What are the common housing loan packages offered by banks or financial institutions in Malaysia?
Each financial institution packages its housing loans differently.
You should examine all the features of a loan package and not just base your decision on any single feature.
Pricing is just one consideration; other features like flexible repayment terms could balance the scale or even translate into greater loan savings.
Financial institutions generally offer housing loan packages either in the form of a term loan
, or a combination of a term loan and overdraft
- Term Loan
- A facility with regular predetermined monthly instalments. Instalment is fixed for period of time, say 30 years
- Instalment payment consists of the loan amount plus the interest
- Overdraft facility
- A facility with credit line granted based on predetermined limit
- No fixed monthly instalments as the interest is calculated based on daily outstanding balance
- Allows flexibility to repay the loan anytime and freedom to re-use the money
- Interest charged is generally higher than the term loan
- Term loan and overdraft combined
- A facility that combines Term Loan and Overdraft. For example, 70% as term loan and 30% as Overdraft
- Regular loan instalment on the term loan portion is required
- Flexibility on the repayment of overdraft portion
Reprinted with permission from BankingInfo (A Consumer Education Programme by Bank Negara Malaysia)
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