Do you know...
Interest make up a major portion of your monthly instalment

Did you realise that for the first 5 years, 75% to 80% of your monthly installment goes to serve the interest of your mortgage loan repayment

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Banks often display their home loan interest rates prominently, but they seldom explain how it works. While a housing loan is not the easiest thing in the world to understand, it isn’t science either. Below, we attempt to explain the inner working of property financing, but first, you need to understand a few key terms:

**Principal of a property loan**

The principal of a mortgage loan is basically the amount borrowed and not yet repaid. For housing loans, interests are usually charged on this principal amount.

**Interest Rate**

Interest rates for these loans in Malaysia are usually (before July 2014) quoted as a percentage below the Base Lending Rate (BLR) are usually charged on this principal amount. For example, if your loan was taken in year 2013 and the BLR was 6.6%, the interest rate on a BLR-2.4% would be 4.2%

**Loan Tenure**

The loan tenure is simply the agreed length of the loan. In Malaysia, homebuyers take out housing loans with tenure of up to 35 years.

**Example:**

Let’s assume you are about to take out a mortgage of RM200,000 for 30 years, at an agreed interest rate of BLR-2.4%. Let’s further assume that the BLR is 6.6% (which basically means the interest rate on your loan is 4.2%)

Illustration:

Loan Amount: RM200,000

Interest Rate: 4.2% per year

Loan Period: 30 years

**Interest Calculation**

The interest on all home loans in Malaysia is calculated monthly. In this case, the 4.2% yearly interest rate is equivalent to monthly interest rate of 0.35% i.e. 4.2% divided by 12.

When it comes to making your first month’s loan repayment, applying the monthly rate of 0.35% to the principal loan amount of RM200,000 gives you an interest charge of RM700 for the first month.

**Monthly repayment calculation**

While your interest charge is RM700 in the first month, the banks normally require that you repay a little more than RM700 each month. This extra payment goes into bringing down the loan principal.

Because your loan interest is calculated based on what you owe, by paying that little bit extra in your first month, the interest on your loan for the second month will be slightly lower. In this example, the interest payment for month 2 is RM699 (i.e. RM199,722 x 0.35%).

In calculating the monthly amount you are required to pay, banks use a special formula called an “amortization formula”. This monthly amount works in such a way that by the time you get to your last payment (based on your agreed loan term), you would completely pay off your loan plus all interest due.
The monthly repayment amount is usually the same for the entire term of your loan, unless there is a change in the Base Lending Rate

The longer your mortgage loan,
the higher the risk!

You would most probably end up paying double your principal amount if you have chosen a 30-35 years mortgage loan. Due to the long tenure you have chosen, you could be paying more in interest whenever there is an increase of BLR

If you notice your installment amount remain unchanged when BLR increased
You need to be careful

The chances are you are paying more interest already every month! Also, your loan tenure could have been extended! You need to do an assessment to your mortgage loan payment as soon as possible to avoid further damages

Let us help you to do an analysis and assessment to see how serious is your damage and,
Rectify the problems quickly
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The earlier you stop the damages, the more you could have save from paying extra interest

We can advise you on the right way to manage your loan mortgage by making through smart repayments.

with our formula and analysis, you can enjoy
saving that counts

You will soon see very significant savings

Start Saving NowFAQ - Questions That Housing Loan Borrowers Should Know

In Housing Loan,75% - 95% of the monthly installment go to interest charges. Only less than 20 - 25% go toward principal repayment. The principal portion increases after the loan tenure reaches half- way mark. By then, you would have paid large amount of interest charges!

Generally, borrowers would benefit in terms of lesser interest charged and shorter loan tenure. But you may not know precisely how much of the interest charges were reduced nor when the loan expires. Whenever BLR increases, with the same monthly installment the loan tenure extends. A mere 0.25% p.a. increased in BLR may extend loan tenure by 6 months to 30 months, depending on the remaining loan tenure.

Normally, lenders will reduce the borrower's monthly instalment. But the loan tenure may remain or be extended in some cases. Are you one of them? We have the solution to your "problem". By using a mathematical methodology, we can reduce loan tenure subject to terms and conditions.

Currently, BLR is on an uptrend. For those whose monthly instalment have remained the same for the last 12 months, do not celebrate! There is a high possibility that your loan tenure has been extended. Come to for an assessment. The risk is yours if you do not!

SP|50 is a report that enables customers to slash up to 50% off the mortgage loan interest and its tenure regardless of their current or future property loan. Ultimately, it protects you from the dramatic fluctuations of BLR. This is not refinancing, restructuring or similar services by lending institutions.

Provided all recommendation a are followed, SPI50 has an accuracy rate of 99% in helping customers reduce their mortgage loan interest and tenure.

Without BLR management, any pre-payment done previously or in the future could be compounded to interest due BLR fluctuation, default rate, late or insufficient payment. (i.e. lump sum, extra pre-payment or monthly repayment.) Hence, improper BLR Management would result in loan tenure extension with an increase in interest.

By checking your current outstanding balance, you can measure the effectiveness SP50 plan.

You can seek advice from our Smart Service Advisor.

Other private companies that provide Mortgage Reduction may not guarantee accuracy due to BLR fluctuations which may result in an extension to your loan tenure and increase in interest. BLR management on the other hand, guarantees results despite BLR fluctuations.

Increase in BLR may result in an extended period of repayment unlike what you have signed up for. This may result in you having to pay more interest than what you are supposed to.

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