based, hence you seldom see the word loan in any business associate with Islamic since loan regularly include interest payment. Islamic home financing in Malaysia normally comes in two types that are Bai’ Bithaman Ajil (BBA) or Musharakah Mutanaqisah (MM).

Fees Involved In Housing Loan

The next thing that you should know when buying a property is all the fees involved throughout the process. Other fees those are included when buying a property such as:

– lock in penalty (this however only applicable to conventional, but not applicable to Islamic)

– Loan legal fees – more loan documents in Islamic as it involves more agreements according to Syariah’s law

– Full flexi type involved set up fees and monthly maintenance charges

Sale And Purchase Agreement Legal Fees

Professional Legal Fees:

• For The First RM500,000.00 – 1.0% (Subject to a minimum fee of RM500.00)
• For The Next RM500,000.00 – 0.80%
• For The Next RM2,000,000.00 – 0.70%
• For The Next RM2,000,000.00 – 0.60%
• For The Next RM2,500,000.00 – 0.50%

Property Stamp Duty

• For The First RM100,000 – 1%
• Subsequent up to RM500,000 – 2%
• Subsequent onward – 3%

Loan Agreement Legal Fees

Professional Legal Fees:

• For The First RM500,000.00 – 1.0% (Subject to a minimum fee of RM500.00)
• For The Next RM500,000.00 – 0.80%
• For The Next RM2,000,000.00 – 0.70%
• For The Next RM2,000,000.00 – 0.60%
• For The Next RM2,500,000.00 – 0.50%

Loan Stamp Duty

• Total Loan Amount X 0.50%

By fully understanding the different types and features of the housing loans, it is hoped that this will help the informed applicants so select the right type of housing loan that meets their needs. Also not forgetting the cost involved in purchasing of properties, hence make sure you are fully aware of the costs that you need to bear when buying a house.