Buying a house is only the most significant financial decision of your life. If you’re not lucky enough to be born with a silver spoon in your mouth, chances are you will need to apply for a housing loan in order to get the keys to your dream house. In Malaysia, there are a plethora of options from numerous financial institutions to get the mortgage loan that you require. But how do you know which one is the most suitable loan for your needs? All the legalese, complicated terms and conditions is enough to make you confused. You need to make sure that you are making the right choice when shopping around for the right home loan for you. Otherwise, you could very well end up with an unsuitable plan that could be a hassle to sort out as mortgage loans are likely to have an extensive tenure. These are some key points that will steer you in the right direction for that all-important decision.
Home Loan Types
In Malaysia, there are two types of basic home loans available for interested home owners. Traditionally, there is the fixed term loan which involves you paying a fixed sum of money each month for the entire length of your loan period. The other type is known as the flexi-loan, which as the name suggests, offers you the flexibility of reducing your loan interest. The customer ties up a Current Account to the loan and the loan amount is deducted as scheduled while additional monies will be used to pay for the principal amount. This means the more you save in the Current Account, the less interest you will have to pay. As more banks are adopting a semi-flexi property loan, it is good practice to always ask the bank officer to explain all the fine prints and request for extra benefits as you will not be able to change lenders for at least 2-3 years.
Available Loan Amount (Photo credit: westernmortgageloan.wordpress.com)
Available Loan Amount
The amount that the bank is willing to loan to you varies from bank to bank. Usually the highest amount that a bank will offer is 90% of the property’s price thus the remaining 10% will have to come out of your own pockets. Seek for the bank that offers you a higher margin if you do not have sufficient cash flow to put up on your house. As a rule of the thumb, it is advisable to opt for a monthly payment of not more than one third of your monthly income. Take into account your other necessary expenses and commitments when planning your monthly budget.
Terms & Conditions (Photo credit: telegraph.co.uk)
Terms & Conditions
Always read carefully over the contract before agreeing to take up the loan. the two most vital deciding factors when looking for a home loan are the interest rates and lock-in period. It goes without saying that interest rates are the killer that adds more burdens to loans which is why you should always choose the bank that can offer you the lowest interest rate. Mortgage loans are no small amount and just a little hike in interest rate could mean a big difference in your monthly repayments. Lock-in periods are where a penalty is incurred if you decide to settle your full loan amount before the period ends. Ensure that you have the shortest lock-in period with the lowest penalty possible in case you decide to switch banks in between your loan tenure.
Additional Fees & Charges (Photo credit: frugalqueen.co.uk)
Additional Fees & Charges
Buying a property doesn’t mean that you only have to worry about paying off your mortgage loans every month. There are any number of sneaky hidden costs that you might not be aware of just waiting for the right moment to appear. Before you manage to get the keys to your house, you will need to pay for stamp duty and legal fees for the bank and lawyers to prepare an agreement for you. it is advisable to take out an insurance policy on your house seeing as it is the most expensive investment in your life. Other hidden costs include utilities, maintenance, and penalties which you have to prepare for.
Satisfaction with Bank (Photo credit: csbcorrespondent.com)
Satisfaction with the Bank
There is no shortage of financial institutions offering different home loans that are suitable for all kinds of customers. It is possible to request for a home loan that is tailored especially for your needs. With all these overwhelming choices, it can be hard for you to settle on a particular bank. Bear in mind that you will be doing business with them frequently for an extensive period, so you should choose a bank that you will feel comfortable with. Their service and level of convenience are key deciding factors on these so that all your loan processes in the future will go smoothly.