Mortgage Expert SAY

When You Can't Refinance......

2009-06-09T21:30:00.000-07:00

Perhaps the most terrifying and paralyzing situations is when your monthly mortgage payment is starting to climb or is actually past what you can afford, and no one will refinance you......

Solutions:

1) Talk to your lender

- You should tell them the desperate nature of your situation and ask for ideas and solutions

- Restructure your loan in order to lower down the monthly mortgage payment:

a- re calculate the mortgage payment based on the current loan balance
b- extent the loan tenure up to age 65/ age 70

2) Try to sell your home

Sell your home and end the mortgage payment!

3) Find someone to assume your mortgage

In an "assumed mortgage" someone else essentially takes over your mortgage payment. This can be a great deal for both a buyer (because they may not need a down payment) and a seller (because they avoid real estate agent fees).

4) Start generating revenue from your home

Rent out room(s) can bring in income to cover the increased mortgage payments until your feet back on the ground and get refinanced.

Qualifying for a Mortgage

2009-06-09T18:52:00.000-07:00

To qualify for a Mortgage, be the borrower that Lenders like the most!

Here are the simple steps to qualify yourself for a Mortgage:

1) Property Type and Location

- Make sure your mortgaged property is fall into Lenders' NON NEGATIVE LISTING properties. Every Lenders have their own listing and it is different from each other. Again, Location! Location! Location! Just in case, they have to dispose off the property in getting back their loan or it will become bad debts at the end!

- Property value MUST be justifiable by Bank's panel valuer firms. You might want to get verbal indication on property value from Lenders up front. It is FREE! To get property current market value, kindly provide the property details as below:

a) Property Full Address
b) Type of property
c) Freehold/ Leasehold (balance years to go)
d) Size (land & build up)
e) Renovation details, cost involved and when was the renovation?

Tips:
Lenders will give loan based on Property Current Market Value or Purchase Price whichever is LOWER! You can play around with Purchase Price when comes to property acquisition if property current market value can be justified in obtain more loan sum from lenders, but the price to pay for it is you have to pay some compensation to Property Vendor cause you make vendor property disposal gain more and hence tax more.

2) Borrower Income and Job Stability

- Lenders love stable income stream borrowers. Just show them what you have to prove your income receivable every month. They can be in the form of Payslips, Bank Statements, EPF statements, Tax statements, Stamped Tenancy Agreements, Deposit Slips and others...... Make sure matching can be done to calculate your monthly income figure.

- Try to avoid "Own Print" income documents like Payment Vouchers, Company Letters, EA Form ONLY!!

Tips:
Do your filing properly so that you won have hassle to retrieve documents for loan application to SAVE MORE INTEREST from time to time!

3) Mortgage Debt Service Ratio (Mortgage Repayment per month/ Income per month)

- Make sure your Debt Service Ratio is not exceed 1/3 or 33.33%! Or you will be falling into category of difficult in repay-back the installment and possibility of bad debts from Lenders perspective.

Tips:
If out of the ratio, then
a- source for co borrower in bring up the Income as a whole
b- lower down the loan amount to be borrowed (you might have to borrow
from relatives, friends or withdraw from Employee Provident Fund - Account II
if applicable, check out more details from www.kwsp.gov.my)

4) Total Debt Service Ratio (Total Debts Commitment per month / Income per month)

- Make sure your Total Debt Service Ratio is within 80%. Under financial planning model, suppose individual Total Debt Service Ratio should be within 50%, or you are highly expose to debts! This is not "healthy" in Finance!

note:
Total Debts Commitment includes other mortgage loan, personal loan, overdraft, credit card minimum payment, hire purchase loan and others......

Tips:
ONLY take in to consideration of those debt commitment under Financial Institutions! Your owing to friends and credit companies is not counted for loan qualify.

5) Your Repayment Habit/ Pattern

Lenders are accessible to Central Credit Reference Information System (CCRIS) to find out borrower repayment pattern. CCRIS is a computerised database system that stores information reported to the Credit Bureau on individuals repayment pattern of all debts commitment under Financial Institutions. Lenders will judge the repayment pattern in granting the new loan facility to you. Lenders want GOOD PAYMENT MASTER!

Tips: DO NOT MISS OUT MORE THAN 2 TIMES of any debts commitment in a calendar year from today! Or, delay your loan application till the particular months data disappear from the CCRIS report.

To obtain your own credit report, please visit BNMLINK at:

Ground Floor, D Block, Jalan Dato' Onn, Kuala Lumpur.
Tel: 1-300-88-5465 (1-300-88-LINK) (Overseas: 603-2174-1717)
Fax: 603-2174-1515 E-mail: bnmtelelink@ bnm.gov.my

For more information on CCRIS go to http://creditbureau.bnm.gov.my.

6) Your Credit Background

Lenders are accessible to Credit Tips Off Service (CTOS) to find out borrower credit background such as any bankruptcy or court case pending...... NO APPROVAL CAN BE GRANTED IF YOU ARE STILL IN THE CASES!

Tips:

a- Get your clearance letter and present it together with loan application, then problem solved!
b- WAIT!
c- Talk to your lawyer for special arrangement

To obtain your CTOS report, please visit:

CTOS Sdn Bhd (209649-U)
Unit A-8-4, 8th Floor, Megan Avenue 1,
No 189, Jalan Tun Razak, 50400 Kuala Lumpur,
Malaysia
Tel: 603-2770 8833 Fax: 603-2770 8834
Website: www.ctos.com.my

AS SIMPLE AS THAT!

Plan your finance well to have "wealthy" and "healthy" life style TODAY!

DO KEEP AN EYE ON YOUR MORTGAGES!!! A very important finance tools to balance out your financial plan......

When did the last time you check the Mortgage Loan Statement(s) and/or Loan facility Letter Offer?

2009-06-08T20:39:00.000-07:00

10 years ago? 5 years ago? 3 years ago? RECENTLY?

To be a smart loan payor, you MUST do your Mortgage Check from time to time especially when financial institutions announce drop in mortgage loan interest rate. Or at least 5 years once!

Worry about up front cost? Now, there is ZERO COST refinancing packages...... ask us!

Too hassle to compile loan application documents required? Please do so cause your time in compile documents for loan application is going to SAVE YOU at least RMXX,XXX or more ......

DO NOT WAIT! Check now......

MUST KNOW! To pick the BEST MORTGAGE LOAN in town and really suit you......

2009-06-08T20:21:00.000-07:00

The secret of getting the best loan for yourself is you must understand your own mortgage need very well before you sign on the bank letter offer! Or you will just spend extra money to the bank!

MUST KNOW!

How to choose the best loan that saves you thousands of money? Or fit your mortgage planning the most?

BEST! BEST! BEST! You want to have best loan in town and save you money or even give you money for emergency cash use, business set up, working capital financing, renovation fee, education fund for your children or even yourself, debts and bills settlement. Offers from banks always there but it is just whether you catch the right one for yourself!

Mortgage needs is different from one individual to another. You will have to plan yours one correctly! And, this will be closely related to your own cash flow statement, financial planning, the usage of property mortgaged and others subjective factors such as risk profile, conveniences. Please get your paper and your pen ready for notes taking…

1) YOUR OWN CASH FLOW STATEMENT (current and future)

Net cash flow = cash in flow – cash out flow

Net cash flow: Idle saving in your savings/current account at the end of the month

Cash in flow: Salary receive, bonuses, rental income, interest income and annuity

Cash out flow: monthly fixed/ variable expenses

Pls refer the table below:
CASH FLOW STATEMENT
<>
For The Month Ending xx/xx/20XX

INFLOWS : -
GROSS SALARY
BONUSES
EPF : EMPLOYER'S PORTION
DIVIDEND INCOME
RENTAL INCOME
INTEREST INCOME
ANNUITY
OTHER INCOME
TOTAL INFLOWS

OUTFLOWS:-
FIXED OUTFLOWS
LIFE INSURANCE PREMIUMS
MORTGAGE PAYMENTS
CAR LOAN PAYMENTS
SUB TOTAL

VARIABLE OUTFLOWS:-
INCOME TAX
FOOD/ GROCERIES
PARENTS ALLOWANCE
UTILITIES
CHILDREN EDUCATION
TRAVEL & HOLIDAYS
GIFTS
CREDIT CARDS
OTHERS
SUB TOTAL
TOTAL OUTFLOWS

NET CASH FLOWS (SURPLUS/DEFICITS) RMXXXXXXX

If your net cash flow is countable, do not ever let the money stay in the savings and/ or current accounts. It is only gives you less than 2% per annum and some even no interest! Better consolidate them in ONE account i.e. Flexi Loan Account. And this will help you to save the differences due to principle reduction.

Case study 1:

Name of borrower: Ms Carmen
Original Loan Amount Taken: RM200, 000
Outstanding Loan Up to date: RM100, 000

Carmen’s net cash flow: RM50, 000

Before consolidation,

Loan interest paid= RM100, 000 * interest charged

After consolidation,

Loan interest paid= (RM100, 000-RM50, 000) * interest charged

TOTAL INTEREST SAVE= RM50, 000 * interest charged

VICE VERSA, if your net cash flow is not countable, you are advised to take a very conventional mortgage loan then pay installment according. Whereby, if you were to wrongly take Flexi Mortgage Loan, you will end up lost money in paying the Flexi Loan Account maintenance fee in which you can save it! If Account maintenance fee RM10 per month, you can save RM10*360months= RM3600!! One brand new laptop is yours! Why pay more!

IMPORTANT NOTE:
Always compare the interest rate to be received versus interest rate to be paid for cash placement in order to maximize the saving and/ or gain! Makes money works for you ……

You may want to browse the latest bank rate (include fixed deposit rate, savings/ current rate, mortgage rate) offered from financial institutions online before any cash placement decision made.

2) YOUR OWN FINANCIAL PLANNING

You! Do you have any financial planning in mind for now and later? You plan to buy a car later, then hire purchase installment will eat up your net cash flow; You plan to invest in property later, then mortgage installment will eat up your net cash flow; You want to allocate your money in other investment tools such as unit trust, shares, insurance? If you were to do so, please have it everything in mind before you obtain the mortgage loan. Or it will definitely limit you to plan others. Do you smart financial planning in line with mortgage planning! You can!

Execution without plan will fail ……

3) USAGE OF PROPERTY MORTGAGED

This property mortgaged is for own occupied? Or as an investment? If it were for investment, then when is it going to be disposed off or sold-off? How many years from now? Or, you want to rent out this property later? Ask yourself ……

Different answer will lead you to different mortgage loan package.

For own occupied case, since you are going to pay the installment for long term basis or more than 5 years, then you must choose the loan package that can really fit your own cash flow planning – flexi or conventional, then followed by the lowest rate amongst all. Lock in period and penalty cost if loan transfer or termination will not be your most concern in this case. Just pick the one with lowest interest and comfortable one to pay by then!

If investment for rent, above solution is applied cause the mortgage payment is still long term!

If investment for sale, then you will concern more on how much profit I can gain from disposed off after minus expenses involved.

Net property gain = Selling price – interest cost – penalty cost if applicable- expenses to dispose or before dispose such as advertisement cost, agent fee, renovation cost

Hence, to increase the net property gain, you must choose the loan package with lowest interest during the period before dispose, so you must estimate when you are going to dispose it! If 3 years from now, then compare only interest for 3 years but not 30 years and choose the lowest one amongst all! Too, not forget to choose better without lock in period and zero penalty cost! Others become less important ……

4) YOUR OWN RISK PROFILE

Lets do your own assessment in identify your own risk profile. Very simple! Just ask yourself, if you were to given an opportunity to invest RM100, 000, how many Ringgit you can tolerate to lost without affect your emotion? RM5, 000? RM50, 000? RM0?

If your tolerance to lost is less than RM50, 000 then you are categorized under risk averse. You are conservative! You prefer something guarantee! You hate uncertainty! In that case, in choosing a suitable loan package, better go for those fixed rate package instead of BLR (Based Lending Rate) plus spread package due to BLR fluctuation from time to time.

Average BLR for past 30 years from 2009 is 10.25%

5) OTHERS FACTORS TO BE CONSIDERED:

You willingness in withdraw EPF (Employee Provident Fund) Account 2 for property acquisition and mortgage loan reduction. Some might insist to keep the EPF for your old age spending just in case their children might not be there to support you due to any reason. Or you just do not want to become burden to anyone when you are getting old. Again, this is depends on each individual risk profile!

(Kindly refer EPF withdrawal procedures and details at www.kwsp.gov.my)

Your prefer financial institutions? Service level? Your existing accounts placement? Ease to make payment? Ease for personal approach?

The above factors might over-take CASH FLOW PLANNING, FINANCIAL PLANNING, USAGE OF PROPERTY MORTGAGED as mentioned earlier!

Pick the right one for yourself and SAVE A LOT MORE INTEREST!!!

Why should a Mortgage Consultant?

2009-03-20T05:56:00.000-07:00

Back in those days, there are only the finance houses you can turn to for hope of getting a mortgage. Choices? Never heard of them.

Then, the banks started to offer products targeted at an individual basis instead of just focusing on their corporate clients. They came out with their own mortgage package. Still, the clients have to be in an active position by wandering up to the mortgage officer and requesting for a mortgage.

After the insurance companies come into play, the margin of the mortgage packages started to reduce and mortgage providers have to compete harder to secure their market base. Clients suddenly find themselves being approached by the mobile agents of these mortgage providers.

A natural job that evolved from this countless choice of mortgage packages is SOMEONE to choose these mortgages on your behalf – a mortgage broker or an independent mortgage advisor.

Oh no, that in itself is another choice. Faced with all these options, what is the right one to make?

Find your right mortgage partner

The fact is, there are so many products available, all competing to get your business, that unless you are an expert, it is easy to choose the wrong one.

The key to a great mortgage is finding a good broker or mortgage officer, who can serve in your best interest by obtaining the best packages from time to time in order to save on loan interest. Thus, from proper mortgage planning, there would be wealth creation or accumulation.

How do you choose your mortgage partner?

It’s all about credibility, dependability and longevity.

1) Credibility

Are the mortgage officers/ agents/ brokers independent?

Naturally, the financial institutions and their outsourced will only promote their own products as their bonuses and commissions are linked to their sales, hence their views will be biased, i.e. their own products are always the best products.

On the other hand, the insurance agents will often cross sell their own products, i.e. clients can only take on their mortgage packages if they buy their insurance packages too. Which makes sense of course… from their point of view.

There is nothing wrong with cross selling of products. Who knows, those products might even suit your needs. It is up to you to decide. However, if you don’t feel like being pushed into buying another product that you don’t need, then just go to another provider for your mortgage package.

The new kid on the block in Malaysia – mortgage broker would be the solution to the problem. They are professionals who focus and specialize in mortgage consultation work at all time. They carry out research on all financial institutions’ latest loan packages, and then simplify them so that it could be easily understandable.

On top of that, the consultants match the client’s profile with the loan packages and also assist the client in their mortgage application. Brokers are in neutral position to advise and keep track of clients’ data to highlight the need of refinancing or restructuring.

2)Dependability

Can the financial institutions or the agents who offer you their services deliver what they promise?

With so much competition going on, it would come as no surprise if anyone quote you a lower than market rate to attract you. The honeymoon rate might change once the “promotion” period lapse, leaving a surprised you to find that your monthly repayment has gone up.

How could this happen? You trusted them and they did not highlight the “special” terms to you. Welcome to the real world. Of course, not all agents are out there to get you and it is important that you find someone who has been long established in the field. The rule of thumb is to find someone with at least 3 years’ experience under their belt.

Alternatively, you could shop around to find out about mortgage and their lingo before you commit to anything. With the advent of the internet, you can have access to tons of information in relation to the mortgage in a click, making mortgage packages more transparent and competitive. Even mortgage loan application can be submitted online at www.osm.com.my.

However, if you are short on time, mortgage broker can be your best friend. Brokers work with many mortgage bankers and can sometimes find the most competitive rates, tailored to your financial situation.

Beware: There were incidents where ex-employee of a mortgage broker firm become self employed and charge their own client exorbitant amount of money. In some cases, it could be up to RM5000. In actual fact, broker charges Nothing, as they earn commission on the mortgage deals they broker.

Scams can happen anytime, anywhere and here are a few tips to protect yourself from unscrupulous agents:

i) Pay a visit to their company if you can.
ii) Check out the validity of the information printed on their name cards, e.g. phone number and website.
iii) Ask another agent working in the same company to verify the identity of your mortgage agent.
iv) Ask for a formal receipt whenever money is involved.

3)Longevity

Have the agents/ institutions been around in the market long enough?

Some agents may only be in the field for a quick buck when there’s a property boom and get out of the field when the business is low, say, during a recession. The lack of dedication on his part would become a problem for you, as a client, as you might call one day to close the deal on the mortgage you’ve been discussing with him, only to find that he’s left the company. Or worse, the company has closed down.

Only an agent with integrity can stand up against time and continue to flourish. Satisfied clients would come back for refinancing solutions or refer their friends and family to the agent.

The rule of thumb is to find someone with at least 3 years’ experience under their belt. This is not to say with those with less experience is no good. There are excellent agents who built their credibility within a short period. Ask the question, “How long do you intend to be in the field,” and you might be able to differentiate the good from the bad.

Should you REFINANCE your mortgage loan now?

2009-03-19T23:30:00.000-07:00

You should, if your current mortgage interest is higher than BLR-2% (i.e 3.55%) or else you are just paying high interest to your lender, no loyalty should be in you!

In fact, "refinance" should appear in your mind anytime as long as you are in mortgage loan debt or you are a property owner. Not only now!

You should, if there is a gap between you existing interest payable with current interest offered in the market from other lenders. Do your interest saving now without further delay! Do not wait!!!

You should, if you think your loan package is no more in fit to your current cash flow movement i.e change of career might give impact on your cash flow fluctuation, go and get the flexible loan package to save rather than stay in your existing conventional term loan!

You should, if you need cash for your own personal use i.e business set-up, renovation, education funding or emergency fund! Mortgage loan financing always is the best financing tool compare to others like personal loan, credit card ... because mortgage loan interest always is the lowest! Instead of applying personal loan, or use credit card loan to pay all these, better refinance yours!

You should, if you are in lots of debts! Check out yours, use your mortgage loan cash out to contra your high interest debts! Refinance with cash-out, get cash out from mortgage loan financing, again mortgage interest always the lowest, use the cash out to fully or partially settle other high interest debts! Then, pay only mortgage loan installment and your debt burden sure will be released a lot!

You should, if you do not favor to your existing lender services! Refinance to change your lender if any!

COMPARE, CHOOSE AND SAVE! Calculate yours now......