WY asked 6 years ago
Hi KC,
Currently i’m serving a loan with outstanding loan amount of RM430k, at a interest rate of 3.86%p.a, and the tenure going to end on year 2052 (32yrs from now).
So i would like to know with the current low interest rate offer by various bank right now, is it a wise move for me to refinance my current loan with a lower interest rate loan (lowest i knew is at 3.65%p.a) at the current properties price which appreciated to RM650k?
Also, if im able to refinance it at lower rate with RM650k loan, with the additional cash out that i could gain from this exercise, is it i could save more (in term of interest and shorten the tenure) if i dumb back the additional cash i got from refinancing into the new flexi loan?
My intention is to gain maximum advantage with the current low interest rate of bank and also with my properties appreciated value.
Appreciate on your kind advice.
KCLau Staff answered 6 years ago
Some considerations:
– When you refinance, there is cost involved such as loan agreement, stamp duty for the agreement, valuation fee etc. Check with the banker to estimate the cost involve. Some banks might absorb that too.
– With the additional cash, you can put back in the flexi-loan as you mentioned. It saves the interest cost tied to that additional amount only, which you didn’t do anything compared to without cashing out. But I would consider to invest the additional cash-out part for higher return, if you know how.
– Overall, if the cost justify, it is a good exercise as you will have extra liquid cash. You can deploy this cash or help during emergency as the money is in your hand, giving you more flexibility.