What is a Home Loan Repayment?
Most people will take up a house loan from a bank to help them purchase a property. These borrowers will be required to repay the house loan on a monthly basis over an agreed period of time (loan tenure) until the loan is paid in full. This monthly repayment is known as the home loan repayment.
The monthly home loan repayment covers a portion of the initial capital (the principal amount), as well as the accrued interest. As long as you make your repayments every month, your home loan balance will gradually decrease every month. Generally, the loan tenure is dependent on your age – the younger you are, the longer your loan tenure. In Malaysia, the maximum loan tenure is 35 years, or until the borrower turns 70 years old (whichever comes earlier).
It’s important to note that the initial home loan repayments will primarily be used to pay down the interest on your home loan. If you plan to sell your property in the first few years, you’ll find that the amount you owe the bank won’t have decreased significantly.