Optimize your Housing Loans

Mistakes in Comparing Loans

• Loan Package 1– RM 100,000 Loan– 30 Years– 6%

Monthly Inst = RM 600

Total = RM 216,000

• Loan Package 2– RM 100,000 Loan– 15 Years– 7%

Monthly Inst = RM 899

Total = RM 161,820

Which Loan Package is better ?

Computation of Interest Charged

1) Know the interest rates charged.Eg. 6% per year.

2) Know the outstanding balance.Eg. RM 100,000

3) Find out whether it’s Daily Rest / Monthly RestEg. Monthly Rest

4) Find out the Monthly Installment AmountEg. RM 800 / Month.

Calculation of Interest

Monthly Rest• Interest / Month

= $ 100,000*6%/12

= $ 500 / Month

• Installment = RM 800– Interest = RM 500– Principal = RM 300

Daily Rest• Interest / Day

= $ 100,000*6%/365

= $ 16.44 / Day

• Installment = RM 800– Interest = RM 493.2 (30

days)– Principal = RM 306.80

Rates offered by Public Bank

Loan Amount• Above RM 150k BLR – 2.0%• Between 100k to 150k BLR – 1.9%• Less than 100k BLR – 1.8%

• For latest rates, please check with any Public Bank Staff, or Melissa at 012-4256930

Benefits

To Clients• Better Rates• Savings can be channeled to Unit Trust• Optional MRTA

To Agents• Referral Fee of 0.1% of Loan Amount• More Unit Trust Sales• Personal Satisfaction

Real Case Study: Mr. Peter(Age 28)

• Current Loan Balance = RM 182,000

• Interest Rate Charged = 5.89% per year.

• No. of Years Left = 28 Years

• Monthly Installment = RM 1,108

• Penalty if refinance : 3% of outstanding balance. No penalty for early settlement.

When Re-finance to Public Bank

• Current Loan Balance = RM 225,000• Interest Rate Charged = 4.75% per year.

» BLR – 2%

• No. of Years Left = 40 Years• Monthly Installment = RM 1,048

• By Refinancing, Mr. Peter will be able to cash-out RM 43,000 Lump Sum, and save RM 60 every month.

Continuation from Case Study

• RM 43,000 Lump Sum with RM 60 Monthly, invested for 28 years (at 10% per year), would become RM 808,800 at the end of 28 years.

• With 808,800 Invested at 10%, it would give an annual interest of RM 80,880.

• Much more than enough to pay for the leftover monthly installment of RM 1,048 per month.

Questions

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Answers