Refinance

The act of refinancing your housing loan involves the paying off an existing loan and replacing it with a new one with a different terms and conditions. It basically means borrowing money from the bank again (or another bank) under a new loan to settle the debt you owe in your current home loan account. There are many bank refinance packages that are available in Malaysia, MVM will advise and propose the best possible refinance packages according to your needs.

Benefits of Refinancing Your House:

1. To leverage on a property’s capital appreciation
   This method is used when the price of the property has appreciated. The home owner can then cash out the amount of capital appreciation that the property has obtained after a few years.  This cash amount is the difference between the remaining loan you owe to the bank and your property’s current market value.For example, say you have an outstanding loan amount of RM400,000 for a house, which has a current valuation of RM500,000. You can remortgage at 90% of the RM500,000 and obtain RM450,000 financing; use RM400,000 to settle the ‘old’ loan and keep the remaining RM50,000. This RM50,000 cash gains can be used to fund your child’s education, finance other investments, settle other debts or to even serve as savings.
2. To shorten a home loan tenure as the borrower is now more financially stable.
   Slashing down your tenure can result in pretty sweet savings down the road, as exemplified below.Assuming a 90% loan of RM450,000 for an RM500,000 property at a 4.5% interest rate (IR) and by utilising the home loan calculator on our website to calculate the respective monthly instalments: 

   LOAN TENURE	30 YEARS	25 YEARS	20 YEARS
   Monthly Instalment (RM)	RM 2,280.08	RM 2,501.25	RM 2,846.92
   Total Interest Payable (RM)	RM 370,828.80	RM 300,375.00	RM 233,260.80
   SAVINGS (RM)	–	RM 70,453.80	RM 137,568.00

   *Total Interest Payable = RM450,000 – (Monthly Instalment X 12months X Number of years)

3. To leverage on a current lower Interest Rate in order to reduce your monthly repayments moving forwards.
   The home loan’s interest rate is determined by the respective banks’ Base Rate (BR), which is largely dependent on the Overnight Policy Rate (OPR). OPR which is set by the central bank, determines the cost to borrow money. To sum it up, the lower the OPR the better it is for refinancing. Whenever the OPR goes down, banks will pass on these cost savings in the form of a lower base lending rate (BLR) and BR. Hence, it will now be cheaper for property purchasers to take on a (new) home/property loan and enjoy the subsequent lower monthly repayments.On 5 May 2020, Bank Negara Malaysia announced that the Overnight Policy Rate (OPR) will be slashed for the third time in 2020 due to the Covid-19 pandemic – it is currently at 2% and is the lowest OPR since 2009.  All the major banks in Malaysia including Maybank, Public Bank and CIMB have already reduced their effective lending rates by 50 basis points in tandem to the OPR cut.

STEP BY STEP TO REFINANCE A PROPERTY