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Competitive home loan rates, along with innovative schemes by developers to make home ownership easier means there’s no better time than the present to buy a property. Maybank Bhd Head of Mortgage Abdullah Abdul Rahman points out that it’s also a good time to refinance one’s property because by refinancing, one can get ‘extra’ cash by taking advantage of the rising value of one’s property to obtain a larger loan amount.
While the low interest rate environment spells good news for the homeowner and prospective homebuyer, Abdullah admits that the past year has been challenging. “Interest rates were on a downtrend which has significantly reduced profit levels. On top of this consumer cash flow was negatively impacted and several methods were employed to ease our existing borrowers’ cash flow for example reduction of monthly installment and extending their loan tenure,” he adds.
Besides the low interest rates, the financial institution has also to contend with the stiff competition among home loan providers. He discloses that despite the tougher environment the take-up for Maybank’s MaxiHome loans has been “fair”.
“Maybank’s objective has never been to be the market leader where low rates are concerned. Instead, we try to focus on other aspects of our home loans such as the product features, flexibility and delivery system. We also target high net worth customers with properties in prime locations that assure asset quality and minimal risk of defaults. 
“Our objective is not to rely on interest rates alone to secure the loan. Our focus is to improve our level of service, efficiency and delivery system, ensuring fast approval and faster loan disbursements thereby making both our borrowers and developers happy and satisfied,” he says adding that ultimately the bank targets to approve loans within 24 hours.
To put these strengths across to the potential borrower, in November 2008 Maybank unveiled its tagline for its MaxiHome loans: “Mortgage Made Easy”. “It means that the customer can enjoy greater flexibility on his mortgage and with the flexibility, better cash flow and therefore, his mortgage under MaxiHome becomes easier to manage,” adds Abdullah.
Underscoring the flexibility aspect of its home loans are the six different payment options; among them pay half — where the borrower has the option to pay up to half of the principal loan sum at the end of the loan tenure via Employees Provident Fund or second generation loan; pay less — with the option to service only the interest portion for the first five years of the loan and thus enjoy a longer loan tenure; and pay later — with the option to have zero payment during the progressive release period and only commence repayments when the property is fully completed.
Maybank also offers other home loan packages such as Maxihome-i, the syariah based proposition based on the Variable Rate Financing Scheme.
Why consider refinancing
Homeowners who enjoy the flexibility of managing their cash flow should also look at refinancing. While the primary reason for refinancing is to reduce the monthly repayments and/or loan tenure, Abdullah says an important and often overlooked reason for considering refinancing is to consolidate one’s debts and deposits for better cash flow management.
“Refinancing can be one of your first steps towards spring cleaning your financial state of affairs.
You may want to lower monthly repayments to set aside money for your use or to save in an investment product every month. If you think interest rates may rise, you may want to refinance to a fixed rate loan. Another reason for refinancing, particularly if your home has increased substantially in value is to tap into your home equity for additional funds for emergency and other ventures,” he says.
He points out that many financiers now offer zero moving cost; which means that one need not pay to move the loan over to the new financier. All fees and charges normally incurred in the execution of new loan documents are borne by the new financier.
However, he notes that many borrowers are complacent with their current loan or they wait till their lock-in period expires before thinking about refinancing. (Usually there is a lock-in period of three to five years whereby if you settle your home loan within the lock-in period, you will be penalised for doing so.) But if the amount of interest saved by refinancing can recover the lock-in period penalty and when there are more attractive refinancing package available in the market, then it’s worthwhile considering refinancing.
“Factors to look out for are zero moving costs or zero refinancing costs packages. Also look for a flexible product that allows you to make additional prepayments and redraw any repayments throughout the life of the loan. If lowering monthly repayments is your aim for refinancing, look out for products that offer a longer loan tenure thus by stretching out the repayments, monthly installments are lower. This is an attractive option if you intend to stay in your home for a long time.
“Whatever your reason, it pays to shop around for the best loan product to refinance your current home loan,” he adds.
More information on MaxiHome is available at Maybank branches nationwide, contact our call centre at 1 300 88 6688 or log on to www.maybank2u.com
This article appeared in Luxury Living, the special focus pullout of The Edge Malaysia, Issue 782, Nov 23-29, 2009.
