You can take an initial lump sum and then withdraw smaller amounts when you need it (subject to minimum amounts).Īs you only pay interest on the money you have drawn down, you can save a considerable amount in interest over the lifetime of the plan. Your lender agrees to an overall sum of money you can borrow, which is set aside for you. Ready to apply for a home loan? Find one that fits your criteria on our home loan comparison table.Drawdown is a type of lifetime mortgage that enables you to take the cash from your home in chunks, as and when you need it.Ī drawdown lifetime mortgage allows you more freedom to release your money when you like. Love this article? You may also wish to read up on the six things you should consider when taking up a home loan in Malaysia. For all housing loan applicants, make sure you check your Letter of Offer to ascertain the lock-in period and exit penalty before you sign. Remember: it’s better to be safe than sorry! They can be found on this home loan comparison table. The short answer is: yes. In Malaysia, there are actually a handful of banks that offer housing loans without such periods. Are there home loans with no lock-in periods in Malaysia? because in any loan, the interest rate should always be your priority). Though the length of the period is important, do not let it jeopardise your home loan interest rate. If a bank offers you a loan package with zero lock-in period but at significantly higher interest rate compared to other home loans in the market, it is not considered a good deal (i.e. If you can, try to look for home loan packages that do not have such term at all. When choosing a property loan, it is for your best interest to keep the lock-in period as short as possible and the exit penalty as low as possible. What is a good strategy when it comes to it? However, even if you are 100% convinced you will not have the cash to pay off your loan in the near future there are still many circumstances where it could affect you.įor example, you may suddenly decide to sell off your property, or you may opt to refinance either to take advantage of a better loan rate by another bank or to unlock your home equity. If these take place during the lock-in period, you will incur the exit penalty by virtue of you terminating your property loan during the said period. Most property loan borrowers do not pay attention to lock-in period for two key reasons. Firstly, they may not understand what it is. And secondly, they do not think they will have the money to pay off the loan amount in full any time soon, thus rendering it irrelevant. Your penalty = 3% × RM500,000 = RM15,000 Why would it affect you? the day the bank issues the first payment to the developer), and not from the date the legal agreement is signed.Įxample: If you have a RM500,000 housing loan with a lock-in period of five years and an exit penalty of 3% by choosing to pay off your loan in full any time during the five-year period, you’ll pay this amount to the bank as penalty: Take note that lock-in periods are usually counted starting from the first drawdown (i.e. It is not only an important aspect, it is also one of the six things you should consider when taking up a home loan in Malaysia. If you’re actively searching for a housing loan right now, allow us to offer a more in-depth explanation on why you should avoid a lengthy one, as well as answer a question many are asking: Is it possible to secure a home loan with no lock-in period in Malaysia? What is it?įor the uninitiated, a lock-in period refers to the length of time where you’ll incur an exit penalty should you choose to pay off your home loan in full (by full settlement, refinancing or sale). In Malaysia, it could be anything from three years up to five years or more, while an exit penalty could start from as low as 2% all the way up to 5% of your original loan amount. Most home buyers do not put adequate importance on the lock-in period of their home loan package.
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