Remember last week's article we posted titled "Exploring New Housing Loans / Refinancing: Key Considerations"? Well, guess what? We've got the second part ready for you!
In this follow-up piece, we are diving even deeper into the world of housing loans and refinancing options. We have packed it with more insights and tips to help you make those important decisions about your housing finance.
7. What factors should be paid attention to when choosing a Housing loan?
Margin of Financing: the margin of financing is also known as the loan-to-value ratio. The margin of financing is the amount of your loan expressed as a percentage of the property's value. The lower the margin of financing, the more 'equity' there is in the property. The margin of financing could go as high as 95% (of the value of the house), and is assessed on factors such as:-
a. Type of property
b. Location of property
c. Age of the borrower
d. Income of the borrower
8. What is MRTA?
In Malaysia, one will always come across this term “MRTA” when taking up a mortgage loan to buy or refinance a property. What is it? Mortgage Reducing Term Assurance (MRTA) is frequently referred to Mortgage Life Insurance. MRTA helps you settle your mortgage loan in the event something happens to you.
Technically, MRTA is designed to provide coverage and protection for borrowers who take up mortgage loans. It covers the borrowers against Death and Total Permanent Disability (TPD) due to Natural or Accidental causes, on the outstanding mortgage loan, on decreasing sum assured basis. This initially is for an amount equal to his/her outstanding loan, which will be reduced in accordance with the installment payments (according to the Table of Reducing Sum Assured attached to the policy).
By way of Mortgage Reducing Term Assurance, in the event of the borrowers’ untimely Death or TPD, MRTA settles the repayment of the mortgage loan. In this way, it assures that the borrowers’ loved ones are free from indebtedness in having to settle the outstanding mortgage on the house.
10. What Are The Costs Involved?
Before you take action in your home refinancing, there are a few items you will need to take note of:
a. Moving Cost
This refers to money you would need to spend on in taking up a new loan. Items such as valuation fees, legal fees, disbursement and stamp duty are payable when you refinance. If you are refinancing to save on interest, take note of this amount and compare it against the savings in interest you would obtain through refinancing.
b. Mortgage Lock-In Period
When you are ready to pay off your existing loan early (before the tenure expires), check if your existing loan has a lock-in period and if you are still bounded by it. Banks normally charge a penalty of 2% to 5% (on your original loan amount) if you fully pay off your mortgage within the first two to five years. This “two to five years” period, where you will incur a penalty for early settlement, is essentially the “lock-in period” of your mortgage.
11. My existing property was purchased jointly by my wife and me, and a joint loan granted with "Bank A". I want to refinance my property and I will be the only borrower for refinancing application. Will the bank approve it?
Yes, many banks still accept and allow third parties to apply for housing loans, but not all banks accept them. For some bank officials, the borrower's relationship is very important, because some banks will ask why friend relationships can jointly buy real estate and declare that their accommodation is only to get 90% of the deposit? This is illogical, so if the investment is declared to be insufficient, the maximum value should be 70% -80%.
12. I am divorcing my husband. Currently, property and loans are our names. According to the agreement, I will buy his shares. Do I need to refinance?
Yes. If the property has a bank loan, there are two suggestions and treatment methods. First, you must pay off the remaining property loans. If within a short time, there is no way to pay off. You can choose the second processing method, that is, you must apply for a new housing loan from the bank. Only in this way, the legal firm can retrieve the original issuance documents of title from the existing bank, and then can perfect the transfer of his half sharein your favour.
13. I did not pay the two-month installment of the housing loan, and within a year, I may still owe money for 2-3 months in other facilities. I want to refinance to repay my debt. Do you think I should seek refinancing?
If you have defaulted in your current housing loan installment or even other loan facilities, we are advising you to print your bank Negara CCRIS report before proceeding for refinancing application. After print the CCRIS report, you can always forward it to the mortgage bankers, to get their genuine advice. Generally, if the borrower does not pay in time, especially your "refinanced housing loan", the bank will be very sensitive, and may not approve your application.
14. How long the process for refinancing?
The standard refinancing process is when you complete the initial steps to apply for a new loan, and then must wait for the new bank to release the redemption amount to the existing bank and redeem the property. This can take weeks during which time you will have to wait until your new loan is approved. As a result, the is process usually takes between 1 to 2 months. Therefore, the whole process usually takes 3 to 6 months.
For more information about new Housing Loan / Refinancing and request a free quotation for loan legal fees from us today, please feel free to click this link : https://wa.me/60182886525 or contact us as below:-
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Messrs. Donny Wong & Co.
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Legal Disclaimer
We trust that you have gained some information from this article. If you have any specific questions related to this article, please contact us at askdwc@dwc.com.my.
The article posted is for general information purposes only and should not be construed as legal advice. Facts and circumstances differ from case-to-case. Please consult your lawyer for specific legal advice and action to be taken.
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