Home loan is everyone probably the most excusable debt you can get involved with, nowadays.
Do you know the easiest and most efficient way to save on mortgage interest and using the saving to invest in share market, to earn extra income?
You don't have to pay extra installment or attend training. What you need to do is to refinance your home loan at the right time, and as frequent as possible, like me.
The situation has been change from time to time. When I started taking up a mortgage in 2002, the banks offer very low interest rate during the first year of my mortgage. Then the second year interest rate is at BLR minus a margin (e.g. BLR - 2%). Then BLR plus a margin on the subsequent years.
At that time, the lock in period is 3-5 years depending on the different type of package you took up. If you settle the loan earlier and within the 3-5 years lock-in period, you will need to pay a 2-3% penalty.
So the trick is to refinance the mortgage when the lock-in period is over, just to take advantage of the extremely low first year interest rate.
But nowadays, the situation is quite different. Most banks don't provide fixed-rate home loan anymore because they foresee that the BLR will be increased in the near future when the economy starts to boom again. However, banks still offer very attractive interest rate at BLR - 2.3 last year (2009), so I bought another property.
If you have taken up a housing loan during before 2006, it is a good chance that you will be able to get a better offer nowadays although starting 2010; Bank Negara had fixed the bank offer at BLR-1.8 to soften the competition.
What you need to do is:
FIRST - write in to your bank to ask for reduced interest rate.
Instead of paying BLR plus... get them to offer you BLR minus...
SECOND - at the same time, apply to refinance with another two banks.
Then show the offer letter from each bank to their competitors.
So now, you pay less of your mortgage interest and can using the extra saving to invest in share market and earn more monies, from Fiona.
(Please wait for my next hot article on “Stock Predictions for Year 2011”)
Happy Trading and Merry Christmas.
By Brian (FCCA, CMIIA, MIA)
