Which should I consider?
Have you been on a 360 tour the latest show homes
? Now that you’ve thought about the locations, the design and the fittings you want inside, let’s talk about what’s next, a home loan.
Applying for a home loan can be daunting but not to worry we’ll guide through the types of housing loans available to help you understand how they work and ultimately help you decide which suits you best.
Types of housing loans in Malaysia
Semi-Flexi Home Loan
Considered the most common housing loan nowadays, just like the name suggests, semi-flexi loans come with more flexibility where the principal interest can be lowered if you pay more than the instalment amount.
For example, if you receive a bonus at the end of the year and use that to pay off a portion of the loan, this will help reduce your housing loan’s interest rate, saving you money in the long run.
This might be a great option for you if your job is commission based.
Similar to semi-flexi loans, you can pay more than the instalment amount to lower the principal interest of your flexi loan without having to request from the bank.
A flexi loan links the housing loan account to your current account where monthly instalments will be deducted by default. A plus point is that you’ll still be able to withdraw any extra amounts you’ve made for a particular month in case you need additional cash.
Term Loan works on a fixed repayment schedule. By applying for this loan, you are committing to paying a monthly instalment that is bundled together with its interest rates.
With a maximum tenure of 35 years, there are no flexibilities on loan interest when it comes to a Term Loan. You may want to reconsider if you’re planning to settle the loan within the first two to five years, as you may be charged with a penalty by the bank if you pay off the loan earlier than your tenure. In recent times, term loans have become less popular as compared to semi-flexi and flexi loans, with the demand of more flexibility from loans.
Islamic Loans are Syariah law compliant where the home loan works on the basis of interest-free transactions. There are two types of Islamic home loans in Malaysia:
Al-Bai’ Bithaman Ajil – based on a buy-and-sell concept,
the bank buys the property and sells it back to you at an agreed price which includes the actual cost of the property and the bank’s profit. You will then be required to repay the bank either by instalments or a lump sum payment with no interest rates involved.
Musharakah Mutanaqisah – based on a
partnership concept, with this home loan, you and the bank jointly purchase the property where you will become a tenant to the bank and your monthly repayments (ijarah) are used to gradually buy back the bank’s share of the property.
Other home loans features
Additionally, there is also a Government Housing Loan for government servants with a number some rules set for those who apply for this loan.
Read more on ‘How to finance your home purchase by withdrawing from your EPF Account 2’, here.
Have a chat with our friendly and knowledgeable sales advisors, if you have any questions on loans, we’ll be more than happy to guide you through the process of getting into your dream home, call or WhatsApp the Kinta Properties team on 0125008018.