Houses

Understand your housing loan repayment scheme… it’s not as straight forward as it seems

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Most if not all house buyers will require financing to buy their dream homes. While there appears to be stiff competition among banks for market share and interest rates may be kept low, house buyers are ultimately at the mercy of banks when it comes to the detailed terms and conditions of the housing loan. (Banks in this context refers to commercial banks, Islamic banks and other financial institutions).

Unfair legal fees

When a borrower takes a housing loan, the borrower is required to execute a loan and other related agreements. This entails the borrower having to pay legal fees, the amount of which varies, depending on the loan amount – the higher the loan amount, the higher the legal fees although the complicity and level of work do not necessarily commensurate directly with the loan amount.

Although it is the borrower paying the loan lawyers’ fees, the said loan lawyer is actually acting for and on behalf of the bank. As such, the loan lawyer is not in the best position to advise the borrower if there are clauses in the loan agreement which are not in the best interest of the borrower.

In addition, in the event of any dispute between the borrower and the bank, the borrower cannot ask the loan lawyer for advice as the loan lawyer is acting for the banks.

If this is the case, then is it “fair or equitable” for the borrower to pay such legal fees when it is clear that the lawyer is actually acting for the banks? Obviously not. Hence, the bank should absorb the legal fees as the lawyers are clearly there to act for the bank and protect its interest.

Exorbitant fees for simple letters

The banking sector in Malaysia is a very tightly regulated industry. Any fees that banks intend to charge must be approved by Bank Negara. It is disheartening to note that borrowers continue to be charged exorbitant fees which seem to have the explicit blessings and consent of Bank Negara. Instances of borrowers being charged unreasonable fees for copies of redemption statement, EPF statement letter etc are common.

Allocation of monthly repayment to principal and interest

This is a story about three friends who took a housing loan (HL) of RM500,000 ten years ago. They were offered the same HL interest rate of 4.2% (base lending rate of 6.60% less 2.40%) but took different loan tenures as follows:

Albert took a 20-year HL. Eric took a 25-year HL and Jamie took a 30-year HL.

After servicing their monthly loan instalments diligently for the past 10 years, they decided to fully settle their housing loan using a combination of their EPF monies and own savings. When they asked for a redemption statement to find out what was the principal sum outstanding, they received a shock of their lives.

Albert, Eric and Jamie were under the impression as they had served 50%, 40% and 33.3% of the loan tenure, their principal sum outstanding would be RM250,000, RM300,0000 and RM333,333 respectively.

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So, when their respective redemption statement showed that Albert, Eric and Jamie still owed respectively RM301,654, RM359,415 and RM396,652, they got a big shock.

So, why did they still owe so much more than what they had thought? The answer lies in the allocation of the monthly instalment towards covering the principal sum and interest charged by the bank.

In an equitable world, the monthly instalments would be allocated on a “straight line basis” to cover the principle and interest charged. Thus, a borrower who served 10 out of a 20-year HL would only owe 50% of the original loan amount.

However, the reality is that the borrower still owes 60.3% of the original loan amount.

The typical borrower will always be “penalised” for settling his loan before the maturity date. Even in the penultimate year of the original loan tenure, the actual amount outstanding is still higher than the theoretical amount, which should be the amount outstanding had the allocation of monthly instalments been done on a straight line basis.

Is it fair and equitable?

Most borrowers do not know or even understand how this allocation is calculated. Is such an allocation “fair and equitable” to the borrower? Under such circumstances, are borrowers supposed to accept that the bank’s own generated computer system has calculated the interest correctly and allocated the payments in the correct manner?

To the borrower, they have paid 10 out of a 20-year loan, he should only owe balance 50% and not 60.3%. Is this manner of allocation not just another unjust way for the bank to generate higher profits after all the bank did receive the payments on time and in full every month. It is the dream of every borrower to be debt-free as soon as possible and it is not fair to the borrower to be penalised in such a manner when he wants to settle his loan early.

That said, borrowers have no choice but to accept the calculation of the bank as correct and final. If the borrower were to reject and not pay the required sum, the loan will not be considered as repaid in full. The borrower could even be blacklisted and even have his property auctioned off by the bank to recover the remaining sum outstanding if the borrower refuses to pay up.

It would be more transparent and equitable if the monthly payments made by the borrower are allocated in a “straight line basis” to interest and principal equally over the

tenure of the housing loan. Short of that, borrowers are at the mercy of banks.

Some banks operate like a “cartel” and standardise their fees to be charged to customers. One wonders whether such unfair practices are condoned by the regulators like Bank Negara.

It is also interesting to note that banks are exempted by the Malaysia Competition Commission allowing banks to agree and collude on unfair fees, penalties and practices to be charged to borrowers.

Unnecessary expenses

Loan agreement “printing charges” – sold between RM150 and RM350. The banks’ solicitors need to purchase a standard loan agreement from the bank (via soft copy) and adds the borrowers’ details in order to complete the loan agreement. The banks charge the lawyer and the lawyer charges the borrowers.

Standard loan agreements are now downloaded from the bank’s website or from the soft copy. The bank no longer needs to print them and should not charge for such documents. Alas, this has been continuing till to date.

Lopsided terms and conditions

Lopsided terms and “add-on” products are aplenty if the borrower wants to identify with them. It would be good practice to remove or qualify the banks’ arbitrary powers.

Conclusion

The National House Buyers Association (HBA) had on Sept 4, 2014 made representation to the Finance Ministry (MOF), Bank Negara. Housing and Local Government Ministry in the presence of Association of Banks Malaysia and Islamic Banks of Malaysia in the form of slides presentation on some observations and unethical practices of some banks.

HBA is looking to work closely with MOF, Bank Negar and all related stakeholders to level the playing field for housing loan borrowers in the long-term interest of the banking industry. We had proposed to set up a working committee to resolve all unfair practices. MOF and Bank Negara have a legitimate interest in the final shape of the banking industry into operating a principled and towards a “customer friendly arena”.


Article picked from http://www.penangproperytalk.com

Source: StarProperty.my

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A hectic but satisfying day!

It was Friday 1:00pm and I’m rushing to Fraser’s Place KLCC to fetch my client for viewings in Mont’ Kiara. There were about 5 units to show and as soon I got him onboard the car, we headed straight to the first viewing. It was Kenny Heights Villa @ Sri Hartamas.

These villas are situated right behind Plaza Damas and part of Kenny Heights Estates. These are freehold units that were completed about 7 years ago.  There are only 49 units in a gated and guarded vicinity. The linked bungalows are really nice and the unit we viewed came fully furnished with a RM11,000 p/m price tag. It was a pretty good deal as the unit comes with modern fittings and furniture with a private pool on the top floor. Overall, the tenant liked it and took some pictures for further review. They could somewhat do better with some signboards leading to the estate as one may get confused around the area though.

Next stop, Sunway Vivaldi. This is one condominium around Mont’ Kiara that I’m more familiar with as I have a friend staying here and often frequent the place whenever there’s a gathering. However, I have no luck getting a to-let unit here so I have to get one of my closer agent friend to arrange one for us.  This is also a fully furnished unit with a RM 11,000k p/m price tag. It is a nice unit with the pool view. The tenant loved the condominium and quite impressed with the multi-tiered security. He shortlisted this immediately.

Next, we head to MK 11. This is a fairly new luxurious condominium around Mont’ Kiara. It’s only 6 years old and billed as one of the top-notch property in Mont’ Kiara. The sight of the building and its pool is definitely engaging. I’ve never really seen such pool design and it’s pretty eye catching I must say. The unit is priced at RM 15,000 p/m which is a little steep for a fully furnished. But, with everything in place and a unit with almost a 100sqft balcony, that’s what we need to pay I think.  However, the downside of this unit is, of course, the price and also, the owner is around and is currently occupied. Most of the stuff is there and it made the place looked stuffed. The tenant is somewhat unimpressed.

We headed to Lumina Mont Kiara which is about 1 min drive away – that shows just how many condominiums there are around the area. This is a penthouse and possibly one of the best looking units I’ve come across in recent visits. The asking price is at RM 12,000 p/m which personally, I think is quite reasonable. With all the high-quality furniture that comes with it, it’s a steal really. And it’s still negotiable. I was told the owner is quite a prominent figure too. The tenant is very impressed with the unit nonetheless. However, the facility and the walkways are quite a let down though.

Finally, we head to the last stop of the viewings – Mont’ Kiara Damai Resort.  I’ve always loved this place ever since my first visit here. It really does feel like a resort with its 8.7acres land and boasts one of the lowest dense residential with only 230 units. Although a little dated (completed 13 years ago), the place is undoubtedly one of the more quiet and peaceful locations around Mont’ Kiara, away from the highway and retails. However, the tenant doesn’t really fancy the resort type condo and we left after a great tour around the place by the enthusiastic owner. Great job!

After we said goodbye, it’s the most challenging time of the day… Friday evening + rain+heading back to KL = super jam! It took us an hour to reach Fraser’s Place! Gosh! It was my bad. The viewings went a little longer than expected.

But hey, he found what he wanted and I’ve done my part showing some nice units. Just wanna say thanks to all the owners and Donavan for arranging the viewings for us that day! You guys rock!

 

No to African and Middle Eastern tenants? Why..??

Recently, while I was around town talking to one of my clients, we spontaneously brought up the issue about renting out to Africans, China Chinese, and Middle Easterns. Not that this is new or even something we want to talk about but recently, there seemed to be this spark from residents, especially condominiums’ about the refusal of renting out to specific races, especially the Africans. She was quite insistent on not having her unit rented out to the above categories. I’m not too particular about this but having her asking me what is my view on this is a little awkward.

To be honest, a tenant is a tenant. As long as they entered the country officially and legally and most importantly, able to pay the rentals on time, who are we to turn them away? I would usually request for some background details before proposing the potential tenant to my client. Although not much we can get from these profiling work, at least some due-diligence was executed nonetheless.

Yes, we (estate agents) have encountered or somewhat heard from our counterparts about how some of these tenants wrecked the place, lousy paymasters and sometimes, even disappeared after awhile running away with some of the items from the house/condominium. But this happens even with local tenants. Why are we looking at the black dot on the whiteboard rather than acknowledging the white spaces around it that more or less represent a healthy rental market from these categories of people?  We can’t generalize the entire nation just because one or few of them behave that way.

I have really good Middle Eastern tenants and they can be the nicest and most flexible tenants to work with. They also pay their rentals on time too. Well, about wrecking the place, it’s a 50/50 thing. After a few years staying in the same place, especially more than 2 years, using the same items and utilizing every space available, it is fair to say that the wear and tear usually turn out slightly worse than those after a year. Some are born more ‘heavy handed’ (more careless and reckless) hence a little rough in handling the appliances and such. Therefore, nothing much you can do about it but to dig into the Tenancy Agreement and re-highlight the T&Cs which would trigger the security deposits.

And to be honest, yes, I’ve heard and seen that the locals are terrified when they are in close proximity with the Africans. They are pretty imposing at times and the stuff we heard about some of them do make the case. But generally, they are friendly people. At least they greet the people they meet in the lift.

But demanding the owners to refuse renting to these races by the resident committee or the condominium management at certain extent is really out of place in Malaysia. It’s a blatant act of racism if you ask me. Maybe I don’t know what happened between these folks and the Africans, but it doesn’t warrant them to issue a blanket order as pictured above. Coupled with 2017 KPI of 0% rentals to the Africans some more… that’s is a little absurd. Really people?? Seriously?

Take a look at the following video. You sort of feel for the African guy looking for a place.

Is there racism in the Malaysian property rental market? Three R.AGE journalists of different races called the same 30 listings to find out

https://m.facebook.com/story.php?story_fbid=10156301014844741&id=95743749740

Image result for really??

Then again, I’ve come across owners and landlords that are very accommodating too. They acknowledged the current soft market and think nothing more than to be able to rent out their units asap. Yes, they do have concerns about the type of tenants tenanting their place but if they try to be picky and discriminating as what we discussed earlier, it would only eat into their pockets and making life difficult for themselves.

Agents like us play an important part in profiling these potential tenants to the owners. Commission aside. We are the bridge for the tenants and the landlords. We have a job to do besides just introducing the units and getting the deal over the line. The good sense of responsibility and accountability separates a good agent and those fly-by-nights.

I am more curious if the banner of requesting the owners not to rent to the Africans, if at all legal and law abiding? Who sanctioned the move and did they seek the proper authority for execution before they do so? What would the impact be for the owners, the agents, the tenants and the nations?

Racists and racism is a strong word. We would avoid it at all cost if we could. There is no room for that everywhere. Think about our actions and what we can do to mitigate the issues before going down the path of branding ourselves as racists. And for the agents, please, even if you are representing an owner who doesn’t want to be associated with such tenants, at least, be more tactful when declining the offer. We all have emotions and feelings too.

Our latest open house at Selekoh Tunku, Bukit Tunku last weekend

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What a weekend. We just had our latest open house at Bukit Tunku over the weekend and what an experience.  Weeks of preparations and arrangements finally paid off with a successful event. We would like to thank the office for the support, especially the Boss, Nieyko, Stephanie (our newbie support), Naz for your ‘cheerleading’ and all who came-by pre and during the open house.. Thank you so much!

And of course, the main figure here is Ms.Billie, my partner for this open house. Thank you for this opportunity, for me to experience my first Bukit Tunku open house.

We were all very excited leading to the day. Flyers, signboards, newspaper ads, and invitations. For me at least, it is not common to have open house around this area and open to all to look at one of Kenny Hills’ (before it was renamed to Bukit Tunku) classic bungalows. So, it is both a marketing and exposure experience for us.

The Selekoh Tunku address has some prominent residents lining up the street too. It would make a great neighborhood and furthermore, this is pretty close to the Jalan Langgak Tunku area – the happening place in Bukit Tunku. Fancy having a nice breakfast at the Kenny Hills Baker or having your lunch at the sumptuous Kenny Hills Bistro or just simply hop over to Sids at night for a quick alcohol fix? It’s just 1 min away.

Over the past 2 days, we had not many visitors or buyers. However, the quality of the visitors supersedes the lack in numbers. Most of them, when asked, came to know about the open house via the sign boards around Bukit Tunku. The interesting thing is, we do have keen individuals and some offers to bring back to the owner.  In fact, there was one who came back 3 times to view the unit! Talk about loving it. But of course, the negotiation is still in its early stage. We just hope for the best.

We ended the open house on Sunday afternoon and we have a total of 2 offers to be brought back to the owner. What an eventful 2 days and we got away with it even though we had it on a King’s birthday. Heh.

There you go. Our next chapter is already in the works and after today’s meeting with the team, boy, do we have a BIG one coming your way to Bukit Tunku very soon! So, stay close to this blog/facebook update and get to know more about what’s going to happen.

Ciao!

Feng shui and real estates

Feng shui, believe it or not, appears to be on many homeowners mind when purchasing their dream homes. Be it getting a bungalow, a terrace or simply a plot of land, feng shui play a big part in deciding whether the particular unit is suitable to the buyer in terms of liveability or prosperity it brings to the owners.

Most will not understand fully how it works when explained to them by the masters, yet tend to follow whatever that is thrown to them just to be sure that the opposite does not fall on them. Why do we believe in feng shui anyway?

What is feng shui (風水)?

Feng shui or fengshui (pinyin: fēngshuǐ, pronounced [fə́ŋ.ʂwèi] (About this sound listen)) is a Chinese philosophical system of harmonizing everyone with the surrounding environment. It is closely linked to Taoism. The term feng shui literally translates as “wind-water” in English.

Feng shui is one of the Five Arts of Chinese Metaphysics, classified as physiognomy (observation of appearances through formulas and calculations). The feng shui practice discusses architecture in metaphoric terms of “invisible forces” that bind the universe, earth, and humanity together, known as qi.

There is no replicable scientific evidence that feng shui’s mystical claims are real, and it is considered by the scientific community to be pseudoscience.

Historically, feng shui was widely used to orient buildings—often spiritually significant structures such as tombs, but also dwellings and other structures—in an auspicious manner. Depending on the particular style of feng shui being used, an auspicious site could be determined by reference to local features such as bodies of water, stars, or a compass.

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House owners typically believe that a home is where they shall live and function throughout their tenure. Therefore, it has to be ‘spiritually’ compatible with their energies, making sure the house is free of bad ‘qi (氣)’ that could potentially inflict unwanted events to happen to the family. Hence, most of these home buyers would consult a master (feng shui sifus) to ‘feel’ the house and probably recommend certain adjustments before moving in.  Some would even suggest abandoning the purchase altogether. We will get to that later.

As mentioned earlier, most of us do not know much about feng shui. The rituals are passed on from generations and word of mouth. There could be certain coincidental cases where either a home owner suffered a sequence of bad events throughout or the exact opposite with the help of feng shui, and it became an omen to the rest that one should heed the belief against their ‘八字 – birth profile’.

There are many things revolving around feng shui and it is a complex representation of the Ying and Yang that one believes that would interconnect them with the forces of nature and relate them to one another.

A very basic understanding usually involve not having the toilet/washroom right opposite the stove/cooking area, placing bed(s) fronting the door or bathroom, having too many electrical items in the bedroom and so on..  But these are just the tip of what feng shui is all about. Even the cardinal directions of the house also play a part of good and bad feng shui for some. Really, as long as one believes in it, almost anything and everything poses a question to compliment its feng shui.

As a real estate agent, I don’t dwell too much on feng shui but sometimes, we do encounter stuff like this and mostly it doesn’t end up well for us (LOL). Some buyers or even tenants are particularly particular about whether the house is ‘harmonious’ with them and thus, a need to ‘feng-shui-lized’ the place before any transactions take place.

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For instance, recently we encounter a buyer who did a last-minute pull out from a purchase due to a bad review from his ‘reliable’ sifu. We also don’t really know why this was not performed before he placed the deposit for the house but in the end, the deal fell through. What actually happened u ask?

Well according to the sifu, the said house was not suitable for the buyer. That was the first hit. Why? The main entrance to the house is not perfect in feng shui sense. And it is not grand enough for incoming guests. Second, the kitchen is not spacious enough as it serves as an outlet for ‘food distribution’ around the house. Thirdly, the master bedroom ‘rest area’ (the bed area) is smaller than the ‘work area’ (wardrobe and shower area) which represents the owner toiling more than having his deserved rest.

Fourthly, the house is practically poor in its ‘qi’ distribution around the house. This is not a great ‘feature’ for wealthy businessmen – having bad ‘qis’ flowing around the house.

The final blow was that the house is facing a common pool. And according to calculations, the pool signify a potential ‘桃花運 – luck in love’ to the owner. Which again, does not bode well with the overall prosperity aura of the house to its wedded owners.

There you go. Deal off. Probably I may sound a little sour over the whole saga but say what you like. When negativity is uttered even in its slightest form bearing no solid proof that the house has no connection whatsoever with the potential owner,  it is also best said that our luck left us right there and then. It is cold and it is harsh, but when unseen forces come to play, we can only acknowledge the cruel end and be subdued by those who claim to foresee irrelative events, which also translates to their income with no remorse to their predictions, over other’s fortune.

Nevertheless, feng shui masters/sifus will always be in demand for some and they will strut their stuff when called upon.  And we agents, we can only do our part and to be as professional as we can and make sure our clients deserve the best home and the one that ‘complement’ them the most!

What is my 八字 again…? LOL


Feng shui quote courtesy of https://en.wikipedia.org/wiki/Feng_shui

Another case study… for agents (Part 2)

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  1. The pic of the agent is no other than – the buyer’s girlfriend!
  2. Both Agent A and B was shocked nonetheless.
  3. Agent A called up the owner and told him what has happened.
  4. However, the owner didn’t want anything to do with these agents’ issues. He just wants to make sure the deal goes thru although he was made aware that he is potentially selling at a lower price (hence the 2% agent fee) to this particular buyer if the agent is indeed someone attached to him.
  5. That is expected though.
  6. As also expected, when the agents tried to get hold of the buyer, he couldn’t be reached. And so does everyone.

Moral of the story for agents out there:

Make sure you try your best to get exclusivity. Always get your agency appointment letter signed by the owner. Without that, you are just another ‘person’ helping another person to market his/her property. Not until you have the appointment/exclusivity in black and white, the above would likely happen.

To the lady agent, all I can say is… karma strikes quick sometimes… (“.)

Another case study… for agents (Part 1)

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In general,  in real estate, there is a lot of weird and dirty tricks being deployed to come out on top. This happened recently to our fellow agents.

Scenario:

  1. Agent A and Agent B co-broking on an RM 530k apartment
  2. Agent B brought a potential buyer for viewing
  3. Buyer came but insist on bringing the girlfriend for a second viewing
  4. Both came a week later and was satisfied with the unit but needed to renovate the unit extensively. The buyer said he needs to get his contractor relative to do a site visit to estimate the cost.
  5. This happens the following week. However, Agent A couldn’t make it (it was a weekend and with things to follow up) and told Agent B to take care of it during the visit and try to close the deal.
  6. Buyer finally decides to make an offer and both him and the owner came to an agreeable price.
  7. However, while waiting for the buyer to come out with a cheque (earnest deposit), the owner called up Agent A and told him that a lady agent by the name of C****tine from M****City called him and says she will drop by to hand over the cheque for the purchase.
  8. Agent A was dumbfounded. Nevertheless, still get the owner to entertain the lady and see if this was indeed true as he nor Agent B could make it to the unit.
  9. The owner called back not long after saying this offer and cheque came from the same buyer Agent A and Agent B is working on.
  10. Both the agents tried calling the buyer and the lady agent to confirm the whole fiasco.
  11. As expected, none picked up their calls.
  12. Moments later, the buyer texted both agents and mentioned that he has not made up his mind buying the unit.
  13. Agent A felt something amiss and did a search on the lady agent. Her name, number and face popped up in one of the property portals.
  14. He sent the pic to Agent B.
  15. To be continued….