My friend really in a dilemma on whether wants to refinance his existing Flexi home loan. He has 3 packages and I write it down for future reference. Any reader expert in this can give me some comment. (Current BLR = 6.5 %)
Package 1: Existing Home Loan:
Loan provider: Alliance Bank
Original loan amount: RM206000
Current interest rate at 3rd year: BLR +0% = 6.50%
Interest Rate: 1st year at 1.5%, BLR+0% for next 1 year; BLR+0.1% p.a. for next 8 years; BLR-0.35% for next 10 years; thereafter BLR-1%
Instalment: RM1340/month
Outstanding loan: RM180,000.00
Money in link account: RM 150,000.00 (Borrow from friend, parents and pay them interest 4% per yr)
Actual interest rate charge: 30,000 (180000-150000=30000, the beauty of flexi package)
Remaining tenure: 22 years
Penalty for early settlement: 3.5% of original loan amount or RM5,000 whichever higher = RM206000.00 x 3.5% = RM7210.00
Package 2: Refinance with SAME Bank:
Year 1-3: BLR - 0.5% = 6%
Thereafter: BLR – 2% = 4.5%
Installment Year 1-3: RM1200/month
Installment Thereafter: RM1050/month
Lock in another 5 years
Package 3: Refinance with EON Bank (Super Flexi 123 with zero moving cost):
Year 1-6: BLR – 2.1% = 4.4%
Thereafter: BLR – 2.2% = 4.3%
Installment Year 1-6: RM990.31/month
Installment Thereafter: RM980.50/month
Need to pay penalty+outstanding loan: RM 180 000 +7210.00=187210
Questions:
1) Should he refinance with EON bank whereby he have extra RM 300 to spend each month?
2) Should he refinance with the same bank whereby he have extra RM200 to spend each month?
3) Should he wait after lock in period and refinance whereby he have more option since interest rate is not a main determinant because it only charge RM 30k interest?
Conclusions:
My analysis suggests that he should refinance with the same bank which is package 2. Maybe I am wrong, Do you have a better suggestion?
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