Buying a house is no longer a dream with the available schemes, such as prima, Rumah Mampu Milik Selangor and so on. However, loan payment is still an inssue, especially for young working adults. With increasing household debt, consumer spending is naturally affected. This article will guide you on the benefits of debt consolidation with overdraft.
Price of property RM450,000 Increment of property value annually 6.20% Property value in the 7th year RM685,621 Total mortgage debt in the 7th year RM414,082 LTV value 80% Available equity RM134,414 Based on the table above, if the bank offers you a bank loan for the home equity, there will be a total of RM134,414 as overdraft at the agreed interest rate when you loan with your bank.
If you have a number of debts that you would consider consolidating into a much cheaper loan, you can always consider getting a home loan overdraft facility. A home loan overdraft facility will allow you to consolidate a number of balances into one credit facility at a lower interest rate. The benefits of debt consolidation with overdraft will allow you to have the access to cash. With lower repayment monthly, you will then have more cash in your hands. Paying off your debts can be a stressful thing you encounter in life but it is still doable if you stick to paying the minimum payment every month. You could also pay off your debts faster by shortening your repayment period by opting for home loan overdraft policy to shorten the repayment period. One of the best things on consolidating the debts when you use a home loan overdraft cacility is the flexibility to be able to adjust the repayment, not forgeting the amount of interest that you manage to save. This will come to a good use especially during those months when your finance is tight. You could always reduce the repayment amount by stretching the period of your repayment duration. However, do note that you are not able to do this if you are consolidating the debts of term loan, such as your personal loan as consolidating your debts of personal loan will incure harsh fees for late or missing payments and it will also affect the credit rating. In conclusion, using your positive home equity to pay your debts is a good way to regain control of the finances. Not only you can pay lesser for your debts, you can also have a faster and shorter repayment. This will then reduces your debt to service ratio and improve your credit health.
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With so many available housing schemes in Malaysia, such as the PR1MA Scheme, getting a house is no longer a far fetched dream. However, paying for the home loan payment becomes more and more difficult for people nowadays. This article will guide you through the consequences if you miss the the home loan payment. First and foremost, you will definitely be charged with late payment charges, also know as penalty. Each bank has different penalty interest rate and differs across different banks. 1.Late payment Imagine a scenario: Tony was 30 days late in making his monthly payment in the first year. The bank then notified him and charges arrears on him. The arrears charged will be calculated based on the formula below with penalty charged: Monthly payment x 30/365 x late interest (3.9% base rate + 6.35% penalty rate) He will now have to pay an arrear of RM23.48, on top of the monthly payment of RM2,784.44. The total amount that Tony will have to pay the following month is now RM2,907.92 after the penalty. On the bright side, this will be a one off penalty. However, if Tony fails to make payment on before 60 days, the bank will then have the right to re-evaluate the interest rate. Another thing to take note, if Tony has another late payment again in the future, the bank will also re-evaluate and increase the interest rate. Therefore, it is always good to practice making payment on time to prevent getting your interest rate increased and end up having to pay more for penalty. 2.You should never miss a payment Being a late payer on bills will have a bad effect on your credit health, and there will be no way to fix your credit health once you are a late payer. If you are one those late payers who have been making late payments, the only thing you can do now is to make payment on time from now onwards. It will not affect your credit history immediately as the credit history shows your transactions and activities for the past twelve months. That being said, if you start making payments on time, your credit history will slowly improve. 3. Struggles in making payment If you are not in any financial struggle and the main reason for missing payment is solely because of a busy and hectic lifestyle, you could always rely on reminder on your phone. Set a monthly reminder on your phone to remind you to make payment so you will not miss any payment. If you are not keen on this idea, you could always opt for automatic transfer from your bank account to make your home loan payment monthly. However, if you are on serious debt issues, you definitely will need to seek for professional help. In conclusion, think carefully and thoroughly before making such big decision in buying a house. Always set a realistic budget and stick to it to prevent yourself from getting into financial burdens or debts. |
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