Malaysia property market went through a bull run in recent years. Many investors and folks looking to retire in Malaysia have been snapping up homes. Do you know how to compare home loans and what to look out for in Malaysia?
You can choose between flexible home loan or traditional option. The traditional term loan works like the regular repayment schedule based on principal and interest. For flexible home loan, you can make additional payment that’s considered as partial repayment, and enjoy the freedom to withdraw it. Upon withdrawal, the loan amount is adjusted upwards accordingly. With these extra repayments, you are reducing the interest payable. Flexible loans are available from banks in Malaysia, while Singapore banks offer the traditional principal + interest loan.
Banks in Singapore offer Singapore dollar mortgages. As the cost of financing in Singapore is generally low, the mortgage interest rates are less than 3%, as compared to Malaysia banks. However, taking on Singapore dollar-denominated interest rate comes with the foreign exchange risk. One should consider the risks vs the interest rates.
In most mortgage applications, fees and charges are not subsidized though there are promotions from time to time. The typical fees are conveyancing, valuation and processing.
Developer Interest Bearing Scheme (DIBS)
Some developments offered and might still be offering financing with DIBS. Developers will bear the interest during the construction years and the purchasers do not make any payment. Effectively, it’s similar to deferred payment scheme where one pays the downpayment and no repayment is required until completion. Unfortunately, Singapore banks do not finance properties on DIBS. Your mortgage options will be from Malaysia banks. DIBS has been banned on 1 Jan 2014.
With all these explained tips, we hope you understand the basics to look out for.
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