Refinancing

What is Refinancing?

The term refinancing is defined as the process of acquiring a new loan from the same or different financier to pay off an existing loan using the same property as a collateral.

Normally, a borrower would refinance their property for some reasons such as reducing interest payment, changing borrowers and raising capital by doing cash out refinancing.


How does Refinancing works?

An example:

Year 2005
Market value: RM300,000
MOF: 90%
Loan: RM270,000
Tenure: 30 years
Interest rate: 5.99%
Installment: RM1,617.05 pm

Year 2010
Market value: RM500,000
MOF: 90%
Loan: RM450,000
Tenure: 30 years
Interest rate: 4.85%
Installment: RM2,374.61 pm

Loan outstanding as 2010: (RM200,000)


Method A: Cash Out Option
New loan outstanding: RM450,000
RM 200k settle loan. Remaining RM 250k for financial planning or other purpose
Monthly installment:
RM2,374.61

Method B: Non Cash Out Option
Loan outstanding: Remained at RM200,000
Monthly installment:
RM1,055.38 @ 30 years tenure or RM 1151.77 @ 25 years tenure
(Compared with RM1,617.05 before refinancing)

Is it another option for you to cash out money for your dreams or to save interest?

Contact me and I will make sure our conversation is beneficial to you!

Best Regards,
Kelvin