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Okie, in the next few series of post, I am going to focus my effort on finding out the best deal in town. I am not going to be product-specific or company-specific, as I will only be revealing the important facts and figures that you should look into before getting that home loan deal from Bank ABC or Bank XYZ.

There’s 2 main objectives to this Home Loan Guide. Firstly, this guide hopes to help you save as much as possible on the total sum of money you are paying to the bank. Secondly also to shorten the duration of the entire loan tenure.

So let’s start out with first pointer!

Home Loan Tip 1: Daily Rest Interest or Monthly Rest Interest

Okie, I might be stating the obvious, since most banks in Malaysia are now offering their home loans on “Daily Interest” basis. But still, it pays to pay attention on the fine prints. Daily rest mean the interest rate is calculated on the daily loan balance. Monthly rest, on the other hand, is interest rate calculated every 30 days.

So, let’s say if your monthly installment is RM 1,000. After paying for this month’s installment, you received a 3 months bonus from your boss (this is only an example), and you decided to put in another RM 1,000 in the same month. So if you home loan package is:

a) Daily Rest- Immediately your interest after paying the 2nd RM 1,000 is recalculated on the next day itself. Very flexible

b) Monthly Rest- Paying the extra RM 1,000 from the bonus your boss gave makes no difference, because your interest is only calculated every 30 days. Hence, a monthly rest home loan doesn’t encourage you to pay as much as you can.

Okie, that wraps up Home Loan Tip 1. In the next tip, we’ll talk about Pre-Payment & Capital Repayment which is a very important feature in a flexible home loan plan.

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