Which home loan – Fixed or Flexi?

If you are wondering about which homeloan you should opt for your first home or just to refinance given the rising BLR, append below an article feature at The Star online. Have a good read, folks and decide for yourself, any more queries, feel free to contact me at +019-3397088 or E-Mail : carmenfoong.aia@gmail.com

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Saturday March 26, 2011
Which home loan to opt for?
By JEEVA ARULAMPALAM
jeeva@thestar.com.my

A HOME buyer with a floating interest rate home loan may feel slightly unnerved in a rising interest rate environment. Just in a span of five months, Bank Negara had raised the overnight policy rate (OPR) by 75 basis points to 2.75% last year and local economists expect the central bank to raise the OPR further in the second half of this year.

As the OPR moves up, banks will also look to increase their base lending rates (BLRs) and a higher BLR will undoubtedly have an impact on a floating rate housing loan. BLR is typically defined as a minimum interest rate charged by banks after considering its cost of funds and other administrative costs.

As most floating rate loans track the BLR, the interest charged will fluctuate based on the rise and fall of the BLR throughout the tenure of the loan while a fixed home loan ensures that the interest charged is fixed throughout the loan’s tenure.

For new homeowners, fixed rate loans may be a good alternative provided they are able to lock in when interest rates are still low.  So how do you make a decision on which home loan to opt for, be it fixed or floating? For individuals currently servicing floating rate housing loans, jumping to fixed home loans immediately may not be the best alternative.

Considerations that one needs to take into account include the cost incurred in refinancing a home loan, as there are fees or penalties impose by the existing financier for exiting your current loan contract. Also, refinancing will see the individual having to abide by new terms and conditions, which means that the individual’s lock in period for the loan may start again.

But on the upside, you may receive better prepayment conditions and favourable rates with the new loan. If a home owner does not foresee a steep rise in interest rates and the variable rate home loan tenure is coming to an end soon, the differential in savings from switching may be small considering that fixed home rates are also inclined to move up in a rising interest rate environment.

“It’s important to take note of how many more years you have on your loan tenure. If you have a couple of years left, it may not be worth switching considering the cost of refinancing,” says Whitman Independent Advisors Sdn Bhd managing director Yap Ming Hui. “Also, look at the fixed interest amount as that will help you decide, if it is too high or low. If the fixed rate is at 8% and a floating rate housing loan is BLR minus 2%, then the fixed rate loan is not competitive.”

However, for new homeowners, fixed rate loans may be a good alternative provided they are able to lock in when interest rates are still low.  Ng Wei Kian opted for a fixed rate home loan when he first purchased his home. “I’m a type A personality and with the worry that interest rates may move up, I’m much more comfortable servicing a fixed rate home loan,” he says.

He adds that since he is an employee with a fixed monthly income, knowing how much he has to pay on a monthly basis provides him with peace of mind, especially since his housing loan is his biggest financial commitment.

“Another plus point is that as you progress in your career and see a higher salary base, your monthly loan repayment becomes smaller in comparison to your earning power,” he says.

While fixed rate loans tend to suit risk-averse individuals, it is best to seek out various options offered by banks and insurers alike in their product offering before one commits to a housing loan with repayments locked in for 30 years.

A quick check on website www.bankinginfo.com.my shows that BLR among banks here range between 6% and 6.30% as of October last year while there are some attractive fixed home loans out there, with one insurer even offering a fixed income rate at 4.85% per annum (non zero moving costs) and 5.25% per annum (zero entry cost) (~ AIA HOME LOANS!!!). The key take away in making a switch in a housing loan is to examine your financial situation and only change if the penalty fees charged outweigh the savings benefit from the new loan.

 

EPF Withdrawal To Buy House

INTRODUCTION

This withdrawal allows you to withdraw your savings in Account II to part finance the purchase of a house as follows :-

• Individual purchase ; or
• Joint purchase with spouse, family members or other individuals.

This withdrawal also allows you to purchase a house from the developer, an individual or public auction.

WITHDRAWAL ELIGIBILITY

You are eligible to apply if :-

• You are a :
  • Malaysian citizen ;
  • Non-Malaysian citizen with Malaysian Permanent Resident (PR) status ;
  • Malaysian citizen who has withdrawn your savings under Leaving The Country Withdrawal before 1 August 1995 and subsequently made an election to re-contribute to EPF ; or
  • Non-Malaysian citizen (Expatriate) who became a member of the EPF before 1 August 1998.
• You have not reached 55 years of age on the date the application is received by EPF.
• You still have savings in Account II.

CONDITIONS FOR WITHDRAWAL

1. You have purchased a house (house types : bungalow / terrace / semi-detached / flat / condominium / apartment / studio apartment / service apartment / town house) or a shophouse with a dwelling unit ; and
2. You financed the purchase of the house by obtaining a housing loan from any financial institution approved by EPF
   OR
   You purchased the house by cash ; and
3. You have executed the Sales and Purchase Agreement not more than three years on the date the application is received by EPF ; and
4. You have never withdrawn your EPF savings for housing
   OR
   You purchased a second house – You have withdrawn your EPF savings for housing before this but you have sold the house and subsequently purchased another house (you must produce the proof of sale of the first house).
5. You wish to purchase a house by way of hire purchase from any authority authorised by EPF.
6. You purchased a piece of land and build a house on it simultaneously (the date of Land Purchase Agreement with the House Construction Agreement must be within 6 months).

However, you are not eligible to make withdrawal for the purpose of :-

• Purchasing a piece of land or a housing lot only.
• Renovate, repair or make extensions to an existing house.

AMOUNT ELIGIBLE FOR WITHDRAWAL

1. You can withdraw your savings based on the following, whichever is lower :
   1. Individual Purchase
      The difference between the price of the house and the housing loan
      with an additional 10% of the price of the house
      OR
      The balance available in Account II.
   2. Joint Withdrawal With Spouse, Family Members or Other Individuals
      The difference between the price of the house and the housing loan
      with an additional 10% of the price of the house,
      OR
      The balance available in Account II of all applicants
      subject to the maximum eligible amount as stated above.
2. If you obtained a full housing loan (100%), you are eligible to withdraw as much as 10% of the price of the house OR the balance available in Account II, whichever is lower.
3. If you purchased a house by cash, you are eligible to withdraw as much as the price of the house with an additional 10% of the price of the house OR the balance available in Account II, whichever is lower.
4. You can choose to determine the amount you wish to withdraw from your savings in Account II, subject to the maximum amount eligible for withdrawal. You will be required to complete “Surat Akujanji Pilihan Amaun Pengeluaran” for this purpose.

EXAMPLE 1 (Individual Purchase)

Encik Sallehuddin purchased a house costing RM75,000.00 and obtained a housing loan of RM60,000.00. His total EPF savings in Account II is RM40,000.00. Therefore the amount of savings that he can withdraw is :

Price of The House	RM 75,000.00
Housing Loan	RM 60,000.00
Difference Between Price of The House and Housing Loan	RM 15,000.00
Additional 10% of The Price of The House	RM 7,500.00
Maximum Amount Eligible For Withdrawal	RM 22,500.00
Balance Available in Account II	RM 40,000.00
The Amount That Can Be Withdrawn	RM 22,500.00

Since the maximum amount he is eligible to withdraw is lower than his total savings in Account II, Encik Sallehuddin can withdraw RM22,500.00 only.

EXAMPLE 2 (Individual Purchase By Cash)

Encik Amirul purchased a house costing RM125,000.00. He did not take any housing loan to finance the purchase. He has paid RM35,000.00 to the developer. His total savings in Account II is RM60,000.00.

Price of The House	RM 125,000.00
Housing Loan	NIL
Difference Between The Price of The House and Housing Loan	RM 125,000.00
Additional 10% of The Price of The House	RM 12,500.00
Maximum Amount Eligible For Withdrawal	RM 137,500.00
Balance Available in Account II	RM 60,000.00
The Amount That Can Be Withdrawn	RM 60,000.00

Since Encik Amirul has RM60,000.00 only in his Account II, he can withdraw all of his savings in Account II.

EXAMPLE 3 (Joint Purchase)

Encik Amir and Puan Syuhada purchased a house costing RM100,000.00 and they obtained a housing loan of RM100,000.00. Encik Amir has RM20,000.00 in his Account II and Puan Syuhada has RM3,600.00 only in her Account II.

Price of The House	RM 100,000.00
Housing Loan	RM 100,000.00
Difference Between The Price of The House And Housing Loan	NIL
Additional 10% of The Price of The House	RM 10,000.00
Maximum Amount Eligible For Withdrawal By The Couple	RM 10,000.00
Balance Available in Account II for Encik Amir	RM 20,000.00
Balance Available in Account II for Puan Syuhada	RM 3,600.00
The Amount Chosen To Be Withdrawn By Encik Amir	RM 7,000.00
The Amount That Can Be Withdrawn By Puan Syuhada	RM 3,000.00
Total Amount That Can Be Withdrawn By The Couple	RM 10,000.00

Since both members obtained 100% housing loan, the maximum amount that can be withdrawn by this couple is 10% of the price of the house only, i.e. RM10,000.00 to cover for side cost. Applications will be processed according to the amount they choose to withdraw respectively, by completing “Surat Akujanji Pilihan Amaun Pengeluaran”.

EXAMPLE 4 (Purchase Of A Housing Lot And Building A House On It Simultaneously)

Encik Nasaruddin purchased a piece of land costing RM80,000.00 on 1st January 2005 and obtained a loan of RM70,000.00 to finance the purchase. On 1st May 2005, he has signed an agreement to build a house on the said land with a total construction cost of RM200,000.00. He has obtained a housing loan of RM100,000.00 to build the house. The calculation for withdrawal by Encik Nasaruddin is as follows :

Price of The Land	RM 80,000.00
Cost of Construction of The House	RM 200,000.00
Total Price of The Land and Cost of Construction of The House	RM 280,000.00
Total Housing Loan To Purchase The Land and To Build The House	RM 170,000.00
Difference Between The Price of The Land and Cost of Construction of The House with The Total Housing Loan	RM 110,000.00
Additional 10% of The Total Price of The Land and Cost of Construction of The House	RM 28,000.00
Maximum Amount Eligible For Withdrawal	RM 138,000.00
Balance Available in Account II	RM 150,000.00
The Amount That Can Be Withdrawn	RM 138,000.0

HOW TO APPLY AND THE DOCUMENTS REQUIRED

You are required to complete Form KWSP 9C (AHL) and to submit this form together with the original and photocopy of the following documents, whichever is applicable :

1. PURCHASE FROM DEVELOPER OR PUBLIC AUCTION
   1. Your Identification Card / Military Identification Card
      OR
      The following Identification Card affixed with your right and left thumbprints on its copy :
      1. MyKad
      2. Police Identification Card and a letter from your employer confirming that your police no. and Identification Card no. refer to the same person.
   2. Your Personal Savings Account Passbook/Statement or Personal Current Account Statement which is still active ;
   3. Sales and Purchase Agreement (purchase from developer) or Proclamation of Sale (purchase from public auction) containing your name or the names of all applicants for joint purchase and that is executed not more than 3 years on the date the application is received by EPF ; and
   4. If you have obtained a housing loan, the following documents are required :-
      • Housing Loan Approval Letter (if the loan approval is less than one year)
        OR
        Housing Loan Approval Letter and Housing Loan Agreement / Mortgage Form 16A (if the loan approval has been more than one year).
   5. If you self-financed the purchase of the house, the following documents are required :-

   Purchase From Developer	Purchase From Public Auction
   Letter from the developer confirming the purchase paid in cash ; and	Letter from the developer confirming the purchase paid in cash ; and
   Proof of payment of at least 20% from the price of the house ; and	Proof of payment of at least 20% from the price of the house ; and
   Architect Certificate with not less than 20% of construction progress.	Transfer of ownership document such as : Form KTN 16F (‘Perakuan Jual Oleh Mahkamah‘) OR Form KTN 16I (‘Perakuan Jual Oleh Pentadbir Tanah) OR Deed of Assignment in your name OR Declaration letter from you to produce the above-mentioned transfer of ownership document (duly completed) within 6 months.

2. PURCHASE FROM AN INDIVIDUAL
   1. Documents as mentioned under A(i) to (iv) for Purchase From Developer above, and
      

      Individual / Strata Title Has Been Issued	Individual / Strata Title Has Not Been Issued
      Deed of Title in the name of the seller AND Letter of consent of transfer issued by the Land Office (if there is restriction on the property) ; OR Deed of Title in your name.	Letter of consent of transfer from the developer AND Letter of consent of transfer issued by the Land Office/Local Authority (if there is restriction on the property) OR Deed of Assignment in your name.

   1. If you self-financed the purchase of the house, the following documents are required :-

   Individual / Strata Title Has Been Issued	Individual / Strata Title Has Not Been Issued
   Letter from the lawyer in charge of the sale and purchase confirming the purchase paid in cash ; and	Letter from the lawyer in charge of the sale and purchase confirming the purchase paid in cash ; and
   Proof of payment of at least 20% of the price of the house; and	Proof of payment of at least 20% of the price of the house; and
   Deed of Title in your name OR Duly completed Form KTN 14A in your name OR Form KTN 14A in your name, which has not been processed by the Land Office AND Receipt of Submission (“Penyata Perserahan“) from the Land Office AND Declaration Letter from you to produce the duly completed Form KTN 14A within 6 months.	Deed of Assignment in your name OR Declaration Letter from you to produce the duly completed Deed of Assignment within 6 months.

3. PURCHASE OF LAND AND CONSTRUCTION OF A HOUSE SIMULTANEOUSLY AS A PACKAGE
   (This package includes the cost of purchasing the land and building the house)
   1. Documents as mentioned under A(i), (ii) and (iv) for Purchase From Developer above, and
   2. House Construction Agreement containing your name or the names of all applicants for joint withdrawal and that is executed not more than 3 years on the date the application is received by EPF ;
   3. Sales and Purchase of Land Agreement containing your name or the names of all applicants for joint withdrawal and the date of agreement is within 6 months with the House Construction Agreement ;
   4. Deed of Title of the land in the name of the seller/land owner ;
   5. Power of Attorney, which has been registered with the Court, if the purchase of land and house construction is made using a Power of Attorney ; and
   6. If you self-financed the purchase of the house, the following documents are required :-
      1. Letter from the developer confirming the purchase paid in cash ;
      2. Proof of payment of at least 20% of the price of the house ; and
      3. Architect Certificate with not less than 20% of construction progress.
4. PURCHASE A SECOND HOUSE
   1. Documents as mentioned under paragraph A to C where applicable, and
   2. One of the following documents as the proof of sale of the first house :
      1. Transfer of ownership document Form KTN 14A duly completed by the Land Office ;
      2. Deed of Assignment between you and the purchaser ;
      3. Deed of Title in the name of the purchaser AND Sales and Purchase Agreement between you and the purchaser ;
      4. Real Property Gains Tax Form (CKHT 5) AND Sales and Purchase Agreement between you and the purchaser ;
      5. Public Auction Form (KTN 16F or KTN 16I) and confirmation from the bank ;
      6. Transfer of property ownership through a Court Order to any party AND Divorce Papers (for divorced cases) ; or
      7. Official Search from the Land Office showing your name and the new owner AND Sales and Purchase Agreement between you and the purchaser.

SUBMISSION OF APPLICATION

All application forms can be submitted to any EPF office either at the counter or by post :

• Submission at the counter – enclose together with the original documents and their photocopies.
• Submission by post – photocopies of documents must be certified by one of the officers authorised by EPF.

CERTIFYING OFFICERS

Officers authorised by EPF to certify supporting documents to application form are as follows (except for certain documents, which must be certified by the respective officer as stated in the withdrawal form) :-

• EPF Officer :
  • EPF Officer (Grade 18 and above)
  • EPF Counter Duties
• Applicant’s employer
• Justice Of The Peace
• Penghulu/Penggawa
• Advocates and Solicitors
• Government Officers in the Management and Professional Group
• State Assemblyman
• Member of Parliament
• Commissioner of Oath

MODE OF PAYMENT

All withdrawal payments will be credited directly into your bank account subject to the following conditions :-

• You have a bank account with any panel of banks appointed by EPF ;
• Your bank account is still active ; and
• Your bank account is a Personal Savings/Current Bank Account OR a Joint Account (for withdrawal payment above RM100,000 only).

However, if the EPF is unable to credit the payment into your bank account due to reasons such as your bank account is not active or your Personal Identification number does not match, you will be paid by banker’s cheque.

(For more information regarding direct payment to your bank account and the list of banks appointed by EPF, please refer to Direct Crediting Into Member’s Bank Account System)

Note :
After making this withdrawal, you are eligible to withdraw your savings to reduce/redeem the housing loan for the same house once in three years. For further information, please refer to Reduce/Redeem Housing Loan Withdrawal.

CORRESPONDENCE ADDRESS

You are required to furnish your full address in Form KWSP 9C(AHL). Any change of address after submitting this application must be notified to the nearest EPF office.

ENQUIRIES

If you have any enquiry or require further information on this withdrawal, please contact the EPF office

• Any nearest EPF office
• EPF Call Management Centre, Tel : 03-8732 6000
• E-mail : enquiry@epf.gov.my

Please quote your EPF membership number and the type of withdrawal that you have applied for when you contact the EPF. You are encouraged to contact the EPF directly for assistance and advice.

ATTENTION

This information is only a guide. The EPF reserves the right to amend any conditions or request for additional documents if deemed necessary.

Source : EPF Website

AIA’s Shop Loan – Fixed 5.75%

AIA’s have been offering homeloan with fixed lending rates for more than 10 years to the benefit of many home owners without being affected by the ups and downs of BLR.

Just last 2 years AIA have grown bigger to offer Shop Loan to completed shophouses (excludes offices, retails, factory lots) and for Non Zero Moving Cost, the rate is 5.75%pa. For those who prefer ZMC, it’s fixed at 5.99% throughout loan tenure.

Here are the list of areas that shophouses will be high chance accepted, depending on each borrower’s financial data and commitments.

Click “More” Below:-

AIA’s No Limit Medical Plan

Yes, you hear me right! No lifetime limit. What’s the catch, you ask?

Nothing. This plan have been in the planning and finally after nine full months of carrying it, it was fully birth into the worl for us to enjoy.

What is in the market about limit are two typical types:-

1) Annual Limit
2) Lifetime Limit

So, this new plan, the Lifetime Limit is lift off. No need to worry about having not enough medical funds when you need it the most. There are cases where one striked with cancer and under treatments, RM200K or RM300K is simply not enough. So you want to top up then. But no one insurer will want to cover a sure lost client, don’t they?

Click “MORE” Below:-

SOCSO (PERKESO) Coverage

Someone told me that Socso pays after a person died of disease, for the benefits of the disease family and the payment goes to the wife. All along I thought (and I believe it is to many of us belives as well) Socso pays on occupational harzard.

So I decided to check on them and true enough I found the info at their website at http://www.perkeso.gov.my/. When you log into it, go check out “Services” and under “Introduction” you will find the following:-

SOCSO administer two types of protection schemes ie Employment Injury Scheme (EIS) and Invalidity Pension Scheme (IPS) . The EIS provides protection to employees who are involved in accidents arising from out of employment, occupational diseases, and also commuting accident. PIS provides 24 hours coverage for workers from invalidity or dies irrespective of the cause of death. The other objective is to ensure payments are made to workers and dependants when an unexpected incident occurs.

How about that? Sounds interesting? Especially PIS is super attractive!! Yippie!