Malaysia Financial Blogger | Financial Freedom Ideas | imDavidLee.Com

Understand the Lock in Period for Your Home Loan

When you are applying mortgage to finance your house, I urge you to take some time to read every words in the offer letter and ask questions for thorough explanations from banker before you sign it. One thing you should aware of is the lock-in period. It’s the period when you do an early settlement of your loan in full for the first few years of your loan tenure; the lender can impose an exit penalty charge which ranges from 2-3% of the principal loan amount.

For instance, if your principal loan amount is RM300,000, when you choose to settle the loan or refinance it to other bank, the amount you need to pay for penalty is:

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Calculate How Much Interest You Can Save By Refinancing

I have created a mortgage refinance calculator that will help you to find out how much interest you can save if you refinance your housing loan.

Click here to calculate.

Refinancing a housing loan provides some significant benefits to many owners. With the lower interest rate, owners are able to reduce their monthly mortgage payments. It will results in significant savings over the loan term.

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Affordable Housing for Malaysians

Skyrocketing property prices in recent times have raised much concern among home purchasers especially those in the middle to lower income groups. The current prices of many upcoming developments are mostly in the high end range with prices starting from RM500k up to several millions.

The escalating property prices have more or less prompted the call for affordable housing. In an uncertain economic environment where living costs are on the rise, affordability is the main concern for any house buyer.

For the average working group, a property unit which is sold for between RM50k and RM250k is considered affordable. Anything beyond that price will be considered out of their range of affordability due to the lower income.

Why are property prices becoming out of reach to the home purchaser? The logic is simple. Every year , the average salary increment is at a rate of about 5-10% but in comparison, property prices increase by more than 10-20% each year, double that of the salary increment. This naturally causes a disparity of income growth versus property prices, thus making home ownership unattainable to many people.

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Malaysia Property Set to Boom Again in 2012

In recent years, the property in Malaysia is getting huge attention from many investors. According to the national House Price Index, the property prices rose steadily from 97.9 - 150.7 in the past 10 years. And, a residential property would have risen in value from RM135,293 in 2000 to RM208,725 in 2011, up 54%.

From the chart above, we can see that there’s a rapid growth of house prices over the years.

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Buying Freehold or Leasehold?

Does it really matter when come to buying a freehold or leasehold property? What’re the differences? I think the main differences between the 2 tenures are the land ownership. For the freehold properties, you will own the land while for the latter one, the ownership is mostly given by the government for tenures of 99 years.

However, some of the people do not really care much about the tenure of the property while others find it quite important, especially when it comes to renewing leasehold titles. For leasehold and freehold properties with restriction, it will require the agreement of the state government in any kind of transaction. Therefore, the transaction period for leasehold properties with restriction is generally longer.

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