Friday, May 10, 2013

6 things you should consider when taking up a home loan in Malaysia

To the common folk, choosing a home loan is almost as hard as choosing the property itself. If you’re currently in the midst of shopping for a home loan to buy the house of your dream, here are six things you should consider before making what could arguably be the biggest financial decision of your life.

1) Type of home loan

First and foremost, consider what works best for you: a traditional term loan or a flexible home loan (“flexi-loan”). A traditional term loan requires you to pay a fixed amount each month for the entire tenure of your home loan (eg. 30 years), while a flexi-loan gives you the option of reducing your interest whenever you wish (i.e. by saving your extra money into a linked current account. The more you save, the less interest you pay).
If you have a strict and predictable cash-flow pattern, a traditional term loan may be best. If you prefer flexibility in paying off your loan, a flexi-loan is recommended. 

2) Interest rate

As of all loans, your priority should probably go to the bank that offers you the lowest interest rate. Citing an example for a home loan of RM500,000 over a period of 30 years, the difference in interest between an interest rate of 4.2% and 4.15% (i.e. a mere 0.05%) could be well over RM5,000! To find out which bank offers the best home loan interest rate, iMoney.my provides a home loan comparison table.

3) Margin of financing (how much you can borrow)
Depending on various factors which include the value of the property as well as your standing with the bank, different banks may offer you different margins of financing. As you’ll be required to pay any amount not covered by the home loan upfront, this becomes very important especially if you’re short on cash.
As an example: for a RM500,000 house, you’ll need to pay RM100,000 upfront if your Margin of Financing is 80%; but you’ll only need to pay RM50,000 upfront if your Margin of Financing is 90%. 

4) Lock-in period

Lock-in period is the period you’ll incur a penalty (usually 2-3% of the principle loan amount) if you choose to pay off your home loan in full before it reaches the end of its tenure. When it comes to choosing a home loan, it pays to have a lock-in period that is as short as possible with a penalty that is as low as possible. Also, some banks do not charge a penalty at all if sufficient notice is given. Again, iMoney provides a table comparing lock-in periods of all Malaysian banks.

5) Fees & charges

A home loan application involves professional and government-regulated processes such as preparation and disbursement of loan agreement, payment of stamp duty and processing by the bank, just to name a few. All these processes usually come with fees and charges that will be borne by you, the buyer.
In certain cases, it may also be wholly or partly borne by the banks as part of your loan packages. Hence, is it best to sit down with the loan officers (for all the banks you are considering taking your home loan from) and have them run through the fees and charges with you. The task may be repetitive and time-consuming… but it’ll be time well spent.

6) The bank

Lastly, understand that you’ll be dealing with the bank on a very frequent basis for as long as your home loan is in effect (which may be 20 to 30 years). With that in mind, you should probably choose a bank you are very comfortable with. Some of the things you may wish to think about include:

·         Do you have an existing savings or current account with the bank (for ease of inter-account transfer)?
·         Are you satisfied with their standard of service?
·         Is a local branch available near your home or office?
·         Do you consider the bank to be trustworthy and reliable?
·         Does the bank offer value-added services that will make your life easier for the long haul?
·         How is the bank’s reputation as a whole?
·         Does the bank provide online banking facilities which allow you to pay your instalments easily?
·         Is your loan officer approachable, so that you can phone him or her anytime you have a question?

Bearing all these matters in mind, good luck in finding your next home loan and we hope that you have a smooth and beneficial relationship with the bank which provides you that loan.

This article by www.iMoney.my which compares between the various loans, savings and insurance schemes available in Malaysia.

Home Loan Explained

 

Extracted from http://www.imoney.my/home-loan

Buying a house is probably the most important purchase you’ll ever make. Your home loan is likely to be not only your biggest household expense, but the largest financial commitment of your lifetime. For this reason, we’ve compiled a short guide to explain how a home loan works, and what you need to know before you apply for a home loan.

What is a home loan?

To put it simply, a home loan is a loan used to purchase property. Home loans are also commonly referred to as “mortgages”. In Malaysia, home loans are available from banks, building societies or specialist mortgage lenders.
If you already have an existing home loan and want to change to another product or lender without moving home, it is known as a “refinancing”.

How do home loans in Malaysia work?

When you take out a home loan in Malaysia, you enter into an agreement with the lender (usually a bank) and promise to repay your loan over an agreed length of time (also known as the “loan tenure”).
Interest rates for housing loans in Malaysia are usually quoted as a percentage below the Base Lending Rate (BLR). For example, if the current BLR is 6.6%, the interest rate on a “BLR - 2.4%” loan would be 4.2%.

In a typical Malaysian home loan, you make monthly payments for an agreed period (i.e. the loan tenure) until you’ve fully repaid both the principal of the loan and the interest. During the early years of the home loan, the majority of your monthly repayments are used to repay interest on the loan, however, as time passes, a larger proportion of your repayments will go into paying down the loan principle.

Because your housing loan interest is calculated based on what you owe on your home loan each month, by paying a little bit extra each month, the interest on your loan in subsequent months will be lower.

Some factors you need to be aware of when you choose a home loan

Margin of Financing: the margin of financing is also known as the loan-to-value ratio. The margin of financing is the amount of your home loan expressed as a percentage of the property’s value. The lower the margin of financing, the more “equity” there is in the property.

The margin of financing could go as high as 95% (of the value of the house), and is assessed on factors such as:
1) Type of property
2) Location of property
3) Age of the borrower
4) Income of the borrower

Early Termination Penalty: Some mortgage lenders may apply an early termination penalty if the loan is paid off in part or in full within a specified time period, including if you refinance the loan with another lender. This specified time period where you are liable to pay an early termination penalty is called the “lock-in period”. Depending on the term and size of your home loan, this charge can be quite significant.

Home Loan Fees & Charges: There are a number of related costs (such as professional fees and government charges) that you would have to pay when you take out a home loan. Some common fees and charges you would expect to incur include:

1) Stamp duties: Sale & Purchase Agreement (0.5% to 1.0%), Loan Agreement (0.5%) and Transfer of Title (1.0% to 2.0%)
2) Disbursement Fees: varies by state, land office and type of property
3) Processing Fees: one time charge by the lenders (up to a few hundred ringgit).

Common Home Loan Terms

Base Lending Rate (BLR): The BLR is a reference interest rate used by banks to decide how much to charge for various products they offer. It is a rate that takes into account banks’ cost of operations, and is typically similar among the major banks. In Malaysia, home loans are normally quoted as a percentage above or below the BLR. This means, if the BLR increases or decreases by a certain amount, the interest rates charged on floating rate home loans also increase or decrease by the same amount.

Downpayment: An upfront payment made by the buyer of a house or car (or other highly priced goods/services). Downpayments are typically expressed as a percentage of the full purchase price. For example, a 5% downpayment of a RM500,000 home is RM25,000.

Foreclosure: A foreclosure happens when the bank repossesses your property and attempts to sell it in order to settle the outstanding amount on your home loan. This usually happens when you fail to pay your home loan.

Loan Tenure: This means "period" or "number of years". If a home loan has a "tenure" of 30 years, it usually means it would take 30 years to fully pay off the loan.

Mortgage Reducing Term Assurance (MRTA): This is a type of mortgage insurance. An MRTA provides protection for an outstanding loan amount (usually a home loan), in the event of death or total permanent disability of the person insured. The amount of protection reduces over time, and normally matches the outstanding loan amount.

Prepayment (of house loan): Fully or partially paying off your (home) loan before it is due.

Can the developer confiscate your booking fee?

found my dream house. The developer’s office said the project was selling like hot cakes. Sales were on a first come first serve basis’ and I must pay a deposit otherwise she would have to give it to someone else. Or was it a booking fee she called it?
I begged her to give me one week. Three days, she said. How very sweet and understanding of her. Bank loan? No problem… 85% loan margin? No problem, she assured me. If I could not get a housing loan I could always cancel and get my money back. I left the developer’s office feeling on top of the world. I had secured my dream house by paying the deposit. My dream turned into a nightmare when I could not get a bank loan. I had no choice but to forgo the house.
As if letting go of my dream was not bad enough, the developer now refuses to give me back my deposit. The lady said her hands were tight because it’s a management decision. It was not stated in the option letter’ or booking form’ that my purchase was subject to the loan approval. On reading the terms and conditions in the option letter/booking form, I now realised that all terms were inclined in favour of the developer.
What do I do? I just want my money back. I don’t mind if they keep a small sum for cost of paper work and for administrative purposes.

The above scenario is not at all uncommon.

Many house buyers are unaware of lending guidelines requiring loans to be tagged to net income as opposed to gross income. Many find that they are unable to obtain the financing they want and have to withdraw from an intended purchase before the sale and purchase agreement is even signed. The developer then refuses to refund the deposit or booking fee or whatever other payment which may have already been paid.
The unfortunate part about this whole thing is that house buyers do not have the luxury of a learning curve in which they can acquire the necessary skills to avoid getting themselves into trouble. Very often by the time they realised that they have made a mistake, it is already too late and the result can be traumatic and financially crippling.
This very noble and seemingly simple undertaking of buying a house, in a lot of cases, have gone terribly wrong.

Can developers collect booking fee or deposit?

The sale and purchase agreement (Schedule G, H, I or J) as prescribed by the Housing Development (Control and Licensing) Regulations, 1989 (the Housing Regulations) provides very clearly how the purchase price is to be paid. The first 10% is payable immediately upon the signing of the sale and purchase agreement (SPA), not before.
No collection of any payment is allowed before the SPA is signed. Deposit, booking fee, advance payment, administration charges are just some of terms used by some devious developers in their vain attempts to circumvent or contract out of the Housing Regulations and to confuse, mislead and convince nave house buyers especially the first-timers.

Collection of any payment by a housing developer before the signing of the SPA is an offence. This is very clear under the Housing Regulations and it does not matter what the developer calls it.
The Housing Regulation 11(2) stated: “No housing developer shall collect any payment by whatever name called except as prescribed by the contract of sale”. (In this context’ contract of sale means the SPA)

Commission of such an offence under the Housing Regulations means that the developer in question can be prosecuted, fined and/or even imprisoned under Regulations 13. Even those persons who knowingly and willfully aids, abets, counsel, procures or commands the commission of such an offence shall be liable to be punished.

Prosecution, however, is in the hands of the public prosecutor whose action or non-action the house buyers are not able to dictate. House buyers and indeed the general public are of course at liberty to lodge a complaint against any developer in breach of any housing laws. Such complaints can be lodged with the Enforcement Division of the Ministry of Housing and Local Government: www.kpkt.gov.my
The law as regards non-payment before the signing of the SPA is very clear and house buyers are strongly urged to understand the law and not be misled by some cunning, unscrupulous developers or their smooth talking sales representatives who either do not know the law or simply do not care about the law.

Profit orientated developers care about nothing but profit. The more they sell the more they gain. They engage marketing commission agents and sales representatives whose only mission is to sell. In their quest to sell their products, some unprincipled commission agents (secondary markets included), who are untruthful will not hesitate to mislead, conveniently telling “white lies” and make empty promises to make a quick buck. Some are so well trained in the art of selling they can probably sell sand to the man in the desert.

Ever wondered why the sales office told you there are only five units left but three months later there are more than 10 units still available? Did the developer’s office tell you the unit you want is already booked but called you two days later to congratulate you because the same unit has just become available? Ever gone to a developer’s office in the hope of getting the “Early Bird Discount” advertised the day before only to find that the project was launched more than a year ago?

Filing a claim for refund
Free gifts, rebates, and waivers of this or that are also fairly commonly seen and are often stated to be for a limited time only. House buyers hurry to meet the deadline. Three months later the same advertisement appears, again for a limited time only or perhaps extended due to popular demand. Gimmicks of “Free legal fees” offer but you must use the developer’s panel lawyers are commonly marketed.
The list of marketing ploys used by developers and their marketing alliance goes on and unscrupulous developers and real estate agents are not likely to stop trying to exploit vulnerable house buyers any time soon. House buyers must therefore be very wary and not be easily swayed by promises made by the developer’s office.

House buyers who are already caught in tussles with housing developers over refund of booking fee or deposit are at liberty to file their claims at the Tribunal for Homebuyer Claims (the Housing Tribunal). The Housing Tribunal was set up as an alternative forum for house buyers to save them the costs and hassle of fighting with housing developers in the civil courts.

The filing fee is only RM10; no lawyers are required and hearings are normally fixed within a month. The Housing Tribunal is empowered to hear disputes between house buyers and licensed housing developers even though the SPA is yet to be signed but the claims must be filed within the time frames provided under section 16N of the Housing Development (Control & Licensing) Act 1966 (the HDA). Check out the link: www.kpkt.gov.my TTPR

Can the developer forfeit such payment?

Where booking fee or deposit or any other payment is collected by the developer before the SPA is signed, the house buyer would normally have been asked to sign a document indicating the house/apartment/condominium he/she is interested and agreeing to sign the SPA within a certain time frame, say 7 or 10 days or upon notice from the developer. This document may be in the form of an option letter, letter of offer, sales proforma, booking form or another document by whatever name the developer chooses to call it, all in an attempt to disguise a collection prohibited by law.

The amount varies and in some cases it is as much as 2% of the purchase price RM10,000 for a RM500,000 house. When the house buyer decides to withdraw from the intended purchase, the developer refuses to refund the deposit, or was it booking fee, or was it …?

Written by Chang Kim Loong is the honorary secretary-general of the National House Buyers Association: www.hba.org.my, a non-profit, non-governmental organisation manned by volunteers.

Tuesday, May 07, 2013

What makes a great business or organisation even greater?

It takes two to make anything happen Organisations and talents should know that unless either one is contented with the other, neither one will have a chance of being as great as it believes it can be

What makes a great organisation even greater?

The common answer to that is its people. And what makes a great talent greater? Obvious you might say, to be in an organisation that they can best showcase their skills. Whilst the debate continues on who deserves the credit for making either successful, the fact remains that neither an organisation nor a talent can achieve its objectives one without the other.

We are privileged to be in a position to witness the evolving expectations that organisations and talents have in their quest to find the best. The middle ground can sometimes be a blur when both parties fail to listen to the silent whispers of expectations from either side. The line of purposeful work that we do allows us to have a first-hand view of the common expectations that organisations and talents strive to find as their dream talent or dream organisation.

I am sure it doesn't cross the mind of many that there is more to finding a fitting organisation besides compensation and benefits.

We still encounter organisations that believe that if they provide the basic necessities to their employees, all is fair and well. Perhaps, in the early 20th century, that would have been sufficient and fair. However, in the present era, that would not be acceptable.

The last few decades have presented an evolving market from the East to the West, Asia has become literally the place to be; technology has advanced learning and the availability of instant information; new generations have a different view of work and life is now immersed in our workforce.

So, it's of no surprise that talented employees of the generation now' are looking out for the overall package in their organisation of choice.

l Impact to something greater

It's more prevalent that there is a growing desire to do work that makes a difference, if not all the time, then at least most of the time; a contribution that is seen to be worthy to the world through organisations that operate with special attention towards their customers, community, the planet and making a difference.

The organisation builds a culture that encourages work by their employees that serve a purpose; the teams in the organisation would constantly demonstrate commitment towards bettering the clients, even if their suggestions may not be taken into consideration.

Whatever the outcome, the employees feel that they have the ability to make a difference and do work that can create an impact.

Some go as far as expecting to work with organisations that display a sense of responsibility towards issues beyond their bottom line.

Growth of the organisation
Besides being a part of an organisation that is stable, there is growing interest amongst employees to be a part of an organisation that has shown progress and growth. Growth is viewed as the organisation's development, either through successful acquisitions or its evolvement with a cohesive story while capturing market opportunities.

 A further expectation is that the organisation has the ability to be forward-looking coupled with the capacity to consistently deliver on its promises, with an integrity compass in check.

Affiliation and a sense of belonging

Employees today want to be associated with colleagues who are deemed as outstanding, either stars in their areas of expertise or great minds. The interest to work in a collaborative environment with highly capable individuals is seen to be challenging, stimulating and incredibly rewarding.

Employees find themselves learning and growing in such an environment, nudging them to constantly raise the bar for themselves, whilst forming a strong bond with high achievers.

Coupled with that is the ability of the employees to feel a part of the organisation. They want to be able to assimilate to the culture and feel a sense of belonging. Employees feel that it's critical to be a part of an organisation where they feel accepted and welcomed in order to be successful.

An organisation with the ability to present itself as a place that enlists the best talents and is able to make employees feel a sense of acceptance is perceived to be the place to be.

 l Career opportunities
Exposure, learning or development is deemed to open doors for many employees today. We've gathered that being with an organisation that has continuous opportunities for their employees provides a sense of stability and encourages employees to have a reassuring view of the organisation.

The CARE factor
Although I've touched on this earlier, to recap, the care factor is specifically manifested through the organisation via its employees, partners, and even leaders who go out of their way to make life better for its employees.

The culture encourages fair treatment policies, transparent communication, fun at the work place and teamwork. It can be seen that the management practices an open-door policy and make themselves available to listen to their co-workers' concerns and requests, almost all the time, while work-life balance is understood and respected.

The leader
We've heard the phrase people join organisations but leave their leaders' before and many would agree that this still holds true. We have observed that there have been many instances when employees trail their leaders to a new organisation, only to prove that loyalty to leaders who make a difference does exist.

 There is more interest amongst employees today to know more about the leaders within the organisation even before joining them by conducting their own references within the market place.

Employees today are keen to work for leaders who have the depth, insight, foresight and a heart in leading teams to success.

Many of the organisations that we work with time and time again remind us that finding the right talent with the X' factor is becoming far more challenging. Nevertheless, there is insight into what organisations feel is a talent worth fighting over.

Intellectual depth and competence
In a majority of studies, it is evident that the productivity and contribution of an employee is determined by his or her level of intelligence and competence. This is defined as the ability to plan, organise, set priorities, solve problems and execute tasks. It is also seen in the employee's level of common sense and practical ability to deal with the day-to-day challenges of the role.

Personable nature
Organisations too want employees who care; they believe that people who are warm, friendly, easygoing and cooperative with others can help instil a healthy culture of care and concern within the workplace.

Organisations want employees who can immerse in a team and be part of the work family. It is also quite natural that employees with good personalities are invariably more popular and able to rally the support of their teammates.

Leadership ability
Leadership skills should not only be visible when someone is in a leadership role. Organisations today want these characteristics even before the role has been presented to the employee. It is demonstrated by the willingness and the desire of the employee to accept responsibility for results, their ability to take charge, volunteer for assignments, and accept accountability for achieving the required results of their assignments.

Integrity
Integrity is probably the most important quality that has surfaced time and time again for organisations today. It has been viewed as a business expectation aligning them to the company's values in serving their customers. The characteristics in judging integrity stem from being honest in relationships with others, the ability to admit to weaknesses and strengths and the ability to admit when mistakes have been made.

Courage
As shocking as this may seem, organisations are also looking for employees who are willing to take calculated risks. Calculated risks are a result of well-balanced decision-making derived by weighing the positive or negative consequences of the risk at hand. The courage to do so is displayed in the willingness of the employee to accept challenges, the willingness to take on larger assignments or even new opportunities where there is a high degree of uncertainty and the possibility of failure.

Courage also means the willingness to speak up and say exactly what you think and feel in a difficult situation even if it may ruffle some feathers.

Resilience and emotional strength
Inner strength means that employees have the ability and determination to persevere in the face of adversity. It requires the quality of persistence during tough times. Organisations view this as a potential upside when employees have the resilience to undertake the highs and the lows of the assignment unwaveringly. This characteristic is hardly built over time, it requires specific development to bounce back in the face of adversity and emotional strength to overcome it.

No doubt, both organisations and talents will have to accept the inevitable fact that unless either one is contented with the other, neither one will have a chance of being as great as they believe they can be. There must be continuous efforts by both parties to meet the evolving expectations of each other; it will take two to create something greater! My humble view is to keep changing to adapt to the surrounding expectations or risk being extinct. Is that not what progress is all about?

  • Melissa Norman is managing director of Kelly Services Malaysia