What happens if I want to repay my loan early?

When there is a substantial amount of excess money on hand, it is natural for a loan borrower to ask,

“What happens if I want to repay my loan early?”

Getting rid of the housing loan, student loan, personal loans as soon as possible is commonly considered a good decision, but it is ideal to twig the facts behind the early repayment concept. The repayment method will affect the interest expenses during the loan period.

Early repayment of a loan normally incurs penalty charges and hence, you need to figure out various things to make an informed decision.

  1. Reread the loan documents, to evaluate the early repayment conditions of the financial institution, where you have borrowed. The penalty charges may range around 2% to 5%.
  2. In case, the interest rate of your loan amount is pretty low, you can jumpstart to save or invest the excess amount on hand than using it for early repayment.
  3. Some banks allow early repayment only after crossing a certain minimum repayment period.
  4. The earlier full settlement of loan and early repayment of partial amount have different rules.
  5. Find out if the bank reduces the loan tenure.
  6. Sit with your banker and discuss if they add your early repayment in the principal amount or just the interest amount.
  7. Sometimes, refinancing may reduce the burden of the loan than the early repayment like Hong Leong Bank’s Property Refinancing Options.
  8. If you pay an extra amount as the loan insurance, early repayment is not suggested for you.
  9. In case of credit card loans, paying little more than the bare minimum can make a difference.

Home Loan Eligibility Calculator: Check your Eligibility

The Malaysian banks may promise to offer up to 30 times of your net income as a home loan, but everything may go upside down during the process, especially while calculating the eligibility. The home loan calculation is not a rocket science rather we have plenty of online facilities to instantly calculate it.

Depending upon the annual income of a person, the banks in Malaysia offer different percentages, which mainly depend on certain parameters such as occupation, types of expenses etc. While calculating the eligibility, you are required to give the following inputs:

1) Interest rate of the loan
2) Tenure of the loan, which you prefer
3) Principal loan amount you want to apply

Once you fill in all the details, click ‘Calculate’ button to know if you are qualified for a home loan. In the income status, you cannot include LTA or medical allowance, as they are a kind of reimbursements and not the income. Further, the banks also look for good credit history and CIBIL score, for home loan sanction. However, being disqualified for a loan may not be the end of the process rather you can apply jointly with your spouse or others to perk up the eligibility.

The Citibank’s Housing Loan, Flexi Home Loan and Home Credit enhance the flexibility for the customers. Apart from that, the immediate approval of loan (surprisingly, within 10 minutes) and alluring cash back offer magnetize plenty of qualified Malaysians towards the Citibank. Use the home loan eligibility calculator on the Citibank official website and check your eligibility.

Home Loan FAQs

Who is eligible for Home Loans in Malaysia?

Anyone above the age of 18 with a steady income (the kind that will let you pay EMI for years) and with a proof of local residency in Malaysia is eligible. Or at least it is so in principle. Your eligibility rests on the bank or the home loan provider’s set criteria that can include just about any information that touches upon your credit worthiness. Every bank has its set criteria.

Can I close my Home Loan? What are the charges for prepaying my loan?

Most banks and loan agencies in Malaysia allow people to close Home Loans before the term. They know that they cannot afford to be rigid about it, least they lose out to their competitors who off that flexibility. However, since their interest schedule is disrupted by a foreclosure, they charge a fee for closing home loans before term. Anywhere from 2% to 8% on the remainder amount can be charged, depending on the nature of your contract and the company. Also, there are some restrictions on the period before which you can go for a closure.

I already have a Home Loan with another financial institution. Can I transfer the loan to My Preferred Bank Home Loans Scheme?

Of course you can. Loan transfers made available in the Malaysian market are aimed at that. You’ll have to check your legal contract though if there is anything to the contrary. Also, make sure that if you are going for a transfer, the difference in interest should be such that it covers for all the one time payments, fee etc that you have incurred taking out the first loan. It is an expensive affair and your loan transfer should be good only if it helps you.

What are the loan limits which can be availed?

There is a plethora of home loan products and offerings and so a limit is difficult to set. Here is what can help instead. Typically house loan takers, take out loans that come to about 1.5 to 2.5 times their annual income. It is not about how much you can avail or you going beyond a certain limit but more about what you can afford to take on the basis of your annual income. Also, see that you do not go for more than 30% of your monthly income. These factors, including the money you owe on other schemes, will be taken into account by the bank or the lender before deciding upon your limit.

What is the maximum tenure which can be availed under Bank House Loans?

In Malaysia, the cap now on home loan tenure is 35 years. Sometime in July 2013, Bank Negara Malaysia, issuing new lending regulations also declared that banks would no longer be allowed to offer home loan periods of more than 35 years, while in the past there were some banks that were offering even 45 years tenure loans.

How To Get A Personal Loan – Question & Answers

How To Get A Personal Loan – Question & Answers

There is nothing that can beat a personal loan, except a loan from your relatives. Unlike a home loan or an auto loan, you can use your personal loan, just the way you want and break up into parts just the way you want. Which is why personal are a great way to meet that plan of yours which has been pending for so long, be it decorating your dream home, financing a higher education or pursuing your passions, everything possible if you have the right personal loan from the right bank. But how do you go about it and what do you need to keep in mind?

Rates of Interest prevailing

The rate of interest for personal loans in Malaysia with 6.16 per annum to 7 per annum being somewhere near the minimum. The average though hovers around 7.9 to 9.6 per annum in Malaysia today. Citibank Malaysia, one of the more popular banks for personal loans, offers this on their personal loan sit: for New-to-Bank customer will be at an effective interest rate range of 14.5% – 21% per annum. For your ease of comparison, the equivalent flat interest rate is approximately 7.9% – 12.5% per annum.

2) Documents required to apply for loans
Every bank has its own approach when it comes to documents that you need to submit for the application process. Typically for the salaried a photocopy of MyKad (both sides), latest EPF statement or latest two months salary slip and/ or any of the following: latest BE with tax receipt, 3 months bank statements and latest EA for. For the self employed in addition to the MyKad you’d need a photocopy of a business registration form, latest Form B with tax receipt or six months bank statements.

3) Consolidation of existing multiple loans
Getting to move you from your existing loans is what most banks and loan agencies try when you already have a running loan. The reduced interest rates they offer is the incentive for you to consolidate your existing multiple loans and go for one, with a lower interest. There are some banks with offer you extra benefits like a difference of up to 2.5% p.a. on interest when you transfer your personal loan to us. Citibank Malaysia for example offers up to 2.5% p.a. lower rates for its existing Citi cardmembers and up to 1.9% p.a. lower for non existing Citi cardmembers.

4) Getting loan repayment schedules – Installment
Many banks let you know what your installments can be like with just some basic details even before you apply for it. On citi Malaysia’s personal loan site they have made a loan calculator available that takes in your loan amount and your tenure to show you your EMI. It also shows you very clearly, the total interest you’ll be paying for that loan and the total amount you can expect to pay towards the end of the term.
5) Where to get a Loan processed faster.
Go online. You’re loan process starts as soon as you fill in your detail and you can expect someone to call you the next business day to take things further. Banks like Citi allow you to apply online if you have the documents ready. It definitely is fast.

6) Common KYC’s before applying for a loan
You need to be a minimum of 21yrs to apply. The max age is 60 years old at the time of the loan maturity. Need to be a Malaysian citizen or a P.R. working in Malaysia. Have to hold any bank’s Credit Card/Home Loan/Personal Loan/Car Loan/Overdraft for more than 24 months.

7) Why a loan gets rejected
Assuming that your paperwork is in place, your loan can get rejected for a number of other reasons that are not in your control. Even your credit history impacted by a cheque bounce can work against you. Your income sometimes, while well within the limit, can be found not enough for other expenses you are incurring( credit cards etc).


Source- https://ringgitplus.com/en/personal-loan/

Islamic personal loans in Malaysia

Islamic personal loans in Malaysia

Islamic personal loans are unsecured / uncollateralized credit facilities that are compliant with Shariah laws. There are a number of Islamic personal loan products available in Malaysia; we will look at a couple of these (remember, although these products are in sync with Shariah law they are actually open to everyone irrespective of religion):

CashVantage Financing-i from Alliance Islamic Bank Malaysia Berhad

This personal financing product is available for a profit rate of 7.68% p.a. on a flat rate basis (referred to as “Rule 78”). The tenure can go up to 7 years. There is no processing fee and no early settlement fee.

The Shariah concept applicable is Tawarruq (also known as Commodity Murabahah). A Tawarruq consists of consists of two sale and purchase contracts. The first involves the sale of an asset (commodities) by the Bank to the Customer on a deferred basis. Subsequently, the Customer will sell the same asset to a third party on a cash and spot basis.

To facilitate the above,Islamic Banking enters into a “dual-agency” arrangement with the Customer, in which, the Customer as principal appoints the Bank as agent via a Wakalah Contract. The Bank as an agent shall purchase an asset on behalf of the Customer from the Bank and subsequently sell the asset on behalf of the Customer to a third party.

Maybank Islamic Personal Financing-i (MIPF-i)

he MIPF-i is an unsecured Islamic Personal Financing facility that does not require any collateral or guarantor and has a fixed monthly payment schedule. Tenure ranges from a minimum of 2 years to a maximum of 6 years. The profit rate varies from 6.5% p.a. to 8% p.a. depending upon the financing amount. There is no stamping on required documents and there is no processing fee.

The Shariah principle involved is Commodity Murabahah or Tawarruq; this refers to an arrangement that involves sale (with disclosed cost and profit) of commodities to the purchaser on a deferred payment basis and subsequent sale of the commodities to a third party to obtain cash.

Other Islamic personal loan product examples

Personal Financing-i from Bank Islam, Xpress Cash Financing-i from CIMB Bank and the Personal Financing-i from Standard Chartered Bank.

What are Flexi and Non-Flexi Property Loans?

Home loans can be classified into the following categories depending upon the payment terms:

Term Housing Loans

This is a mortgage facility which comes with a fixed repayment schedule, where the monthly installments paid are the same throughout the entire loan period (since most of such loans are floating rate loans, the installment amount may vary depending upon changes to the Base Rate for conventional loans and Base Financing Rate for Islamic home financing).

Semi – Flexi Housing Loans

Term housing loans generally follow the reducing balance methodology, i.e. a portion of the repayment installments goes towards servicing the interest component of the loan and the rest towards servicing the principal component of the loan.

Semi-flexi home loans enable borrowers to make additional payments above and beyond the normal installments; these additional repayments go towards servicing the principal component of the loan; as the principal decreases so do the interest payments. Borrowers can get to repay their loans faster and own their homes sooner!

Borrowers can also withdraw some or all of the additional payments made by them; they may need to make a specific request in this regard and withdrawal charges may be applicable.

Fully – Flexi Home Loans

As the name implies, these loans allow borrowers to make additional payments and withdraw any excess payments made in an easy and hassle-free manner. Such products usually combine a home loan account with a savings account and/or a current account. The CA/SA account can be used to make deposits that go towards servicing loan principal and for withdrawing excess cash.

Examples of Fully Flexible Property / Home Loans in Malaysia

These include the HomeFlexi from CIMB Bank, the MaxiHome Flexi Loan from Maybank and the My1 Full Flexi Home Loan from RHB Bank amongst others.

How to get a personal loan with bad credit?

Data published by Bank Negara Malaysia (as on August 2016) reveal that the total personal loan lendings of all banks in Malaysia totalled 39,319.5 in RM million. This shows the popularity of personal loan borrowings amongst Malaysians.

Personal loans have become very popular mainly for a trifecta of reasons: they don’t require any collateral, interest rates are lower in comparison to credit cards and personal loan proceeds can be used for any purpose deemed fit by the borrower.

Before obtaining a personal loan, Malaysians have to contend with one potential stumbling block – the credit report. In this post, we will look at credit score / credit report in a little more detail:

What is a credit report?

In a nutshell, your credit report is a report of your creditworthiness.

According to Bank Negara Malaysia’s Credit Bureau, the credit report is one of the information sources used by participating financial institutions in assessing credit applications. The credit report contains factual and historical data i.e. both positive and negative information about the credit standing of the borrower as reported by participating financial institutions.

The Credit Report contains the following credit-related information of a borrower:

1) Outstanding Credit(s)

All credit facilities obtained by the borrower, which are still outstanding, either under –
▫ the borrower’s own name;
▫ a joint name with another borrower(s);
▫ a name of a sole proprietorship or partnership where the borrower is the owner of the partnership or the business;
▫ the name of a professional body where the borrower is the member of the body; or
▫ the name of a corporation.

Credit facilities that have been fully settled are excluded from the credit report.

2) Special Attention Account(s)

▫ All outstanding credit facilities under close supervision of the participating financial institutions.

3) Application(s) for Credit

▫ All applications approved in the previous 12 months and pending applications for the borrower.

Can I apply for my credit report?

You can obtain your credit report from the Customer Service Centre, Laman Informasi Nasihat dan Khidmat BNM (LINK) of Bank Negara Malaysia, Head Office or Bank Negara Malaysia Regional Offices / Branches.

You can also get your credit report by email / correspondence by sending the filled-in Credit Report Request Form (CRR), Loan Declaration Form, a clear photocopy of your MyKad (both sides) and two other ID proof documents.

How is this information obtained?

Credit Reports are sourced from a computerised database system known as the Central Credit Reference Information System (CCRIS) that contains credit information of about nine million borrowers in Malaysia. All banks and a variety of other participating financial institutions contribute information to the CCRIS.

Participating financial institutions may request for the credit report of an applicant from the following credit reporting agencies (CRAs) that have been registered under the Credit Reporting Agencies Act, 2010 and can access the credit information in CCRIS:

▫ Credit Bureau Malaysia Sdn Bhd
▫ RAM Credit Information Sdn Bhd
▫ CTOS Data Systems Sdn Bhd

Is there a Credit Score available with the Credit Report?

CTOS Data Systems Sdn Bhd has introduced the CTOS Score* that evaluated credit risks based on five predictive characteristics – payment history, amount owed, length of credit history, credit mix and new credit.

How can you improve your creditworthiness?

Credit Bureau Malaysia has the following tips for applicants looking to improve their credit scores:

▪ Always pay your bills on time.
▪ Keep the balance of your accounts/credit cards at or at least 35% of your total credit limit.
▪ Try to obtain a mix of credit facilities (credit cards, housing loans, hire purchase etc).
▪ Don’t apply for too much credit at one go.
▪ Keep track of your credit reports for at least 2 years.

* Data Source: The Star, March 31, 2016 | CTOS introduces credit score to evaluate consumers’ credit risks.