Mortgage & remortgage
Taking and maintaining a mortgage loan in Malaysia is an interesting affairs. Seven years years ago, I took a mortgage loan of RM450K to part finance the purchase of a building. At that time, with an interest rate of 1.5% above Base Lending Rate (BLR), I though that was the best package offered by the lending bank.
Recently, I re-assess my loan position against existing mortgage packages offered by the local banks. I noticed most of the banks offer loans at an interest rate of BLR minus 1%. The question I find it difficult to comprehend is, why my existing lending bank still charge me at the old interest rate which is higher ? I called up the bank loan centre, and was informed by the bank employee that, the rate will not be revised downward because it is a contractual commitment on my part.
Somehow, the borrowers are always at the losing end, because when the BLR is revised upward, automatically, we are asked to pay higher rate. How often is the BLR being revised downward ? Why can't the banks just fixed the BLR over the whole tenure of the mortgage loan ? Why can't the bank just automatically revised the interest rate downward whenever they published new and lower mortgage interest rate to secure new customers ? I find it difficult to comprehend why the bank always take better care of new customers than their old customers.
Anyway, between BLR + 1.5% and BLR -1%, it is a huge difference of more than two percentage points. Taking into consideration of the loan sum and tenure of the loan, I would probably be having a saving of more than RM 100K if I switch my mortgage loan to another bank.
So, I contacted two banks, one came back with a offer letter within the week, while the other bank delivered the offer letter the following week. Both the loan package are quite attractive with the so called “zero moving costs” loan at BLR – 1% and BLR – 1.25% respectively. My only concern now is, both banks physical locations are not quite convenient for me to make monthly payments. So I decided to call a bank nearby my office, indicated to them I wish to take a new loan to redeem my existing loan, provided that the interest rate is comparable to the offers I received. The bank Sales Officer reverted to me a day later that they are able to provide the mortgage loan at BLR – 1.25% and collected my documents for application of loan.
About the same time, I contact my existing lending bank to enquire about the procedure to cancel the existing loan and informed them my desire to migrate loan to another bank, giving them the reason that the existing interest rate is too high. The funny part is, the bank personnel told me that they have no problem revising the interest rate downward if only I had told them earlier I am planning to migrate my loan to another bank ! And I was advised to write an official letter to inform them that I wish to have my loan interest rate revised downward to BLR – 1.25% as a formality. I felt uncomfortable with this sort of Pasar Malam approach by the bank and never bother to revert to them.
More than 2 weeks had passed, I still have not received any confirmation from the bank near my office regarding my loan application. So, I called up the bank to enquire, but was told that the application is still under “processing at the HQ” and they will revert to me “ASAP”. I indicated to them that it is almost THREE weeks already, but I was asked to understand their position and be patient. Yesterday, I called the bank again, and was given the same replies. Honestly, my opinion is, the bank is too busy to render service to me because my small loan is insignificant to them. So, I politely told them that I no longer need the mortgage loan and requested them to return all my submitted documents. I called the other bank that i accepted their offer and made appointment to execute the loan agreement the following Friday. After that, I will have to rellook into my other outstanding mortgage loans to maximize my savings.
The moral of the story is, if your properties is currently under a mortgage, on periodic basis, you need to monitor the existing mortgage loan interest rate offered by the banks against the mortgage interest rates your currently paying. If at anyone time, the prevailing mortgage loan interest rate is much lower than your current interest rate, immediately write to your lending bank to asked them to revised the rate downward. I think the other important consideration is, a bank may offer you the lowest mortgage loan interest rate and has a physical address nearest to you, but if the bank is so bogged down by formality, hierarchy, and indifference, they will not be able to provide you the necessary customer service in the future. You will be better off taking a mortgage loan with slightly higher interest rate elsewhere.
Recently, I re-assess my loan position against existing mortgage packages offered by the local banks. I noticed most of the banks offer loans at an interest rate of BLR minus 1%. The question I find it difficult to comprehend is, why my existing lending bank still charge me at the old interest rate which is higher ? I called up the bank loan centre, and was informed by the bank employee that, the rate will not be revised downward because it is a contractual commitment on my part.
Somehow, the borrowers are always at the losing end, because when the BLR is revised upward, automatically, we are asked to pay higher rate. How often is the BLR being revised downward ? Why can't the banks just fixed the BLR over the whole tenure of the mortgage loan ? Why can't the bank just automatically revised the interest rate downward whenever they published new and lower mortgage interest rate to secure new customers ? I find it difficult to comprehend why the bank always take better care of new customers than their old customers.
Anyway, between BLR + 1.5% and BLR -1%, it is a huge difference of more than two percentage points. Taking into consideration of the loan sum and tenure of the loan, I would probably be having a saving of more than RM 100K if I switch my mortgage loan to another bank.
So, I contacted two banks, one came back with a offer letter within the week, while the other bank delivered the offer letter the following week. Both the loan package are quite attractive with the so called “zero moving costs” loan at BLR – 1% and BLR – 1.25% respectively. My only concern now is, both banks physical locations are not quite convenient for me to make monthly payments. So I decided to call a bank nearby my office, indicated to them I wish to take a new loan to redeem my existing loan, provided that the interest rate is comparable to the offers I received. The bank Sales Officer reverted to me a day later that they are able to provide the mortgage loan at BLR – 1.25% and collected my documents for application of loan.
About the same time, I contact my existing lending bank to enquire about the procedure to cancel the existing loan and informed them my desire to migrate loan to another bank, giving them the reason that the existing interest rate is too high. The funny part is, the bank personnel told me that they have no problem revising the interest rate downward if only I had told them earlier I am planning to migrate my loan to another bank ! And I was advised to write an official letter to inform them that I wish to have my loan interest rate revised downward to BLR – 1.25% as a formality. I felt uncomfortable with this sort of Pasar Malam approach by the bank and never bother to revert to them.
More than 2 weeks had passed, I still have not received any confirmation from the bank near my office regarding my loan application. So, I called up the bank to enquire, but was told that the application is still under “processing at the HQ” and they will revert to me “ASAP”. I indicated to them that it is almost THREE weeks already, but I was asked to understand their position and be patient. Yesterday, I called the bank again, and was given the same replies. Honestly, my opinion is, the bank is too busy to render service to me because my small loan is insignificant to them. So, I politely told them that I no longer need the mortgage loan and requested them to return all my submitted documents. I called the other bank that i accepted their offer and made appointment to execute the loan agreement the following Friday. After that, I will have to rellook into my other outstanding mortgage loans to maximize my savings.
The moral of the story is, if your properties is currently under a mortgage, on periodic basis, you need to monitor the existing mortgage loan interest rate offered by the banks against the mortgage interest rates your currently paying. If at anyone time, the prevailing mortgage loan interest rate is much lower than your current interest rate, immediately write to your lending bank to asked them to revised the rate downward. I think the other important consideration is, a bank may offer you the lowest mortgage loan interest rate and has a physical address nearest to you, but if the bank is so bogged down by formality, hierarchy, and indifference, they will not be able to provide you the necessary customer service in the future. You will be better off taking a mortgage loan with slightly higher interest rate elsewhere.
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