Yes. You need to appoint a lawyer to draw up your loan security documentation. Normally, the bank or financial institution will provide a panel of lawyers who are familiar with their documentation requirements for you to choose from.
If you prefer to engage your own lawyer, you should discuss this with your financial institution. Unless your own lawyer is the bank or financial institution panel, else bank or financial institution wouldn't allow them to execute the loan security documentation. Some bank or financial institution will allow the non-panel lawyer to execute the loan security documentation on ad-hoc basis.
Sunday, October 3, 2010
Why do I need a valuation?
Anytime you buy or sell property, you need a valuation. The primary purpose is to find out exactly how much your property is worth. Banks and similar lending companies often require it, before a buyer can obtain a mortgage. The financial institution requires a valuation to ascertain whether the property provides sufficient security for the loan given. It also provides an indication that the property is worth what you are paying for.
A valuation is an “educated and trained opinion” on the value of the property. It also, in some circumstances, may ascertain the best use of the property, garnering the best selling price. For example, a long-time residential property may be in an area that has been rezoned for commercial activity, which could potentially bring in a higher sales price than marketing the real estate to potential residential buyers.
A valuation is an “educated and trained opinion” on the value of the property. It also, in some circumstances, may ascertain the best use of the property, garnering the best selling price. For example, a long-time residential property may be in an area that has been rezoned for commercial activity, which could potentially bring in a higher sales price than marketing the real estate to potential residential buyers.
What is the difference between conventional financing and Islamic financing?
When asked about the difference between these two types of financing, the general answer is that both are the same, except in a conventional loan, the purchaser will pay interest, and in Islamic financing, the purchaser will pay a profit.
In a conventional loan, the customer will repay to the bank the loan amount, together with interest at the prescribed rate. The prescribed rate is based on a margin above the bank's base lending rate (BLR), and both the margin and the BLR are variable from time to time. In a case of late payment or default, the bank is entitled to charge compound interests. Interest payable may also be capitalised and the capitalised amount will be subject to further interests.
A common home Islamic financing facility is offered under the Shariah principle of Al-Bai Baithaman Ajil (BBA). In BBA financing, a bank's customer buys a property from the vendor under an agreement of sale. The bank then, at the request of the customer and with the consent of the vendor, steps in to become a party to the sale agreement by executing a novation agreement between them, making the bank now the purchaser of the property. The bank's purchase price is described as the loan facility amount.
At the same time, between the bank and the purchaser, the bank sells the property to the customer at a selling price which comprises the bank's purchase price and a predetermined profit margin. The agreement is usually called the property sale agreement. Since Islamic financing entails a predetermined profit to be made by the bank, a customer will never have to worry about a sudden hike or changes in the interest rates. Right from the onset, he will know the total amount which he has to pay to the bank. His monthly instalment of the bank's selling price will not change throughout the tenure of the financing.
In a conventional loan, the customer will repay to the bank the loan amount, together with interest at the prescribed rate. The prescribed rate is based on a margin above the bank's base lending rate (BLR), and both the margin and the BLR are variable from time to time. In a case of late payment or default, the bank is entitled to charge compound interests. Interest payable may also be capitalised and the capitalised amount will be subject to further interests.
A common home Islamic financing facility is offered under the Shariah principle of Al-Bai Baithaman Ajil (BBA). In BBA financing, a bank's customer buys a property from the vendor under an agreement of sale. The bank then, at the request of the customer and with the consent of the vendor, steps in to become a party to the sale agreement by executing a novation agreement between them, making the bank now the purchaser of the property. The bank's purchase price is described as the loan facility amount.
At the same time, between the bank and the purchaser, the bank sells the property to the customer at a selling price which comprises the bank's purchase price and a predetermined profit margin. The agreement is usually called the property sale agreement. Since Islamic financing entails a predetermined profit to be made by the bank, a customer will never have to worry about a sudden hike or changes in the interest rates. Right from the onset, he will know the total amount which he has to pay to the bank. His monthly instalment of the bank's selling price will not change throughout the tenure of the financing.
Saturday, October 2, 2010
How long does it take to process a loan?
It usually takes about one to two weeks for your loan application to be approved from the time you supply full documentation that require by the bank or financial institutions.
You should ask the bank or financial institution for the checklist of documents required for the application to avoid any delay.
You should ask the bank or financial institution for the checklist of documents required for the application to avoid any delay.
Loan Tenure and Features
Commonly, the length of a housing loan can last up to 30 years or when the borrower reaches the age of 65, whichever is earlier. Each loan package differs from one institution to another, so do not base your decision on any single feature. Most people take on a housing loan from a banking institution which offer different loan packages to cater for the needs of different users.
Be sure to compare rates and choose a loan based on its features, fees and charges as well as the quality of service offered by the institution. Also, make sure you have all the required documents for your application by making a checklist. Look out for features like flexible repayment terms or graduated payment schemes to suit your repayment capability.
Be sure to compare rates and choose a loan based on its features, fees and charges as well as the quality of service offered by the institution. Also, make sure you have all the required documents for your application by making a checklist. Look out for features like flexible repayment terms or graduated payment schemes to suit your repayment capability.
Margin of Financing
Depending on the market value of the property, the margin of financing can go as high as 95% of the property’s value. This is assessed on factors such as:
Type of property:
1. Location of property
2. Borrower’s age
3. Borrower’s income
Type of property:
1. Location of property
2. Borrower’s age
3. Borrower’s income
How much can I borrow?
This will depend on the value of your property, your income and your repayment capability. Margin of financing can go as high as 95% (inclusive of MRTA).
The higher the margin, the higher you will have to pay per installment. Also, at a given rate, a shorter tenure will require you to pay higher installment.
The higher the margin, the higher you will have to pay per installment. Also, at a given rate, a shorter tenure will require you to pay higher installment.
How much can I afford?
This depends on your income and other financial obligations. As a rule of thumb, most house buyers buy houses that cost 1.5 and 2.5 times their annual income. For example a house buyer earning RM40,000 a year would buy a house between RM60,000 and RM100,000.
Furthermore, the monthly loan repayment should not exceed about 1/3 of your gross monthly income. In assessing your repayment capability, the financial institution would also take into account your other debt repayments such as car loan, personal loan and credit cards.
Furthermore, the monthly loan repayment should not exceed about 1/3 of your gross monthly income. In assessing your repayment capability, the financial institution would also take into account your other debt repayments such as car loan, personal loan and credit cards.
Home Frequently Asked Questions
Buying a house is a life-transforming event in terms of financial and social commitments as well as status. Here's the most common questions asked by a house buyer before he/she signup for the home loan.
Questions:
1. How much is the cost to buy a property?
2. How much can I afford?
3. How much can I borrow?
4. Margin of Financing
5. Loan Tenure and Features
6. How long does it take to process a loan?
7. What is the difference between conventional financing and Islamic financing?
8. Why do I need a valuation?
9. Do I need to appoint a lawyer? Can I choose my own lawyer?
10. Who pays for the legal fees and how much?
11. What if I run into financial difficulties and cannot meet my loan repayments?
12. Can I pay off my loan in full earlier than the agreed loan tenure?
13. House Insurance
14. Fire Insurance
15. MRTA
16. MLTA
17. Stamp Duty
Questions:
1. How much is the cost to buy a property?
2. How much can I afford?
3. How much can I borrow?
4. Margin of Financing
5. Loan Tenure and Features
6. How long does it take to process a loan?
7. What is the difference between conventional financing and Islamic financing?
8. Why do I need a valuation?
9. Do I need to appoint a lawyer? Can I choose my own lawyer?
10. Who pays for the legal fees and how much?
11. What if I run into financial difficulties and cannot meet my loan repayments?
12. Can I pay off my loan in full earlier than the agreed loan tenure?
13. House Insurance
14. Fire Insurance
15. MRTA
16. MLTA
17. Stamp Duty
What is BLR?
BLR is a minimum interest rate calculated by banking institutions based on a formula which takes into account the institutions’ cost of funds and other administrative costs. This is defined by central bank of the countries.
The Overnight Policy Rate (OPR) from Bank Negara Malaysia is reference for banks in BLR adjustments, but there might differ from bank to others bank. At the global money market down turn, BLR will get lower and if the money market on uptrend, it will correlation upward. It is wisely and timely to consider take up mortgage loan and start to own your property at the lower BLR as current.
From the record, it shows that the highest BLR Malaysia ever has is 12.27% in year 1998 and the lowest BLR is 5.55% in year 2009. The average is 8.1%. Probably you can use this to justify whether it is better to take the fixed rate loan or floating mortgage loan (BLR +/- x% ). Below table shows the Malaysia Base Lending Rate (BLR) record from year 1989 to year 2010.
The Overnight Policy Rate (OPR) from Bank Negara Malaysia is reference for banks in BLR adjustments, but there might differ from bank to others bank. At the global money market down turn, BLR will get lower and if the money market on uptrend, it will correlation upward. It is wisely and timely to consider take up mortgage loan and start to own your property at the lower BLR as current.
From the record, it shows that the highest BLR Malaysia ever has is 12.27% in year 1998 and the lowest BLR is 5.55% in year 2009. The average is 8.1%. Probably you can use this to justify whether it is better to take the fixed rate loan or floating mortgage loan (BLR +/- x% ). Below table shows the Malaysia Base Lending Rate (BLR) record from year 1989 to year 2010.
Latest Malaysia BLR & BFR rates
Following table are the latest Base Lending Rate (BLR) and Base Financing Rate (BFR) for banks in Malaysia. BLR is used in Conventional Banking while BFR is used in Islamic Banking. However, most of the time BLR & BFR figures are the same.
Friday, October 1, 2010
List of Malaysia Bank
List of Malaysia Banks in alphabatical order:
1. Affin Bank
2. Alliance Bank
3. CIMB Bank
4. Citibank
5. EON Bank
6. Hong Leong Bank
7. HSBC Bank
8. Maybank
9. OCBC Bank
10. Public Bank
11. RHB Bank
12. Standard Chartered Bank
13. UOB Bank
1. Affin Bank
2. Alliance Bank
3. CIMB Bank
4. Citibank
5. EON Bank
6. Hong Leong Bank
7. HSBC Bank
8. Maybank
9. OCBC Bank
10. Public Bank
11. RHB Bank
12. Standard Chartered Bank
13. UOB Bank
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