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An elderly couple bought a house ten years ago and borrowed RM55,000 from the bank.
Skip to the present day, a total of RM48,000 has been paid by the couple.
But just when they thought that they were about to finish paying off the mortgage, the bank recalled the loan and auctioned the house following a default.
Just when the old couple thought they were about to finish paying off the mortgage, the bank recalled the loan and auctioned the house following a default.
After an investigation, the old couple realized that most of the mortgage payments they had paid in the past ten years were interest payments and only 20% of the principal.
The plight was brought to the public’s attention by China Press.
Squeezing People’s Hard-Earned Money
The press cited a sharing on social media by a lawyer named Lisa who is providing legal assistance to the couple.
The old couple’s home had already been auctioned off by the bank, although they are yet to be evicted.
Lisa, who used to work for a bank, calculated the mortgage and interest payment period.
She explained that the old couple only paid the bank’s interest for ten years and pointed out that this is one of the reasons why she is no longer a bank lawyer.
She pointed out that this is also why she left her job and no longer became a bank lawyer.
She said that when the old couple came to ask for help, she was shocked by the bank’s calculation method for housing mortgage payments.
Their mortgage is RM55,000, and the monthly instalment is RM400. They have been paying it for about ten years, although there have been several months of non-payment.
Lawyer Lisa on the old couple’s housing mortage burden.
No Way Out
The bank said the old couple still owed RM45,000 because most of the RM48,000 was used to pay the mortgage interest.
Only about RM10,000 was repaid from the principal.
The old couple brought the complete documents to Lisa for help, but she believed that the lawsuit could not be won.
She said there was no way to prevent the house from being auctioned, and the case could only be postponed at best.
BNM Does Not Interfere In The Pricing Of Financing Products
Bank Negara Malaysia (BNM) has clarified that it does not interfere in setting the retail price of financing products.
However, the central bank will do so if it detects any practices or implementations that affect consumers by financial services providers (FSPs).
The central bank said the retail pricing of products was FSP’s decision, but as part of BNM’s oversight of FSP, it reviewed FSP’s compliance with fair treatment requirements.
This is a joke right? How you expect average people to service the loan for the next 40 years when most job created today doesn’t even exist 30 years ago? Orang minta affordable home, bukan bayar interest lagi banyak dekat bank. https://t.co/YK4YQnRDKQ
— Greg 🚀 (@cryptgreg) January 29, 2019
BNM said it would intervene if it detected any unfair practices or behaviour that could cause significant harm to financial consumers.
The public have urged the authorities to review the regulations and policies for mortgages as more and more people struggle with the extra burden of repayments.
Plus, depending on the loan package macamana (kena check dengan bank) ada bank tak guna the extra payment to deduct your principal pun. They just keep it in a special account which u can keluarkan later. So penat je you bayar lebih, the interest you pay sama je.
— elisa bustaman (@elisataufik) April 30, 2021
How Do Home Loans in Malaysia Work?
Interest rates for housing loans in Malaysia are generally quoted as a percentage below the Base Rate (BR).
For example, if the current BR rate is 4.00%, the interest rate on a ‘BR + 0.45%’ loan would be 4.45%.
You can check the home loan interest rates and fill in the home loan application using home loan calculator apps.
How the help reduce it?
1) downpayment tinggi – saving / KWSP
2) disiplin bayar loan lain so ccris jaga
3) beli dgn first home package
4) try apply few banks utk compare interest & installment
5) beli rumah mampu bayar bukan layak loan semata2.
— anis. (@ansdd_) May 28, 2022
In a typical Malaysian mortgage, homeowners make monthly payments for a stipulated period (i.e. the loan tenure).
The payment period lasts until they’ve fully repaid both the principal of the loan and the interest.
During the loan’s early years, most of the monthly repayments are to repay interest.
However, as time passes, a more significant proportion of your repayments will pay down the principal.