What to look for in a flexible home loan?

Several years ago, flexible home loan was a new concept contrary to the conventional home loan, offered by limited number of bank only. By today, many banks provide their so-called flexible home loan facility to the market. There was a saying that the interest rate of flexible home loans is slightly higher than their conventional counterparts, but this is no longer true nowadays, with both having the same competitive rate.

If you are considering a flexible home loan, what should you look for to distinguish the genuine flexible home loan from the rest?

Here are the basic features that any flexible home loan should mandate:

• Your loan account should linked to a deposit account, such as a current account. You get consolidated statement report for both accounts in one.
• You deposit money into the deposit account, and your monthly installment is automatically transferred from there to your loan account.
• The interest is calculated from outstanding loan amount minus any excess money in the deposit account. In other words, any extra money you deposit can really helps to reduce interest payments, thus saving you the money.
• You are flexible to deposit more than your monthly installment in any amount, anytime, and as often as you wish.
• No notice required or fees charged for the extra payment.
• You have the flexibility to withdraw your excess payments whenever you need it in any amount, anytime you wish.
• No notice required or fees charged for withdrawal of excess payments.
• Withdrawal of excess payments can be done anytime by ATM or cheque facility.
• You can start your principal repayments immediately even if your home is still under construction, rather than merely servicing the progressive interest.
• You can request for an increase in loan amount, giving you a ready avenue for extra money.

Any home loan that does not have ALL the features above, should not be considered as flexible home loan. If the loan imposes constraint or limit to the amount of payment and frequency to the deposit and/or withdrawal of excess money, then it is not flexible enough.

Other than the above basic features, you should also look for the loan with:

• Low interest rate, of course.
• No monthly, quarterly or annually maintenance fee.
• No processing fee for application.
• Subsidised lawyer fee.
• Subsidised valuation fee.
• Low lock-in period.
• Low termination fee.
• Daily rest interest calculation where interest is reduced as soon as payment is made.
• EPF withdrawal to reduce loan outstanding.
• Loyalty bonus in the form of lower interest rates or money rebates for customers who keep the account for years.
• No compulsory to MRTA/MLTA offered by the bank.
• Convenient to make payment easily.

Although you could hardly find a flexible home loan with all the features above, you can always look for the one that offers the most.