Malaysia Home Loans - What's New (October, 2008)

October arrives ushering in the festive months, starting with Hari Raya with Deepavali and Christmas closely in tow. Before you know it, it is 2009 and Chinese New Year again. It is a joyous time…but for a most people, these few months also happen to be the most expensive months of the year.

Payment Holidays:
For those who took their home loans from Bank Islam, there is reprieve as the special feature of Bank Islam’s loans is the built-in 2-month payment holiday in November and December of each and every year of the loan tenure. Handy, if you have just blown the Raya budget into orbit, or simply planning to take that long overdue year end get-away.

And the interest rates aren’t too shabby either with rates such as Baiti Home Financing-i (BFR-1.30% to BFR-1.80%) & Baiti Cakna Financing-i (Yr 1: 3.00%, Yr 2: 5.00%, TA: 7.00%)


Lowest Interest Rate:
Competition among lending banks continue to be fiercely fought and EON Bank signals it’s presence with a smashingly low rate of BLR-2.3% for the whole tenure making this the lowest BLR-based loan (for the entire loan tenure) on offer in the market. The package is for property values higher than RM200,000 and is a non-ZEC (non zero entry cost) package [Click here to calculate Entry Cost]. MRTA is compulsory. Lock in period is 5 years and a penalty of 5% of loan amount or RM5,000 is charged for early redemption.

For ZEC package, EON offers BLR-2.10% for years 1-6, and BLR-2.3% thereafter. Lock-in period for the ZEC package is 6 years.

EON’s offer ends 31st October 2008.

For variations of the package e.g ZEC packages, see here.


Fixed Low-start Loan:
These are loans with fixed interest rates in the initial years before reverting to a BLR-based interest rate. If you are of the opinion that interest rate is northward bound anytime now but will eventually drop again, then these are the loans for you.

For this category, it’s a coin toss between OCBC, and Asian Finance Bank: OCBC offers 5.5% for the first 3 years, followed by BLR-1.75% (years 4-5) and then BLR-2% thereafter. A very good rate indeed plus the loan carries prepayment and “re-draw” facilities. Minimum loan amount is RM200,000 and the package is a non-ZEC package.

Or if you prefer to enjoy a fixed rate for 5 years, OCBC offers a 5-year fixed rate @ 6.25% followed by BLR-2% from years 6 onwards. [See the rest of OCBC’s loans]

Lock-in period is 3 years for the 5.5% fixed package and 5 years for the 6.25% fixed package.

The other contender in this category is a relatively “new” player i.e. Asian Finance Bank. Not many people have heard of Asian Finance Bank although they will now, with AFB’s introduction of a loan with the welcoming 5% fixed rate in years 1 & 2, followed by BFR-1.5% (negotiable depending on credit strength). There is ZERO LOCK-IN period, so if you can actually clear your entire loan within 2 years, here is the absolutely cheapest loan in town – very useful if you are buying a new property whilst selling off another.

AFB is an Islamic Bank and therefore, like Bank Islam, borrowers enjoy discounts off the stamp duties 20%.

The AFB loan package is for properties in Klang Valley and Johor Baharu only and applies to landed and non-landed properties. Maximum margin is 90% and the big bonus is that there is ZERO lock-in period with this package.


Floating Low-start Loan:
As for “non-fixed low-start” loans, Alliance Bank is still the undisputed champion with BLR-2.4% for years 1 and 2. Thereafter the rate is still attractive at BLR-2.1%.

In addition, margin of borrowing can go up to 90%+5% if borrowers choose to finance legal fees and MRTA. However, this extremely attractive offer is for loan amounts between RM300,000 and RM1Million.


Flexi (Deposit-Linked) Loans:
The “Best Flexi Loan” title is retained by Alliance Islamic . Last month, this is what we wrote about it and nothing has changed:

“While a normal Savelink (deposit-linked) loan allows you to offset the amount you keep in deposit against the loan principal, the deposit-linked- account DOES NOT pay you any interest per se.

Alliance Islamic Flexi is a deposit-linked account that NOT ONLY saves you interest by offsetting the deposit sum against the financing sum…IT ALSO PAYS YOU A “PROFIT RATE”. After all, why have your cake if you can’t eat it.

In addition, the one-time set up fee of RM200 applicable on normal Savelink is also not applicable with the Islamic Flexi.

Other goodies include:

-Financing tenure of 35 years or up to age 65, whichever is earlier
-Maximum financing of 90% of purchase price
-Option to include MRTA and stamp duty into financing (+ additional 5%)
-Option to choose Zero Entry Cost (ZEC)/ Financed Entry Cost (FEC) Package) on daily rest calculation
-Rate protection with capped ceiling rate at 9.9%
-No stamp duty for refinancing from conventional loan
-20% discount on stamp duty for new purchase
-For completed properties and for landed & Non-landed

See Alliance Islamic Financing Rates here…