Last month, we spoke to several experts on the basics of refinancing and what it entails. Read on for the rest of their comments on the timing of refinancing and the types of products and services available in the Malaysian market.

When is a good time to refinance?

It is always a good time to refinance if there are significant nett savings attained by refinancing the existing loan, says Moey Tan, chief operating officer of personal financial services at Hong Leong Bank.

“Refinancing, whether through re-pricing with your existing banker or with another bank, will make sense when there is sustained decrease in rates,” says Peter England, head of retail banking at CIMB Bank Berhad.

“For example, the current low interest rate environment makes it a good time to consider refinancing. A borrower may want to change from a fixed term loan product to a more flexible loan like overdraft when he has more disposable income and knows how to leverage on the product flexibility to save cost or invest for potentially higher returns than his interest cost,” explains Goh Ching Chee, Citibank Berhad’s director for mortgage business.

Lim Keatky, head of mortgage of ING Insurance Berhad, feels that homeowners may refinance at anytime as long as they have a valid reason to do so.

“However, before they do so, they must ensure their needs are matched accordingly with the new home loan offer and they have to make sure the up front, ongoing and refinancing cost is properly calculated,” explains Lim.

What to do after deciding to refinance

Whatever your reason is to refinance, it pays to shop around for the best loan product to refinance your current home loan, says Abdullah Abdul Rahman, head of mortgage, consumer banking division of Maybank.

“In order to make the best decision for you and your family, it is important to be aware of your short-term and long-term financial goals pertaining to your financial situation and your home,” says Abdullah.

“Draw out your current situation, your immediate financial needs such as to consolidate your debt or to renovate your home and your future financial needs such as to send your kids to college. Also match this with a long term savings and insurance plan to ensure that you have a nest egg when you retire and no longer earn a constant stream of income. The best decisions are based on the most thorough information,” he explains.

According to Lim from ING Insurance Bhd, it is important to know what you want, and to do a product search prior to deciding on which financial institution to refinance with.

“Do a basic financial plan for yourself. Some of the elements that are important to include in this financial plan are the exact time period you want to finish paying off your housing loan. In addition, be certain how much interest will be incurred for the entire duration of the loan,” advises Lim.

“It’s also important to know the different types of home loans available in the market. Some home loans are based on fixed interest rate while some are based on floating interest rate. Understand how each type can help you achieve your financial plan. It is good to know to what extent of certainty each type of home loan help you achieve your financial plan,” he adds.

Products and services available in the market

With the myriad of products and services available, selecting the right financial institution and the right product can be quite a hassle. However, it pays to research thoroughly to find the best product to suit your own financial needs.

“At Citibank, we offer flexible, best-in-class home loans that meet customers’ different financial and lifestyle requirements. Our current portfolio of housing loans includes our ever popular Citibank Homecredit, Citibank Flexihome Loan, Citibank Housing Loan and Citibank Home Partner-i,” says Goh.

“By default, Citibank will revise customers’ instalment payments when there are revisions in interest rate. This is particularly helpful to customers especially in the current low interest rate environment as this translates to more disposal income for customers to tide over the current tight economic environment,” he explains.

Offerings from ING Insurance include fixed rate home loan, 4.85 per cent for non-zero entry cost, 4.99 per cent for zero entry cost, fixed up to 30 years, and up to 90 per cent financing, says Lim.

“ING offers a great opportunity for the borrower to log in at low fixed rate for up to 30 years. With the fixed rate home loan regime, the interest rate is fixed throughout the life of the loan, which means the monthly payments will not change for the whole period of the loan tenure providing borrowers the peace of mind and stability needed,” explains Lim.

Meanwhile, Hong Leong offers two major types of home loans namely, Hong Leong MortgagePlus and Zero Moving Cost packages. The former is a flexi home loan linked to a non-interest bearing current account to provide customers advantages such as, daily interest savings, easy access to cash, shortened loan period and the flexibility of depositing and withdrawing funds.

With the Zero Moving Cost package, the customer would not need to pay legal fees, processing fees, valuation fees and stamp duty when refinancing with Hong Leong Bank.

“CIMB Bank is the second largest property financing provider in the country, offering both conventional and Islamic financing,” says England. The bank offers flexible home financing where balances from both conventional and Islamic account can be used to offset the outstanding principal.

“This means that the more you have in your account, the less you pay in terms of charges (interest or profit) for your home financing. Our Islamic Flexi Home Financing-i, launched in January 2009, garnered more than RM300 million in sales, within its first month,” says England.

At Maybank, one will find the MaxiHome promotional package and MaxiHome standard package, in addition to its range of facilities and benefits. The former recognises and acknowledges the premium that properties located in prime areas offer, therefore the packages are priced competitively in the market. The latter, which also offers attractive rates to complement the promotional package, is available at all branches nationwide to meet the needs of customers throughout the country.

“In addition to these attractive low rates, the MaxiHome loan packages are designed to offer attractive lower monthly repayments which will enable customers to own their dream house without compromising on their other financial commitments or lifestyle,” says Abdullah.
The MaxiHome loan packages, depending on the type of property purchased, offers a slew of attractive benefits including Zero Payment benefit, Pay Half benefit, Pay Later benefit or Pay Less benefit.