Friday, December 18, 2009

Properties: Hands-on learning Part 3 - Financing

Just got back from Ho Chi Minh City (thank you bosses). The historical tours were mostly quite depressing and eerie - deaths, killings, tortures - the "fun" of war, where no one wins except the politicians. Mekong river, Dong Koi street (wandering around with colleagues & alone) and food was great though.

Ah.... the rush (to ensure Seller wins by avoiding RPGT in 2010) in finalizing the S&P + Novation Agreement for the transfer of the existing rental contract is going on smoothly - thanks to the capable Ms. Chung Fui Yee of Ky, Lim & Churme.

While that's happening, I've already nailed down the financing options to:
HSBC's (BLR -2.x%) Islamic Flexi home loan
ING's fixed rate 4.85%

Why these 2? 
1. HSBC is not playing the bloody game that most banks in Malaysia are playing now - grouping up like a cartel and agreeing amongst themselves to limit home loans to BLR-1.65% (zero entry cost) or BLR -1.85% (non-zero entry cost).
Even my trusty Standard Chartered (SCB) Mortgage1 people are in that Cartel and told me it's non-negotiable even though it'll be my THIRD home loan with SCB if I execute with them.
Sigh... if this was USA, I think we can sue for the cartel for non-competitiveness & manipulating the market prices.

2.  ING's fixed rate of 4.85% and friendly lock-in terms beats its nearest competitor AIA.

Decisions, decisions
  1. HSBC's rates VS ING's is about a variance of 1.45%pa.
    HSBC: 1   ING: 0
  2. HSBC's rates are variable based on BLR -2.x%, currently 5.5% (crazily low compared to history)
    VS. ING's fixed rate of 4.85%
    Future possibilities:
    Depressed BLR will be climbing up - historical average is about 8%+/- based on 20yrs+ of data
    BUT the Malaysian government plans to implement GST in mid 2011, which will hamper economic recovery, thus may severely slow down the rates from climbing.

    In my opinion, paying a premium of 1.45% for 2010 to about 2014 to ensure manageable long term mortgage, thus, making my cash flow planning for Casa Subang easier MAY be worthwhile. However, ING's customer friendly lock-in terms are better if I wish to sell the serviced apartment within 5 years.
    HSBC: 1   ING: 1
It's currently a tie - I need to meditate on this. In addition to which loan, I've gotta mull over the loan amount to take - I've been offered more but based on my cash flow simulations, I should only be taking RM163K loan to ensure that 9 months rental can cover 12 months mortgage payment.

FYI - the remaining 3 months rental is to buffer for non-occupancy of 3 months per 2 years & annual costs like insurance/MRTA, quit rent/assesment, etc.

Decisions, decisions. Any battle-hardened property investor advice?


  1. Boss MK, I wonder why you reveal so much leh. :P

  2. Not boss lar, worker ant working out my family's freedom. Well, IMHO, nothing majorly personal other facts, figures + my own reasoning.

  3. Well, I just got back from that "www. chart nexus . com" free seminar. An overview of technical analysis, but basically they are selling their training at about almost MYR5k per pax. Do have a look at their website.
    BTW, Friday lunch on?