Bank Housing Loan

a site that offer you with information of housing loan.

AmBank Any Good?

Background of AmBank

AmBank is so far the 5th largest banking institution in Malaysia in terms of capital. The bank is having over 200 branches and outlets after undergo consolidation for a few times. AmBank is currently offering consumers and companies with a variety of financial products and services which are of course including housing loans.

For housing loan or home loan, AmBank does come with a range of products to cater for different consumers’ needs.

Resident Property Financing

HomeLoan
It is a mixture of term loan and overdraft. It is possible for you to lower the interest for your loan by making extra payments and the flexibility for redrawing is available.

HomeLink
HomeLink provides you with the facility for you to integrate your account into the bank system for easy monthly payment and monitoring. Besides, you are able to withdraw cash via any Ambank ATM or issue cheque with your cheque book.

Family 1st HomePlan
By getting this loan, you will have 5 years of fixed rate loan and you will not have to worry about the interest fluctuation. You will need to come out with predetermined payment for other expenses and get a consolidated family accounts to ease the supervision.

AmIslamic Bank Home Financing-i
This is a Syariah compliant financing loan that offers you with both fixed rates and variable rates. Your profit rate can be capped up to 9.99%.

Skim Rumah Pertamaku(My First Home Scheme)
You can entitle for 100% loan. The loan also available in fixed rates and variable rates. You are able to choose either go for MRTT or MRTA and the tenure for the repayment is with a maximum period of 30 years. However, there are couple of conditions that you need to meet in order for you to entitle for the loan.

Commercial Property Financing

PropertyLoan
This business loan is combines of term loan and overdraft. The loan that is with MRTA will allow you to borrow with a maximum of 85%. The benefit of the loan is that you will not have to pay for any processing fee. The repayment tenure is 20 years or up to 60 years old depends on whichever apply first.

PropertyLink
The terms and conditions are just the same with HomeLink except this is for business financing and HomeLink is for individuals.

AmIslamic Bank Property Financing-i
This loan is also similar with AmIslamic Bank Home Financing-i except this loan is for business financing.

Bad Experience With AmBank

Note: To protect the innocent, the post will keep the name anonymous by refer her to Linda.

Few months ago, Linda was called up the customer service from AmBank to make an inquiry regarding a bank statement as she wished to pay up a portion of her housing loan. She had to keep calling for a couple of times and finally after half an hours passed only she managed to get someone on the phone and after another 20 minutes of conversation only they managed to collect all the necessary information for them to run the process.

Linda was frustrated as she claimed that every time she contacted the AmBank customer service, she will have a different officer spoke to her and what came across her mind was that none of them know much about the financial thing. She was being transferred to numerous different departments and only got the right person to talk to.

She expressed her intention articulately for settling on part of the loan and the officer seems like acknowledged on all the words that she said so she thought there will be no issue at all. But after 2 months, when she receives the loan statement, to her surprise that nothing has been changed. She called up the customer service again and she was informed that no such request was received by them! Her mistake as she didn’t remember the name that she talked to earlier and they were accused her for creating all the troubles! She was getting annoyed and has decided to switch the housing loan to other bank.

This is one of the cases that being feed backed by the consumer. Besides, most of the customers are thinking that AmBank is actually a loan shark with legal license as they think a lot of charges that incurred by the bank is very unreasonable. They are thinking that AmBank seems like no-brainer and treating very bad for their customers. AmBank is in need to improve their services very much if they want to continue to stay in the financial business.

Knowing About MRTA – Mortgage Reducing Term Assurance

Get Familiar with MRTA

If you are buying a home or applying for housing loan, then you should have to know what is MRTA. MRTA actually stands for Mortgage Reducing Term Assurance. Some people also call it Mortgage Life Insurance. The main purpose of MRTA is it will help you to settle your housing loan if any mishap falling on you.

Even though it is taboo and a lot of people just not really wish to talk about it, we still nevertheless need to treat MRTA seriously since illness, disability, or death can just happen any time in our life. With MRTA, it is going to cover the outstanding part of your housing loan if something happen to you. MRTA also offers you secure feeling and safeguards your family from the loss of a house. It gives you coverage even while in the development phase. The premium for the coverage is affordable and can also be financed by your financial institution.

What benefits you can get from MRTA?

- Worldwide and 24 hours coverage.

- One time payment to your housing loan in the event of fatality or complete and permanent disability as a result of natural factors, accidents or illness.

- Lower cost on the premium for joint life application if the house that you bought is jointly possessed by your spouse or next of kin.

- The premiums for MRTA could be loaned by the financial institution.

Exactly what does MRTA insure?

The MRTA covers illness, disability or death. Nevertheless, there are exclusions which include:

- Death as a result of AIDS/HIV and suicide.

- Pre-existing disorders for example AIDS/HIV

- Total or permanent disability because of armed forces, self-inflicted injuries, civil commotion and riot, flying racing on a horse or wheels, other than as a fare-paying passenger.

How much will the MRTA premium cost?

The cost for the premium is actually depend on the amount assured, term, joint-life, premium financing, interest rate, age at next birthday and construction period.

If your age is the range of 18 to 60 years and is in good health condition, you are most likely to insure for MRTA. An individual can apply for MRTA by simply filling up the application form at the appointed financial institution.

Pros for MRTA :
- Those who has financial problem can apply for it. It is subject to a maximum of 5% extra financing and earning stability.

- Rather inexpensive

Cons for MRTA :
- The rate for premium financing is 9% that is not based on the home loan rate.

- Not flexible since it is Non-Transferable to other loan, property or refinancing to difference bank..

- The beneficiary is the financial institution. Generally bank will keep the coverage policy but not you. Many have already forgot about the policy by the time they want to redeem their properties.

- When your age increase, the premium rate for your next MRTA policy will get increase as well when you buy additonal property or refinancing your existing house.

- Lesser coverage for you if you pay the premium faster.

- Not entitle for income tax deduction since there is no receipt for the financing.

- Coverage on start upon first drawdown. You are only getting covered once a claim was made to the bank even though you have signed the loan agreement and offer letter. You need to ensure there is nothing going to happen to you before they release the money. Some building projects that are under development can take up to 6 month or more before your first loan get release.

MRTA Important Note:

- MRTA is a Term Life policy that covering you up to 65 years old only.
- Its plan is non-transferable.
- It is not a life time plan.
- Every time you change property or shift your housing loan, the premium for your MRTA will raised.

MRTA Vs MLTA

Besides MRTA, you may want to know about MLTA as well which is stand for Mortgage Level Term Assurance. The traits of MLTA are:

1. It carry the same coverage as MRTA however the coverage will be level rather than reducing.
2. Only some banks are offering the plan of MLTA.
3. The premium will be more expensive compare to MRTA.

Claiming sample:

For housing loan of RM100,000 for a repayment tenure of 30 years. Let’s say in 15 year the O/S is RM80,000:

MRTA pay RM80,000 to respective bank to settle off the loan balance.
MLTA pay RM80,000 to respective bank and on top RM80,000 to the beneficiary.

Housing Loan Frequent Asked Questions

How much I am able to borrow for housing loan?

This is mainly vary depending on your home value, your salary as well as your ability to pay back. The margin for the housing loan that you could get can be up to 95% inclusive of MRTA(Mortgage Reducing Term Assurance). Of course, the higher the loan you apply for, the higher instalment you will need to repay each month. Besides, most of the banks will require you to pay for higher instalment for a shorter term of the loan.

Normally how long does it take for getting a loan?

For housing loan application, it will take about 1 – 2 weeks for processing and getting approval from the time the banks receive full documentation submitted by you. You many need to make a request a checklist from the banks for all the necessary documents that you need to supply so that there will not going to be any delay for your loan application.

What is the amount of loan that I can get?

This is actually need to depends on your salary as well as other financial obligations such as credit card debts or other loans that you have at the moment you apply for housing loan. Typically, most homebuyers are going for houses which cost about 1.5 to 2.5 times of their annual income. For instant a homebuyer is making RM50,000 a year would buy a house that price in between RM75,000 to RM125,000. Additionally, the monthly instalment for your housing loan shouldn’t go over 1/3 of your total monthly income. When come to assessing the ability for your instalment repayment, the banks would probably take under consideration your other debt repayments like credit card debts, personal loan, car loan and etc.

What is a valuation and why do I need it?

A valuation is an assessment carry out to evaluation the value of the property that you want to buy. It is required in case you’re purchasing a finished and completed house. The bank want to make such valuation for the purpose of ensuring whether or not the property or home gives enough security for the loan offered. Additionally, it also provides an indication whether the property that you bought is really worth the value.

What is the difference between conventional financing and Islamic financing?

For conventional financing, the outstanding loan includes principal and also interest charged. The interest will be the cost for bank to obtain the funds. While Islamic financing is base on the idea of buying and selling as the bank buy the property and then sells it to the buyer with premium for the buying price.

Do I need to get a lawyer and select my own lawyer?

The answer is yes. You are required to get a lawyer to prepare for you the loan documentation. Typically, the bank will give you a list of lawyers who are experienced with preparing for all the necessary documentation required by them for you to choose from. However, in case you wish to engage your own lawyer, you may want to discuss with the bank.

Who going to pay for the legal fees? Buyer or Bank?

Normally, the buyer will need to bear the legal fees. Nevertheless, a number of developers and banking institutions may possibly offer you to cover the legal fees for the legal documentation as part of their promoting offer. Furthermore, some banking institutions even provide financing for the fees for loan documentation.

How if I run into financial difficulties and not able to repay my housing loan?

If this is the case, you will have to contact your bank to negotiate for a reasonable repayment program, which will consist of extending the housing loan repayment period.

If I have extra money, can I pay off all my housing loan earlier than the agreed loan period?

If you settle your loan in full earlier, usually there will be penalty charges that you need to pay. Depending on the bank, penalty charges most likely will be in between 2 – 5% of the total outstanding amount of your housing loan. The penalty charges you need to pay will depend on the product type you’ve selected and when you want to redeem your housing loan. Keep in mind that for certain loan packages, there are specific minimum durations you should notice before you are allow to make full settlement.

Can I get waiver of penalty fees for my early housing loan settlement?

You may discuss with your bank for any waiver of penalty fee as this is of their discretion to waive for any fee.

Why I notice my outstanding housing loan remain high at the initial stage even I make the repayments on time?

This is the strategy commonly practice by all financial institution. For the early years of your housing loan, a large portion of your repayments will go for the interest payment. Therefore if you make partial repayments to settle the outstanding principal sum, you are making considerable savings with your interest payments and thereby lessen your loan pay off time.

If I have extra money, can I make extra payments instead of the monthly contractual repayments?

This mainly depends on the terms and conditions of the agreement for your housing loan. You will be able to shorten the loan pay off period by paying in additional money every month or making an extra significant payment at the end of the year. Once you make your extra money repayment, you need to inform the bank in which the extra money payment should be put on the principal. Nevertheless, if you make a partial repayments or lump sum payment to your principal housing loan, you will have to give notice to your bank prior for you to do so. Normally the notice tenure is between 1 – 3 months.

Do I need a guarantor for getting housing loan?

Once again, this is at the bank’s discretion and depends on the applicant’s credit standing.

Does the bank has the right to impose extra charge on my loan account for any charges incurred like legal cost, late payment charges, insurance and etc?

This is typically stated in the terms and conditions of your housing loan whether the bank has the right to impose charges on your account or not.

What is the grace period to repay my monthly instalment?

Commonly, the bank provides a grace period of 7-14 days for you to repay your overdue monthly instalment. If you make your instalment after the grace period, you will need to make additional payment for late payment charges.

When does the bank issue the housing loan to the seller or developer?

For properties that are being built, the bank will issue the progressive payment to the developer depending on the claim made upon completion of each construction stage as certified by the Architect’s Certificate. For properties that have been completed, the loan is going to issue once legal documentation is complete or when all required approvals, such as the approval of the state government have been obtained.

It is possible for me to buy a property under joint names but apply the housing loan only under my name?

The bank normally will take into consideration for these types of applications on the value associated with each case, with below conditions:

- The co-owners need to be husband and wife, with one party is jobless and another party is completely accountable for the housing loan.

- The co-owners are having relationship of father/mother and children, the parents are aged and jobless and the children completely accountable for the housing loan.

Even so, these are still at the discretion of bank since they may as well taking other factors into consideration.

In case the developer go bankrupt or abandons the housing project, do I still need to repay my instalment?

The answer is unfortunately a yes. You are always required to repay your housing loan once you sign for the loan agreement. But, considering that the bank has vested interest in the house and property, you can actually go over a plan of repayment with your bank. It’s also advisable to report the issue to the Ministry of Housing & Local Government.

Exactly what goes on in case of death of a borrower who didn’t paid for insurance policy?

The deceased’s survivor/next of kin is able to claim the deceased’s house through the court. He/She is going to have a choice either to continue to repay the housing loan or redeem it. Nevertheless, most banking institutions cause it to mandatory to insure (MRTA) towards this type of occurrence.

What are the results in case the housing loan is fully repaid?

At the time the housing loan is fully repaid, the bank is going to release its charge on the house through its solicitors. The bank (charger) is going to uplift his claim on the house and the title to the house is going to be transferred to you.

So what can the bank conduct if I fail to make repayments?

Once you don’t make three consecutive payments, the bank is going to take the mandatory actions to recall the housing loan. When worse come to worst, your house will go for foreclosure by the bank for auction in order to repay the loan. The borrower is still subject to pay the variant between the price sold in the auction and the outstanding amount of housing loan.

Which one can be the most convenient way for me to repay my housing loan?

Banking institutions provide a number of services in making banks and loans easier for you. You can find several ways for making your repayment such as:

- Internet Banking
- Deposit cheque in the deposit machine or send it directly to the bank
- Telephone banking service
- Transfer from an ATM machine
- Open a savings or current banking account and make your payment through the deduction direct from your savings or current account (in case you have deposit and loan accounts in the same bank, you may enjoy the waive of the service charges)

Do I need to think of refinancing my housing loan if some banks are offering me a lower interest rate?

Most people are considering of refinancing for the costs involved. You should be undoubtedly aware, you’ve got sustained a considerable amount to pay for all the required fees for you to get your first housing loan. Fees that you been paid for are may include legal fees, processing fees, transfer fees and stamping. If you are thinking of refinancing it means that you will need to pay for the same charges again. Therefore, before you make up your mind for refinancing, you need to make sure that the amount that you are able to save from the lower interest rate of the new loan is sufficient to cover all the charges incurred from refinancing, which includes penalty charges, if you happen to have for your existing housing loan.