Optimizing Your Housing Loans - 31 May 2008

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31st May 2008 Training by Peter Lim

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Optimizing Your Housing Loans - 31 May 2008

  1. 1. Optimize your Housing Loans
  2. 2. Mistakes in Comparing Loans <ul><li>Loan Package 1 </li></ul><ul><ul><li>RM 100,000 Loan </li></ul></ul><ul><ul><li>30 Years </li></ul></ul><ul><ul><li>6% </li></ul></ul><ul><ul><li>Monthly Inst = RM 600 </li></ul></ul><ul><ul><li>Total = RM 216,000 </li></ul></ul><ul><li>Loan Package 2 </li></ul><ul><ul><li>RM 100,000 Loan </li></ul></ul><ul><ul><li>15 Years </li></ul></ul><ul><ul><li>7% </li></ul></ul><ul><ul><li>Monthly Inst = RM 899 </li></ul></ul><ul><ul><li>Total = RM 161,820 </li></ul></ul>Which Loan Package is better ?
  3. 3. Computation of Interest Charged <ul><li>Know the interest rates charged. </li></ul><ul><li>Eg. 6% per year . </li></ul><ul><li>Know the outstanding balance. </li></ul><ul><li>Eg. RM 100,000 </li></ul><ul><li>Find out whether it’s Daily Rest / Monthly Rest </li></ul><ul><li>Eg. Monthly Rest </li></ul><ul><li>Find out the Monthly Installment Amount </li></ul><ul><li>Eg. RM 800 / Month. </li></ul>
  4. 4. Calculation of Interest <ul><li>Monthly Rest </li></ul><ul><li>Interest / Month </li></ul><ul><li>= $ 100,000*6%/12 </li></ul><ul><li>= $ 500 / Month </li></ul><ul><li>Installment = RM 800 </li></ul><ul><ul><li>Interest = RM 500 </li></ul></ul><ul><ul><li>Principal = RM 300 </li></ul></ul><ul><li>Daily Rest </li></ul><ul><li>Interest / Day </li></ul><ul><li>= $ 100,000*6%/365 </li></ul><ul><li>= $ 16.44 / Day </li></ul><ul><li>Installment = RM 800 </li></ul><ul><ul><li>Interest = RM 493.2 (30 days) </li></ul></ul><ul><ul><li>Principal = RM 306.80 </li></ul></ul>
  5. 5. Rates offered by Public Bank <ul><li>Loan Amount </li></ul><ul><li>Above RM 150k BLR – 2.0% </li></ul><ul><li>Between 100k to 150k BLR – 1.9% </li></ul><ul><li>Less than 100k BLR – 1.8% </li></ul><ul><li>For latest rates, please check with any Public Bank Staff, or </li></ul><ul><li>Melissa at 012-4256930 </li></ul>
  6. 6. Benefits <ul><li>To Clients </li></ul><ul><li>Better Rates </li></ul><ul><li>Savings can be channeled to Unit Trust </li></ul><ul><li>Optional MRTA </li></ul><ul><li>To Agents </li></ul><ul><li>Referral Fee of 0.1% of Loan Amount </li></ul><ul><li>More Unit Trust Sales </li></ul><ul><li>Personal Satisfaction </li></ul>
  7. 7. Real Case Study: Mr. Peter (Age 28) <ul><li>Current Loan Balance = RM 182,000 </li></ul><ul><li>Interest Rate Charged = 5.89% per year. </li></ul><ul><li>No. of Years Left = 28 Years </li></ul><ul><li>Monthly Installment = RM 1,108 </li></ul><ul><li>Penalty if refinance : 3% of outstanding balance. No penalty for early settlement. </li></ul>
  8. 8. When Re-finance to Public Bank <ul><li>Current Loan Balance = RM 225,000 </li></ul><ul><li>Interest Rate Charged = 4.75% per year. </li></ul><ul><ul><ul><ul><ul><li>BLR – 2% </li></ul></ul></ul></ul></ul><ul><li>No. of Years Left = 40 Years </li></ul><ul><li>Monthly Installment = RM 1,048 </li></ul><ul><li>By Refinancing, Mr. Peter will be able to cash-out RM 43,000 Lump Sum , and save RM 60 every month . </li></ul>
  9. 9. Continuation from Case Study <ul><li>RM 43,000 Lump Sum with RM 60 Monthly, invested for 28 years (at 10% per year), would become RM 808,800 at the end of 28 years. </li></ul><ul><li>With 808,800 Invested at 10%, it would give an annual interest of RM 80,880. </li></ul><ul><li>Much more than enough to pay for the leftover monthly installment of RM 1,048 per month. </li></ul>
  10. 10. <ul><li>Questions </li></ul><ul><li>& </li></ul><ul><li>Answers </li></ul>

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