Types of home loan packages in Malaysia

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There are numerous home loan packages offered by financial institutions, with each of them tailored to the needs of today’s home buyers. Having said that however, these packages can be categorized into only three main types -term loan, overdraft facility or a combination of both.

Here are a brief description of each loan type:

 

Term loan

  • Monthly installments amount are fixed for a period of time (term/tenure).
  • An installment payment goes to reduce the loan amount (principal) and the interest.

 

Overdraft facility

  • Credit line granted based on predetermined limit.
  • No fixed monthly installments as interest is calculated based on daily outstanding balance.
  • Allows more flexibility to repay the loan at anytime and freedom to re-use the money.
  • Interest charged is generally higher than term loan.

 

Combination/hybrid of term loan and overdraft

  • A facility that combines term loan and overdraft where the total loan amount is splitted into two parts, for example 60% as term loan and 40% as overdraft.
  • For the term loan portion, regular loan installments are required.
  • For overdraft portion, repayment is flexible.

 

It is better to check with several financial institutions on what home loan packages they have to offer before deciding on a home loan package. Speak to the officers in charge and tell them what are your needs and expectations. With your input maybe they can tailor the best deal for you or at least point you in the right direction.

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