January 8, 2010

Free Moving Cost : No more easy financing?

I bought my current home without paying anything at all except the RM500 which I booked it and I actually got that back when the bank release the whole sum. The loan also pay the legal fees which actually went back to my legal firm and I even managed to buy another property using the same tactic. All these happens circa 2003 - 2004, my early days of marriage. I actually handled the money and arrange all the legal stuff while my wife decided on the house. I even got the owner, who is a Dato' to give us a personal tour (twice!) for us to see the house before it was completed. He really knows personal touch is the best way to do business. The peak of this type of loan was in 2005.

Anyway, as the world turns and Malaysia become too lax in the 100% loan type of financing, Bank Negara decided to only allow Free Moving Cost or the payment of legal fees by the banks but they can only finance 90% of their housing loans. Even if they say they are giving 95%, that 5% is for them to pay for your legal fees (which are usually capped at 3% of the loan sum) and your Mortgage Rate Term Assurance (MRTA) which is the insurance to protect the bank if anything happens to you.

That last only until last year. Do you know that since 01.01.2010, there will be no more 100% financing or 95% financing with legal fees and MRTA being paid by the bank or 90% loan with legal fees paid for? Bank Negara had asked all banks to stop it and you have to bear everything yourself.

Of course, the housing developers are smarter and those which have deep pockets are offering to help you pay part of the 10% of your purchase price. Some offer 10 + 90. Some even offer 5 + 95. No, those are not the lesson kids learn in school but the type of properties where you pay only 10% or 5% and the pay the balance ONLY WHEN THE PROPERTIES ARE COMPLETED. Even better than the bank's offer right? But, if you buy a property from another individual person, which does not allow for such arrangement, you will still have to fork 10% of the purchase price for down payment before you find a housing loan to pay the 90%.

So, for now, the best properties to buy seem to be a property build fresh by a housing developer who gives you the best deal in town. As for loans, my advice is to get the bank officer to quote you before you commit yourself. Our term for it is 'shopping for housing loans'. Everyone does it nowadays...

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