Lau Chee Kiong asked 6 years ago
Hi KC,
Hope you are doing well.
I would like to seek your advice for my case.
I have a home loan with public bank(detail as below), i plan to buy a new car at RM80000. i would like to know which option below is the best for my case?
Note: for option 2 and 3, i can pay extra money per month(monthly budget RM2000)
loan start year 2009
toal loan amount RM177500
Term in Months 360 (30 years loan)
Balance = 50000
Available Redraw Amount = RM 81000
Installment Amount =RM 786.00
Interest Rate = 4.47
*** i am paying RM1500 monthly currently
option 1: get a car loan
continue the home loan(pay RM1200 monthly with estimated 4 years++ to go) + get a car loan RM 80000, interest 3%, 9 years, estimated monthly payment RM940.
Total estimated ineterest for 9 years RM 21600
option 2: refinance current home loan
refinance the home loan to RM 130000, estimated interest rate 4.5%(not sure curent int rate), 9 years,estimated monthly payment RM 1466.
Total estimated ineterest for 9 years RM 28337.
Use the extra RM80000 to pay the car cash money.
option 3: utilize the redraw facility(not much knowledge on this redraw facility)
cash out the “Available Redraw Amount” RM 80000 and pay the car cash money.
If cash out RM80000, the balance will become RM1300000?
“Installment Amount” still remain RM786 per month? or how is the interest calculation?
How much monthly payment if cash out RM80000 from redraw facility and want to clear the new amount(RM130000) in 9 years?
Will LHDN check if we use the redraw amount to buy the car cash money?
Appreciate if there is any better option than the above options.
NOTE: all the interest rate/calculation are just estimation/assumption, please corect me if i am wrong. Thanks.
Thanks a lot in advanced.
CK
KCLau Staff answered 6 years ago
If your sole purpose is to reduce the interest cost you pay, then Option 3 will be the best option.
1. Without refinancing, you don’t need to incur legal fees to redo the loan agreement
2. Your installment will remain the same for the housing loan after redraw.
3. Whenever you have more money, you can still pay down your housing loan with a faster rate.
4. If LHDN audit you about the cash, you just need to show that it is taken from your home loan.