How To Pay Off Your Home Loan Faster
We’ve found an online resource giving 12 tips on how to pay off your home loan faster. This is from SunCorp of Australia, some of the tips may or may not be applicable to your situation here, but some of it is good advice.
In summary, the 12 tips are:
For explanation of the above and some examples, you can check out the original article here.
For home loans available in Malaysian local and foreign banks, check out the following packages:
Home Loans by Malaysian and Foreign Banks Part 1 : Local Banks
Home Loans by Malaysian and Foreign Banks Part 2 : Best selling Islamic Banks Loans
Home Loans by Malaysian and Foreign Banks Part 3 : Foreign Banks in Malaysia
Based on a simple calculation, a HL of RM250K for 20 years @ 6.1%, the total interest payable is RM183K. For the same HL amount and tenure but at 7.1%, the total interest payable is RM219K.
This means that if you only paid the minimum amount, at the end of the loan tenure, you still owe the bank RM36K. Quite a large amount, considering that you’ll be retired in 20 years time.
This means that we should pay extra to our HL whenever possible cos RM36K spread over 20 years is only RM150 extra a month which is very managable.
Comment by preacher — May 18, 2006 @ 4:56 pm
You FORGOT to take INFLATION into account.
With an average inflation rate of 4%, RM1000 only remain 60% of its value after 10 years.
I will rather advise people to use the extra money to buy golds, which at the end of every decades, you will find you have more money reserve than paying extra money just to save the depreciated ringgit interest.
Comment by moo_t — May 19, 2006 @ 11:36 am
I agree with moo. if you have extra money, do not pay off your loan as the equity that you have is dead money until you sell property or draw cash it out. Better to put in gold, bond or high interest deposit account to capitalise on the the power of compound interest. You will find that you will be better off using the money to work harder for you to generate more wealth rather than pay the money to the bank which end up as dead equity.
Comment by Feizal — January 14, 2007 @ 7:59 pm