If you have a housing loan in Malaysia, you might want to read this.
Recently, we received an interesting sharing from our viewer, Mr Tan (not a real name), and we thought it might be beneficial to share with everyone.
Here it goes.
Mr Tan has a housing loan account with one of the local bank for a few years now. Mr Tan used to pay his monthly instalment promptly. If the due date is on the 1st, he will pay before 1st.
However, due to busy schedule and travelling, he has overlooked to pay his home loan account before 1st for two months consecutively.
He paid his April Instalment payment on 12th April, which is due on 1st April.
And his May instalment payment on 11th May, which is due on 1st May.
Mr Tan do not have any arrears in his account; he pays the payment in full.
When he was late in payment, he received a reminder from the bank.
Sample Reminder Letter from Bank:
Loan Account : xxxxxx
Loan Amount: xxxx
Instalment amount : xxxx
Arrears Amount : xxxx
1.Applicable only to property financing under individual borrowing (pegged to Base Lending Rate or Base Rate)
We refer to the above and wish to advise that the above loan account is currently in arrears as detailed above and would appreciate your urgent attention to regularize your account immediately, failing which, your facility will be subject to interest rate upward revision based on the following scenarios (either scenarios to apply): –
1a. If you fail to maintain prompt repayment when due by the 1st of every month for any 2 consecutive months, the Bank will increase your current interest rate by 0.75% OR
1b. If you fail to regularize the current arrears by end of this month, your current interest rate will be revised to Base Lending Rate (BLR) + 0% or Base Rate (BR) + 2.85% or; 1% above prevailing facility interest rate, whichever is higher.
The facility interest rate upward adjustments may be reviewed again back to the original interest rate contracted upon compliance of six (6) months consecutive prompt monthly repayments made by the 1st of every month.
By being LATE in payment for consecutively two months, he received a letter from the bank stated his home loan interest rate will be adjusted to 5.37% per annum.
Change In Interest Rate
We wish to advise that effective 7/6/2016, the interest rate on your loan will be increased by 0.75% per annum to 5.37% per annum. The increase in interest rate is due to monthly payment was mot made in a timely manner as specified in the reminder sent to you in previous month(s). As a result, please be informed that your monthly payment shall be adjusted accordingly.
Please note that the new monthly instalment will be revised on 1/8/2016. In the event the monthly payment is made by way of standing instruction, please maintain sufficient funds in your deposit of your new instalment payable prior to the effective date.
We also would like to inform that the interest rate will be revised back to the earlier interest rate structure upon compliance of six (6) consecutive month prompt monthly payments made by the 1st day of every calendar month.
For further clarification, please contact us at xxxx
Mr Tan called up the bank and asked for an appeal. But, was rejected. The decision stays.
However, the facility interest rate upward adjustments may be reviewed again back to the original interest rate contracted upon compliance of six (6) months consecutive prompt monthly repayments made by the 1st of every month.
Moral of the story:
Home Loan interest rates will be adjusted when delaying in monthly payment.
Not all the banks are imposing this clause. However, it is good to have heads up and check it with your bank.
Pay your home loan on time.