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willi
19-06-2007, 01:37 PM
Any one in the financial sector here :) ?

Current I am having a housing loan from Bank H. Initially I took $130K in Year 2001. I have been paying the monthly installments without fail. Now, the balance is approx $85K.

I am contemplating if I should withdraw from my EPF account ( approx $75K) or re-finance the loan from other bank.

EPF is giving yearly dividend with slightly more than 5%. While Bank H is charging me BLR (current rate 6.75%) + 0.35% = Total 7.1%. And they are not willing to revise the rate further due to smaller amount of $$ involved.

However, as we can see, the offer from other banks are far more attractive ie. BLR - 1 - 1.75 % , with the condition that the loan amount must be at least $100K (if I am not wrong )

If I were to let go my existing loan, I understand that I will have to pay some banking fees. But, how much are they :( , it is worth while to make a change ???. I dont want to be Penny Wise Pound Foolish ... which eventually I would have to pay more.

Appreciate your advice, please. Thanx ............ :)

mlkok
19-06-2007, 08:37 PM
Have you checked on the costs involved should you refinance against the amount you'd be saving?
Taking out from EPF Account 2 to pay down your loan would be a good idea if you want to free up your cash for other purposes.

willi
20-06-2007, 08:33 AM
Have you checked on the costs involved should you refinance against the amount you'd be saving?
Taking out from EPF Account 2 to pay down your loan would be a good idea if you want to free up your cash for other purposes.

Yeah, I am in the midst of searching for any bank who can offer me a better rate. With so many banks who are offering loans with below the BLR rate makes me 'gatal' to switch. But, it will have to be more than $100K
(I assumed, and therefore I need to check further)

Any financial expert out there, boleh tolong ah ... !!!??? :D

PJS
20-06-2007, 09:39 AM
Check your loan agreement to see how much is the penalty if u terminate the loan early by refinancing with other banks, normally 5 yrs. Since your loan is well after the normaly 5 yr penalty period there shd be no penalty.

Since u can withdraw up to 75K from EPF it is advisible to use that to pay down the loan. Even tho there may be zero moving cost refinancing packages, for <100K, I don't think u can see as much interest savings as paying down the original loan with your EPF.

You may opt to withdraw all available amount in a/c 2 (RM75K) from EPF or only partial, say, 50K, and keep some balance in a/c 2 in case u need it for education or medical expenses(only if u didn't hv a substantial savings for emergencies such as these).

Once the loan principal is reduced to 10K or 35K, and u continue to pay the same monthly payment, the interest charges will be very minimal, a much larger % of your monthly payment is used to pay off the principal instead of servicing the interest. The whole can probably be paid off within a few years then u will be free of debt! :) u can also do a second EPF withdrawal in a year or 2 and totally pay off the loan.

Why bother with refinancing then?

Another option is to refinance up to 100K, make sure u choose a flexible home loan. The 2nd bank will pay u 15K in cash after they settled the loan with 1st bank, (100K new loan - 85K outstanding old loan) dump it back into the loan to reduce the balance to 85K. Start servicing the loan while u apply for EPF withdrawal. u will be paying less interest in the mean time.

Then dump the EPF money into the new loan asap and reduce further it to 10-30k, and pay it off slowly, make sure u take >5yrs before final settlement or u will incur penalty. Check the T&Cs carefully to ensure u can prepay the loan with cash n EPF without penalty.

To realise any savings, u hv to make sure that all costs involved (legal fees, stamp duty, misc fees, etc) do not exceed the interest savings in the next 5 yrs, if u use EPF to pay down the loan, I doubt if u will see significant savings , if any, by switching bank. If u let the loan remain at 100K and not touching the EPF, then maybe u will see some savings in the long run, but if u calculate the interest paid less EPF dividend rate, u still may not see any real gains.

willi
20-06-2007, 10:46 AM
PJS - thanx a lot. The information is very useful for my next action :D

USJ27Resident
12-08-2007, 02:53 AM
Speaking about housing loans... For those that don't know, or have the time to kacau your bank...This is a trick to get your monthly loans lowered :p

Just go to ANY bank and grab a SPECIAL OFFER brochure that offers a BELOW BLR rate... (currently AMBANK is offering -1.35% below BLR)... then head to your bank that your house is mortgaged to... tell them you are considering to moving your housing loan to (example: AMBANK)... unless they lower their BLR / loan rates [you need to show them the brochure from the rival bank]... I BET you they would, to keep you in their books.

I did just that... and guess what - I am saving almost RM250 p.m. or an est. RM3000 a year.. (10 years, can add up to 30 thousand from a 1.15% savings!)

chinkw1
08-09-2007, 10:37 AM
Is there any one here who invest in stock market?
Or can any good ppl here direct me to a forum which talks about the above please.

Budget2008 announced that dividend will be tax FREE. I want to find out how it works.

Pls help me.

wksp
05-10-2007, 06:55 PM
Is there any one here who invest in stock market?
Or can any good ppl here direct me to a forum which talks about the above please.

Budget2008 announced that dividend will be tax FREE. I want to find out how it works.

Pls help me.
not really the divided is already the after tax profit.Let say u make 60k profit in your company,the tax dept will tax accordingly than the profit after tax let say 40k,and u declared 30k to all shareholders,let say three holders each get 10k,than this 10k is not taxable as income in your personnel tax.Got it.