( When buying a house or refinance your home)
If you read my earlier article “How Much You Need To Buy A House In Malaysia?”, You’ll understand that buying a house will cost a lot. Based on the article, you will need about 17% of purchase price to cover all the costs.
However, if a purchaser opts for Zero Moving Cost ( Bank pay for your moving cost) or Finance Entry Cost ( Finance the entry cost with your loan), then you might not need to come out 17% deposit, the cost will be lower around 2-3%.
So, the question we always get from our viewer is why they should go for Zero Moving Cost Package?
Here we have three reasons why you should choose Zero Moving Cost Home Loan.
1. BANK PAY FOR YOUR MOVING COST
It’s always nice when people pay for your coffee, food or anything. But, in this case, the bank is willing to pay for your moving cost. Not only you do not need to worry about the money upfront, but you can also channel that extra cash to other more profitable investment.
We have here an example of Customer Pay Moving Cost Package and Zero Moving Cost Package.
You can see that Zero Moving Cost Package will outrun Customer Pay Moving Cost Package in the short term.
Customer Pay Moving Cost Package
Loan amount : RM500,000
Instalment : RM2,008.93
Tenure: 35 years
Interest rate: Up to 3.30%
Normally Lock in period three years
Zero Moving Cost Package
Loan amount : RM500,000
Installment : RM2,037.59
Tenure: 35 years
Interest rate: Up to 3.40%
Normally Lock in period five years
Estimate Moving Cost ( include all fees like loan lawyer fees, stamp duty, disbursement fees and valuation fees) : RM500,000 x 3% = RM15,000
Different Between Customer Pay Moving Cost Package and Zero Moving Cost Package Installment: RM2,037.59–RM2,008.93 = RM28.66 per month..
Earlier, James opted for Zero Moving Cost Package.
After the lock in period- 5 years, he decided to refinance again to another bank.
Even though, Zero Moving Cost interest rate is higher than Customer Pay Moving Cost Package.
But, after 5 years, James only paid RM4620.00 additional monthly installment .
( RM28.66 x ( 5 years x 12 =60 months) = RM1719.60)
If earlier he opts for Customer Pay Moving Cost Package, he has to come out with RM15,000. That was RM13,280.40 more.
***The above calculation is only for reference only. It will differ if other factor change.
2. SAVE MONEY NOW NOT LATER
Saving is a concept that if you have a chance to save money now, you do it right now. Not in the future.
If Zero Moving Cost package can save RM15k Moving Cost, then you should go ahead. Let’s the bank pay for you.
Especially, when buying a house, It involves a lot of cash. You want to keep aside some for other unforeseen expenditure or unexpected things happen in life.
Quote: Live for the moment because everything else is uncertain – Louis Tomlinson
3. ZERO MOVING COST IS LIMITED
Zero Moving Cost is not offered by all the banks in the market. Only a few willing to take chances in offering this home loan package. Why?
First of all, to pay for customer moving cost is expensive. An average moving cost for one case is about 2-3% of the loan amount; it can cost up to RM10k-RM15k per file. So, multiply by a few thousand files. That’s a lot of money!
Secondly, for all moving cost file, the bank has to come out with their fund to pay upfront to the lawyer and valuer before borrower paying them back. It takes years before a bank can break even the cost. And sometimes when they do, the customer start leaving the bank by refinancing to other banks. So, there are many risk involve.
While for some that willing to offer Zero Moving Cost is the one that willing to take the risk. It is limited. You want to grab the offer as soon.
1. If you think your property value will increase within next ten years, then you must foresee that with a great value, there will be a great opportunity to sell or to refinance the property. With this, Zero Moving Cost is probably the best option for you. Zero Moving is good if you’ll stay with the same bank within 5-10 years.
2. However, if you think that you will stick with the same bank more than ten years without refinancing or selling the house, then Customer Pay Moving Cost Package might be your best option. In the long run, Customer Pay Moving Cost Package will outrun Zero Moving Cost Package for greater saving.
3. Choose a low-interest rate Zero Moving Cost Package.
4. Get all the details and do your calculation. You’ll know which one is the best for you.
Note for disclaimer:
While we have taken due care in providing this comparison for your convenience, we cannot accept any responsibility or whatsoever for this service or information was given. We make no representation as to the accuracy, completeness, currency, suitability, or validity of any information on this and will not be liable for any losses, injuries, or damages arising from following comparison provided. Please use your discretion and good judgment before making any decisions or taking any action from the information.