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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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Jacky Cheung Classic Tour | 学友 · 经典世界巡回演唱会 2018 Malaysia edition

Those who are close to me know I’m a huge Jacky Cheung fan. I’ve been to a couple of his concerts here in Malaysia and absolutely thrilled by the performances from the start to the very last second. Usually, his concerts are the highest of quality and his performances are immaculate. His Baritone and falsettos are what sets him apart from many old and new performers for the past 2 decades.

I’m particularly impressed with singers who sing without heavy breathing sound -especially from a recorded session. Listen to singers like Jacky Cheung, Sam Hui (許冠傑), Alan Tam (譚詠麟), Hacken Lee (李克勤) and to a certain extent, Leslie Cheung (張國榮), and you’ll notice that they have a very special skill of not letting their breathing sound entail their singing. Not that it matters to many, but once you realized the difference, you can’t help but feel amazed how they do it.

Jacky_KL Concert

Back to the concert. Yes, this could or would be his final multi-destination performance in the foreseeable future. At the age of 56 (born 1961), the quality of his voice has not really regressed, just a little more matured and heavy on the tenor style. He can still hit the high notes not many are able to do.  And, after a few concerts, I wish to take one last shot at this too!

Few tiny problems here. The price, the sessions and the availability. Starting at RM 258 and all the way to RM 988 per seat, this is definitely going to burn the wallet more than the previous sessions. And to make it worse, only 2 performances on the 26th and 27th. Not enough for the fans. And if I were to choose the higher range but still affordable seats, say the RM 488, I’ll be competing with the majority of ticket buyers since they’ll probably think like me. Ouch!

So, for my favourite artist with his could-be last mega show in Malaysia, why not all out? Nope. As much as I loved the singer himself, I’ll never fork out that much for a show. Can’t really say it’s because of the price, but just the fact that I’m not the one that is willing to pay that price for a 3-hour show. Yeap, final.

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For those who have not seen any of his concerts, liked him as a singer and have a huge spare of money to spend, well, do go ahead. You won;t regret it. The props and the acts for the 3-hour show more than justify the price actually. And he is a legend in Cantopop.

Since this is held at Axiata Arena @ Bukit Jalil, and with the above-illustrated layout, one can’t go wrong with any seating locations. This would be a 360-degree stage and you can witness the high-octane performance from every corner. Technically speaking, I would recommend the Green Zone for it is about the right distance be it visually (definitely not saying The Red Zone isn’t better hahaha) or auditory. If they have the high rise platform like how they did it 6 years ago, the better!

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On a side note, many of my friends asked me which is my favourite JC’s number. Not many know of this. In fact, no one does. Probably not the one you think though… and I would say…. (drum rolls please…) – ‘来来回回’ (back & forth in simple translation). Surprised?

I loved the fact that this song is simple, catchy and it captures Jacky’s flawless voice for his more romantic numbers during his peak somewhere around the mid-90s. The song is about a journey of a courtship where one faces love and separations – back & forth and eventually, a happy ending. There are no high vocals, excessive music pieces and falsettos, but the song is simply lovely and perfect for couples in love.

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So. There you go. Go watch Jacky Cheung live and you will know why he is the undisputed God of Song of Cantopop. There will be others setting a different path in this category in the near future, but Jacky Cheung has this aura and charismatic figure as an entertainer that is hard to replace or replicate. He is a performer of the highest order that is brimming with quality and ever improvements!


Pictures courtesy of Hype Malaysia, UnUsUaL Group of Companies and The Hive Asia

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

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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!

Malaysia 60th Independence Day

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This post is late! Gosh.. 1 more day to go. We are almost reaching the end of the month of August. And what does that bring us to..? Yes. It’s Merdeka time again! It is the 60th independence day for Malaysia since 1957. On the 31st of August every year, we Malaysian celebrates our ‘Merdeka Day (independence day) with a public holiday for all and usually a national parade of performances and activities in the central of Kuala Lumpur.

31 August 1957

On the night of 30 August 1957, crowds gathered at the Merdeka Square (Padang) in Kuala Lumpur to witness the handover of power from the British. Prime Minister-designate Tunku Abdul Rahman arrived at 11:58 p.m. and joined members of the Alliance Party’s youth divisions in observing two minutes of darkness.[2] On the stroke of midnight, the lights were switched back on, and the Union Flag in the square was lowered.[3] The new Flag of Malaya was raised as the national anthem Negaraku was played. This was followed by seven chants of “Merdeka” by the crowd.[2][3] Tunku Abdul Rahman later gave a speech hailing the ceremony as the “greatest moment in the life of the Malayan people”.[2] Before giving the address to the crowd, he was given a necklace by representatives of the Alliance Party youth in honour of this great occasion in history, with a map of Malaya inscribed on it. The event ended at one in the morning the next day.

On the morning of 31 August 1957, the festivities moved to the newly completed Merdeka Stadium. More than 20,000 people witnessed the ceremony, which began at 9:30 a.m. Those in attendance included rulers of the Malay states, foreign dignitaries, members of the federal cabinet, and citizens.[4] The Queen’s representative, the Duke of Gloucester presented Tunku Abdul Rahman with the instrument of independence.[4] Tunku then proceeded to read the Proclamation of Independence, which culminated in the chanting of “Merdeka!” seven times with the crowd joining in. The ceremony continued with the raising of the National Flag of Malaya accompanied by the national anthem being played by a military band and a 21-gun salute, followed by an azan call and a thanksgiving prayer in honour of this great occasion.[4]

The day followed with the solemn installation of the first Yang di-Pertuan Agong, Tuanku Abdul Rahman of Negeri Sembilan, at Jalan Ampang, and the first installation banquet in his honour in the evening followed by a beating retreat performance and a fireworks display. Sports events and other events marked the birth of the new nation.

I’m proud of my country Malaysia despite some of the ongoing frictions between the government and opposition and a certain fiasco that was blown out wide. But this country is well known for its peace and harmony and shall be forever seen that way for many years to come.

Why I liked Malaysia? The people of course! We are friends of friends of every race. The food! What you can’t find in Malaysia..? The places of interest – historic, sandy white beaches, highlands, Metropolitan, and forests… you name it! The culture – games, dance, food, performances and even the architectures. Finally… grateful that there aren’t any violent natural disasters (wishing all my fellow friends from Hong Kong a safe recovery from the recent typhoons Hato & Pakhar) to hit the country.

To those who are new to Malaysia or just arrived, we hope you’ll enjoy your stay and stay around for the celebration. There’s so much to do that’ll keep you busy the whole weekend! Avid Estates & The Fresco Apartment would like to wish Malaysia, A Happy Merdeka Day 2017!!

So, let us welcome 31st August 2017 with 3 cheers …. “Merdeka’… “Merdeka”…”Merdeka”!!


Merdeka details courtesy of Wikipedia

Wikipedia needs help!

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Dear all my fellow friends and readers. Recently, Wikipedia is calling out to all its users/readers/contributors for some donation to their project which I personally think is pretty dire and deserve our highest of attention.

For the past 16 years, Wikipedia has been offering free online content (encyclopaedia) to everyone and have been the ‘go-to’ site for most of us in search of quick information. Although not entirely accurate for some ambiguous topics, most of the information by the public and anonymous writers are pretty close to its definition and would be a good enough source for anyone needing a quick understanding of the searched subject.

So, please do your part to contribute back to this wonderful project and more importantly, the society by giving a little spare change to keep this running.

The following link directs you to their donation page and its modes of payment:

Ways to Give

For the love of free information! God bless.