Managing Debts

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Managing debt can be tricky if we do not monitor our finances from time to time. Most Malaysians today, have at least a car or a house loan tied individually or as a couple. Not forgetting the current trend of shopping, lifestyle hangouts and owning exclusive items has created a new wave of spending. It’s a cool trend to have, however we also must learn how to manage our spending and consolidate debt well.

There is a huge number of Malaysians today who fall in a serious situation to regain control of their debts. In Malaysian, through AKPK’s Debt Management Programme (DMP) we are provided with counsellors to develop a personalized debt repayment plan in consultation with financial institutions. It is important to manage debt to avoid becoming a defaulter and later be categorized as a bankrupt. Being a bankrupt will be very messy for us throughout our life, unless we get our finances sorted out.

Once our debt is well managed, it will improve credit scoring and enhance our relationship with our partner and family members. Bad debt management in many occasions leads to depression which may contribute to a higher rate of divorces and in some extreme cases may lead to suicide.

Here are some standard methods to manage our debts:

List down all the outstanding debt and total up the amount we owe (credit card, high purchase & mortgage), the monthly repayments and the interest due. By calculating this we will know the exact amount of debt we have. Don’t panic yet as there are ways to manage it. Once we get our paycheck, make sure all the loan payments are paid preferably before the due date to avoid any finance/interest charges. With internet banking, it’s much easier for us to make payments on time.

Contact the mortgage/higher purchase provider to renegotiate the terms of the loan. Just to be clear, this will not help to reduce debt, though restructuring the debt will make repayments easier to manage or shorten the loan repayment period.

Find a credit card company that offers a balance transfer deal. Use the balance transfer to consolidate debt. Transfer all the credit card debt onto the new credit card and gradually pay off to reduce debt.

 

Public Bank Home Loan

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Public Bank is one the few banks in Malaysia which is known for its home loan plans and there are two very unique offers which are available for customers to choose from. The unique feature about the housing loan from public bank is that the interest rate is calculated on a daily basis. For those of you who have always dreamt about owning your very own dream home, Public Bank just might be the bank to offer you such a deal and make those dreams come true. Apart from that, Public Bank also offers traditional banking solutions in addition to online banking products, credit cards and other types of deposit products.

Do you qualify for a Public Bank home loan?

The age limit for one to qualify to get a loan from Public Bank is a little higher as you will have to be at least 21 years of age. They have also set a maximum age limit whereby you cannot be more than 70 years of age if you are looking to apply for a loan. One of the most important thing is that you have to be employed or self-employed and like most requirements from banks, you will need to have a take home salary of at least RM 24000 per annum in order for you to qualify.

Just how much can you really borrow?

You will be happy to know that Public Bank has given you a maximum instalment limit of up to 50% of your income to service the loan. The loan is provided could also reach up to a 90% of the property but that is not all as you also get an additional 10% Mortgage Reducing Term Assurance (MRTA) . You will still have to be careful as if you have any other instalments from other existing loans, it will make it a little harder to qualify for the full loan.

How do I improve my chances on getting a loan for that dream house I have always wanted?

If you don’t know already, being married is a plus point when it comes to applying for loans. This is so because you will be able to make your spouse a co-applicant and her income will be added to your eligibility when applying for the loan. If all else fails is that you could also add your parents as co-applicants and the same privileges apply.

2 Types of loans available

5 HOME Plan

The 5 HOME Plan Package whereby a customer can save a considerable amount in interest. This is because the rates are actually calculated on a daily basis. Customers who are eligible will also be provided with credit cards with Exclusive Annual Fee Waiver throughout the loan tenure. There is also an option of redraw facility for all new Conventional Housing Loans with loan amount of RM100,000 or more. For example, let’s say you have made an additional RM 30,000 for your housing loan with the access cash in your hands faithfully, this option gives you an opportunity to take back the extra money which you previously paid for your own personal use.

MORE Plan

The MORE package plan would be more suitable for property owners who want extra funds for a renovation or other extension work. It could be for any purpose whether it means taking their family on a holiday to even renovating their home. This plan also enables customers who have loans with other banks, to transfer their existing loans under Public Bank instead. There are many suitable packages to choose from and under the MORE plan, there is an equal monthly instalment package with OD facility and Home save package linking your loan to your current account.

Think wisely as both home loans offer great advantages when it comes to savings and flexibility. Just to be extra sure about which loan and monthly repayment scheme would suit you best, do use the Public Bank home loan calculator provided from the bank’s online website to give you a better understanding of what to expect.

 

 

Bank Islam Personal Loan

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Bank Islam Personal Financing-i Package
From minimum of RM 10,000 to maximum of RM 200,000 financing available
Maximum 10 years repayment period
Stable position with minimum salary of RM 2,000
optional Takaful Insurance
No guarantor needed
No processing Fees
Valid for Federal or State level Government servant and Government Link Companies (GLC) staffs only.

Options of fixed or floating interest rates and Takaful Coverage. Having Takaful means that you can enjoy better interest rates and having protection for your installments in case of unfortunate incident. Floating interest rates would mean that your loan will be tied up with movements of BR with banks.

Takaful Coverage

FIXED

1 to 10 years : 4.99% p.a.

FLOATING

1 to 3 years: Base Rate + 2.25% p.a.

4 to 10 years: Base Rate + 3.15% p.a

 

Bank Islam Personal Financing-i is a loan package that is offered for public sectors and selected GLCs only. So the loan is not available for anyone working in the private sector. This product is Shariah compliant and is based on Tawarruq buy and sell concept. There are three interest rates  tiers where you can enjoy better interest if you opt for selected Takaful products. The product includes TakafulWill writing, Banca Takaful or BankIslam Card-i. The amount of loan available is from RM 10,000 to RM 200,000. The loan amount would be subjected to criteria such as monthly income and credit score. Applicants can even loan more than RM 200,000 if they provide collateral as security to Bank Islam.

As of personal loans in Malaysia, there are no collateral nor guarantor is needed for the loan. However you may need a collateral or guarantor if you credit score is not strong. One point that differentiate this personal loan is there are options for fixed or floating interest rates. This may not be a good advantage during good economy times but is certainly beneficial during recession period where interest rates can shoot over 10% in Malaysia.

Repayment

The payment for Bank Islam Personal Financing-i  is done via auto salary deduction or salary transfer to Bank Islam. The maximum deductable would be 50% to 60% of salary.

Fees

There are no processing charges when you apply for the loan however there will be a RM 50 chargeable Wakalah fees for this product. A 0.55% Stamp duty is also applicable which is based on the loan amount. A 1% p.a penalty will be charged for any late repayment. Personal Takaful Financing Plan (PTFP) is optional with the loan. This is to protect borrowers in the case of any unfortunately incidents.

Insurance

The loan comes with optional Personal Financing Takaful Plan which would protect applicants in the the unfortunate event of death or permanent disabilities. The rate would vary on factors such as age and risk. As a fule of thumb, the interest rates would go higher if Takaful plan is opted.

Eligibility

It is clearly stated that this loan is only offered to Malaysian Public Sector employees only. To be eligible for the loan,  you will need to be a Malaysian citizen , 18 years old and above and having a minimum salary of RM 2,000 monthly. Private sector employee that is listed on Bank Islam panel companies such as Public Listed Companies, Goverment Link Companies is also eligible for the personal loan

Documentations

Applicants will have to bring the followings when applying for this loan

  • Copies of IC  on the front & back
  • Most recent 90 days salary slip
  • Most recent 90 days bank statement with salary credit account
  • Employment confirmation letter, Details such as Name, IC number, Designation and Number of serving years

and any of these documents

  • Most recent income tax submission form
  • Most recent EPF statements

Repayment table

bank islam repayment table

Pros

  • Flexible choices between fixed and floating rates
  • Low effective rates starting from 5.70% to 11.69% EIR

Cons

  • Only available for public sector