AIA HOME LOAN UPDATES MAY 2011‏

It is happening again! Interest rates are on the rise once more!

May 5, 2011- Bank Negara Malaysia increased the Overnight Policy Rate (OPR) by 25 bps (0.25%) and Statutory reserve requirement (SRR) by another 100 bps (1%).
 
May 11, 2011 -Maybank and RHB Bank became the first banks to raise their base lending rate (BLR) from 6.30% to 6.60% as others follow suit.

Effects of OPR & SRR hikes - passed to borrowers with Higher BLR hike!

The higher BLR increase by 30 bps (instead of 25bps) is to incorporate the higher rise in SRR. An increased in SRR raises the cost of funds for banks and a 1% increase is expected to absorb approx RM7.5 billion liquidity from the market. Unfortunately, these additional costs are just passed back to the borrowers with higher BLR hikes with no impact on the banks!!

The worst may not be over
For this year alone, economists expect 50 -75 basis point rise in OPR and 300 basis point increase in SRR. This will mean further rounds of BLR hikes…..  

The bad news is…. the increase in BLR may even be higher than the rise in OPR if SRR is raised!  
 
Can you really afford another round of rate hikes?

OPR increases in 2010                        BLR: 5.55% (in 2009)
0.25% hike in March to 2.25%                 BLR: 5.80%
0.25% hike in May to 2.50%                  BLR: 6.05%
0.25% hike in July to 2.75%            BLR: 6.30%    

TOTAL BLR INCREASES in 2010: 0.75%

OPR & SRR increases in 2011

0.25% hike in May to 3.00%                   BLR: 6.60%        
TOTAL BLR INCREASES : 1.05% to date

0.25% hike in July?!                         BLR: 6.85%?
0.25% hike in September?!                    BLR: 7.10%?

OPR increases in 2012 onwards?
 
IMPORTANT TO NOTE :

If you have a RM500,000 loan at BLR-2.20% an increase in BLR from 5.55% to 7.10% for a RM500,000 loan for 30years will:-
= Increase instalment by RM450/- per month  
= Increase your total interests by RM162,000/- for the whole term.
= Increase the loan tenure from 30 years to 53 years and 5 months (increase tenure by 281 months ie an additional RM619,324/-    (if instalment remains unchanged)

 THE SOLUTION:
 AIA HOME LOAN – THE LOWEST LONG TERM FIXED RATE IN MALAYSIA

4.85% p.a. fixed up to 30 years

5.25% p.a. fixed with Zero Moving Cost (Free valuation, legal fees, stamp duty on loan)

This is strictly for a limited time period only so get in your applications asap.
The packages are applicable for both purchase of properties and refinancing of existing loans.

StarBiz dated 11 May 2011

Which home loan to opt for?

Source: http://biz.thestar.com.my/news/story.asp?file=/2011/3/26/business/8352132&se

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.




URL:

http://biz.thestar.com.my/news/story.asp?file=/2011/3/26/business/8352132&se

c=business

AIA Home Loan @ 4.85% p.a. Fixed Rate: Do a Mortgage Health Check on your Housing Loan To...

http://fixedratehousingloan.blogspot.com/2011/03/do-mortgage-health-check-on-your.html?spref=bl: "How does a Mortgage Health Check Benefit You? If you have a home loan with other banks, come and see us with your loan statement and off..."

Do a Mortgage Health Check on your Housing Loan Today

How does a Mortgage Health Check Benefit You? If you have a home loan with other banks, come and see us with your loan statement and offer letter and see how you could: 1) Settle your home loan earlier 2) Pay less rather than more for your instalments 3) More certainty to your financial planning Don’t get caught up in a financial maze like…… Did you know that many banks do not revise their instalments even when interest rate fluctuates? What is the impact to you when BLR hiked from 5.55% to 6.30% this year? Consider this:- A. BLR increase by 0.75% can extend your loan tenure by 10yrs 2mths. (Extra RM208,986 in instalments). B. BLR increase of 1.25% can extend your loan tenure by 42yrs 1mth. (Extra RM865,065 in instalments). * Based on RM300K loan for 30 years with same instalment of RM1713 at BLR 5.55% . (BLR from 5.55% increased to 6.30% & 6.8% respectively). Be wise financially and don’t get lost! Get a Mortgage Health Check now. e-mail: fungnt@gmail.com

IMPACT ON RISING OF BLR

Example :

Loan amount = RM300,000
Period of Financing = 30 years
Interest rate = BLR + 0% (BLR at 6%p.a.)
Monthly instalment = RM1,799
Total interest payable = RM347,514

If BLR increase from 6.00% to 6.75% p.a. (+0.75%), let's see what is the impact

Loan amount = RM300,000
Period of Financing = 30 years
Interest rate = BLR + 0% (BLR at 6.75%p.a.)
Monthly instalment = RM1,946
Total interest payable = RM400,486
Total additional interest payable = RM52,972


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Fixed Rate for your Housing Loan

PRODUCT BRIEF “ Fixed Rate throughout the whole Loan Tenure for Better Financial Planning” 4.85% p.a. (Fixed Rate) Non Zero Moving Cost package (NZMC)

5.25% p.a. (Fixed Rate) Zero Moving Cost package (ZMC)

(AIA Mortgage Save / Mortgage Invest)

AIA Mortgage Save – A revolutionary home loan that generates guaranteed cash savings and protection*. AIA Mortgage Invest – A rewarding home loan that yields investment returns for retirement and protection*. * Other Terms and Conditions apply. Margin of Financing (MOF) • MOF is based on Open Market Value (OMV) or purchase price whichever is lower for new purchase. • OMV shall be based on the valuation report prepared by AIA panel of valuers. New Purchase (Up To) 90% Landed Properties 80% Non-Landed Properties Refinancing (Up to) 80% Landed Properties 80% Non-Landed Properties (Note: Exceptions can be considered on a case by case basis. MOF is subject to the discretion of AIA Bhd.)

Loan Tenure

Up to 30 years or age 65 whichever is earlier. Minimum Loan: RM 100,000

Who can apply? • Individual Malaysian Citizens or permanent residents. • For Self Employed - The business established for at least 3 years and operating profitability for the past 3 years. Documents Required

For Individual: • Copy of Identity Card • Last 3 months Payslips • Last 3 years Income Tax (Borang J with tax payment receipt) • Letter from Employer (if current employment is less than 6 months) • Sale & Purchase Agreement / Booking Receipt (S & P Date)

For Business: • Copy of Identity Card • Business Registration / Form 24 & 49 • Last 3 years Financial Statement • Last 6 months Current Account Statement • Last 3 years Income Tax (Borang B with tax payment receipt) • Sale & Purchase Agreement / Booking Receipt (S & P Date) Processing Fee • Waived for all package Mode of Payment • AIA Cashiers (AIA Branches) • Standing Instruction with Maybank • Online www.maybank2u.com • Maybank Cashiers

Late Payment Penality • 1% p.a. on the amount in arrears Lock-In Period • 5 years from date of 1st drawdown (for refinancing only) or a prepayment fee of 0.35% of outstanding loan (Min 2%, Max 4%). For ZMC – pay back MC & other incidental costs. • No prepayment fee imposed if prepayment is done via own savings, EPF withdrawal &/or sale of property except for refinancing.

AIA Mortgage Save / Invest • Enjoy the benefits of AIA Mortgage Save – a home loan that generates guaranteed cash and protection. • Enjoy the benefits of AIA Mortgage Invest – a home loan that yields investment returns and protection.

Major Risks None as interest rate is fixed and not subject to fluctuation of the prevailing market interest rate.

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Please contact me at e-mail: fungnt@gmail.com for more information

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