BLR Usage

When LOW

Benefits: Lower Interest Rate, Faster Payback or Settlement

Temptations: Extra Cash, Lower Payment Installment, Longer Period Pay Back (optional)


BLR UP when economy is good, a normal loan will take longer with extra more than 6 months installments.

BLR DOWN when economy is bad, a lower rate is offer, faster settlement with following calculations.

* MAYBANK, CIMB, has reduced its BLR by 25 basis points from 6.75% to 6.5% effective Dec 1. 2008

* You must break the initial plan in order to refinance for the lower rate.


 

Assume BLR = 6.75%, Loan Amount RM200,000, Term 25 years

Plan A [ Initial Purchase Plan ]

BLR + 1.5% = 8.25%

Principle                               = RM200,000.00

Interest                                = RM273,070.80

Total                                     =  RM473,070.80

Monthly Payment              => RM1,576.90

 

Plan B [ Refinance Offer ]

If a better plan, BLR - 1.90% = 4.85%

Principle                               = RM200,000.00

Interest                                = RM145,530.43

Total                                     =  RM345,530.43

Monthly Payment              => RM1,151.76

Saves RM127,540.37 on Interest if compare to Plan A

 

Plan B + Extra Payment [ Refinance Offer + Your Extra Payment Decision ]

If a better plan, BLR - 1.90%, maintain monthly installment amount Plan A

Therefore RM1,151.76 + extra payment RM425.14 = RM1576.90 monthly payment.

Saves RM64,556 on Interest if compare to Plan B

Saves 10 years + 2 months = Term 14 years 10 months settled.

 

Comparing Plan A with Plan B + Extra Payment, Difference of Interest 3.4% (8.25% - 4.85%)

Saves RM192,096 on Interest

Term 14 years 10 months settled from 25 years

 

* Home Loan Calculator :

http://www.ambg.com.my/personal/financialtools/homefinancing.asp