Refinancing simply refers to the process of changing from one bank home loan to another. If you’ve had your home loan/financing for a number of years, such as 5 years or more, you may be a prime candidate for refinancing.
Before choosing to refinance, it is important for home owners to understand and read through “3 Things To Know Before Refinance Your Home” article.
1. Purpose Of Refinancing
While, before you go deep to proceed for refinancing. It is important to evaluate your purpose and goal for such moves. Because, the moves that you’ll make will have price on it and you do not want to make this costly mistake. Therefore, focus on the purpose of refinancing before decided on anything will help you stay in the path.
Your purpose can be varied from to pay for house renovation, children education, consolidate debts, taking those dream vacation to Europe and so on. Whatever your purpose is write it down because you might need to make a decision later whether refinancing is the right move.
2. Cost Of Refinancing
Yes, refinancing has a cost. And if you think by getting Zero Entry Cost Package will help you get away from this. Then, you’re so wrong.
Always remember banks are profit oriented companies these companies only have one thing in mind which is how to make profit from your purchase, in this case you are purchasing a product name home loan from them. They will try every possible way to earn that money from you and they even hired people to teach them how to make money from every single people who has a home loan. Scary? No, it’s just business.
So, what are the costs of refinancing?
a) Bank Processing fee (range around RM50-RM200)
b) Professional Legal Fees
c) Stamp Duty
d) Disbursement Fees
e) Valuation Fees
f) Redemption/Penalty fees (if applicable)
For Professional Legal Fees, Stamp duty, Disbursement Fees and Valuation Fees the estimate range will be 3% of the loan amount.
3. 10 Year Limit on Mortgage Refinancing Cash out
While, this is a quite new ruling that affected the whole refinancing market. Bank Negara Malaysia (BNM) decided to implement this new guideline to curb the rising of household debt.
Prior to this, anyone could refinance their homes with repayment tenure up to 35 years. Under the new guideline, any cash out amount from mortgage refinancing would be capped at 10 years’ tenure.
When most of the banks had implemented this, there are certain banks that goes around it.
Some banks are allowing the cash out portion to be served under maximum 35 years’ tenure but with a condition customer’s eligibility calculation of the cash out will be based on 10 years’ tenure. In this case, customer must have a strong and stable income against their commitment in order to get easy approval.
Hopefully, this article “3 Things To Know Before Refinance Your Home” provide you with some enlightenment in the refinancing process.
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