AskGuru Live! is a platform that allows all property seekers to ask property-related questions and have a conversation with the Guru-of-the-Month via our Facebook. Every once a month, AskGuru Live! will invite a property expert to answer questions about a specific topic for two hours.
Our first AskGuru Live! sessions were held on 15th and 29th of April, with Gary Chua, a property financing expert, being the first Guru-of-the-Month.
Gary has over 11 years of banking experience, both in local and international banks. With extensive financial knowledge and banking experience, he started SMART Financing. He shares his financial knowledge and experiences with his members and guides them to master the skills of achieving financial freedom via responsible and smart leveraging.
The AskGuru Live! sessions were a great success with many sending in their finance-related questions, to clear their doubts and to gain knowledge. Listed below are among the top questions asked during the live session with our property financing expert.
Question 1
Tan Loh: My friend is 30 years old. He is earning RM8,000 every month without making any EPF contribution. He has the salary crediting record of over 10 months in the bank, but has not taken any car loan and credit cards, except for a study loan. Is it tough for him to get a loan?
Gary: Yes, it will honestly be tough for your friend to get a loan. Reasons being that (1) he doesn’t contribute to EPF, and (2) he has thin bureau (minimal credit repayment history in CCRIS).
Question 2
Leow Yuk Loong: Can I purchase a house under joint names and apply for the housing loan only under my name?
Gary: Yes, there are banks that offer third party loans, but most of the banks only allow the joint purchase with the spouse, parents, or siblings.
Question 3
Lim Khoon Eong: What are the difficulties and limitations of obtaining a bank loan if I already have two housing loans? The hot areas usually will have higher selling prices than the bank valuations. How do I go about obtaining the 100% financing?
Gary: The potential challenges you might face during application will be passing the affordability test which is also known as DSR (debt service ratio). You might have insufficient DSR room to take up an additional new loan.
Under the current BNM guidelines, the maximum property financing is capped at 90% of the property value. However, if you are a first time home buyer, you might get 100% financing via the Skim Rumah PertamaKu.
Question 4
Firra Firr: I am a first-time home buyer Would like to know what documentation needed, processing time for loan and how long is the loan period.
Gary: The standard documents required by the bank are property purchase booking form, IC photocopy and income documents. To get further information, you may call any banks and they will let you know what documents are required. The processing time takes about a week and the highest tenure is up to 35 years or up to the age 70, whichever comes first.
Question 5
Kamarul: Most people say refinancing your property is a good move, can I know what are the benefit of refinancing?
Gary: Refinancing is the cheapest mode of getting additional funds for your future investment or other needs, especially when your property has appreciated in price. You may refinance to change your housing loan type from the term loan to Flexi loan or vice versa.
You can also refinance to enjoy lower interest rates now if your housing loan was taken a long time ago and sitting on a higher effective lending rate. You may also refinance to shorten or lengthen your housing loan tenure as part of your financial planning.
Question 6
Harriet Tan: What do I need to be aware of when refinancing my property?
Gary: First you have to be aware of the cost involved such as loan legal fee & stamping fee. Savings in interest rates may not be higher than the initial cost you need to pay when you refinance from one bank to another. Check if your existing mortgage has a lock in period or penalty, as well as get the current valuation of your property.
Also, check on the flexibility of the packages offered by banks, such as the type of mortgage loan offered, lock in period, moving cost offer, insurance requirements (MRTA) and so on.
Question 7
Leow Yuk Loong: Should I consider refinancing my loan if I am offered a lower interest rate?
Gary: Yes, you definitely should! However, be mindful about the lock-in period of your existing loan. Conduct your due diligence before refinancing your loan and you should be doing fine.
Question 8
Lee Mee Choo: I currently jointly own an apartment with my sister, but the home loan is fully under my name. As my sister has now started working and is able to finance the property, we have decided that she will take complete ownership of the property. My question is whether the home loan can be transferred to her name? The apartment is currently tenanted and the rental fully covers the monthly loan payments.
Gary: Yes, you can opt to transfer the loan to your sister. The key things you may need to review are: (1) Your sister’s loan-ability or affordability level to take up this property loan; (2) The lock-in period of your existing loan, which may incur additional costs if still within the lock-in period; (3) You may need to move the loan to your sister via refinancing; (4) Take note that there is cost involved in refinancing.
Question 9
Angeline Loh: What are the pros and cons of a floating rate loan and a fixed rate loan? And under what circumstances should I opt for floating or fixed rate loan?
Gary: Floating rate means the rates may fluctuate. It may go up or come down. And this is referring to the Base Rate or BLR tagged loan. Normally the rate changes in accordance to the fluctuation in OPR. As for a fixed rate loan, the rate is fixed for the entire loan tenure of your loan.
Which one should you go for? It depends on your strategy. If you wish to have a fixed instalment for the entire tenure, then you may want to consider the fixed rate loan. But one thing to note is that effective lending rate of the fixed rate loan is on the high side at the moment, which may be about 0.8% to 1.0% higher than the floating rate of 4.45% offered by most banks.
Question 10
Chee Kin Tan: What are the documents required for a foreigner buyer? How about the loan ratio level and how long is the processing time for the loan approval?
Gary: The standard documents required are passport photocopy and income documents. Processing time will be about 1 week or so. Please note that different banks have different policies for foreigners. The loan margin will range from 50% to 70% and employees working in MNC companies are preferred.
With Malaysia’s current market condition, do you think buying a property under bank value is still possible? We think it is. Want to find out how? Ask Faizul Ridzuan, our next Guru-of-the Month, on 20th May at 3pm – 5pm. Full details here.
