Friday, May 18, 2012

House mortgage and lawyer fees

We have already paid the down payment for our house. So what's next?

  1. Look for bank loan - Is advisable to find out from the bank how much loan they can grant us based on our income prior to our house hunting. Honestly, I didn't know we can stretch the payment period to the maximum age of 70. Are we even still working at that time? Anyway, just because the bank grant that amount to us, doesn't mean we have to take full advantage of it. At the end of the day, the more we loan, the more interest we are going to pay.

  2. Find suitable mortgage package - What is flexi loan? Recently, flexi loan is getting more and more popular. Initially, only the oversea bankers offered them, but now even the local banks are starting to offer semi-flexi and flexi loan as well. So what are the advantages and should we get them? According to what we understand, flexi loan offer us the flexibility of paying more that the prerequisite instalment amount and the additional payment will be deducted from the principal amount and thus, we can save in interest fees. This scheme is suitable for those who have additional money and wish to settle their loan earlier that the tenure period.

  3. Clarify on lock-in period and penalty - Is also important to find out the lock-in period of our mortgage because mortgage deal changes every now and then. The most common lock-in duration is 3 years. After the lock-in period, scout for new mortgage deal that offer lower interest rate. Refinancing our mortgage after the lock-in period will help us to save a lot on interest.

  4. S&P and Loan Lawyer - We didn't realize lawyer fees are going to cost us such a substantial amount of money. Remember to include this in your budget, if you do not wish to add into your loan amount. For our property of RM348K, we paid RM6K for S&P and RM4K for loan agreement.
We applied to various bank that located near our neighbourhood that include Maybank, HSBC, RHB, CIMB and Public Bank. Most of the bank told us that our house market value was only RM310K, but in order to attain 90% loan from the full amount of RM348K, we have to pay for an on-site evaluation fee. Is this a scam? Anyway, we paid RM1K for the evaluator in order to get the 90% loan. Most banks offered us flexi mortgage deal at BLR - 2.4% for the entire 30 years tenure, however we chose Maybank due to its convenience. Inter-bank transfer is going to cost us RM2 per transaction and driving to pay at the branch office will either cost us more on petrol or worst a parking ticket.