Homebuyers consider refinancing to revise their existing loan with more favourable terms. Most often, when interest rates fall, homebuyers would look for refinancing to negotiate a lower interest rate so that they can save money on monthly instalments.

Refinancing is also a great option if homebuyers need additional cash to renovate or upgrade their houses. They can increase the loan amount and adjust the terms accordingly. Alternatively, if a homebuyer’s credit profile improves, they may want to speed up their loan payment. In such cases, loan tenure can be shortened with refinancing.

Thinking Of Refinancing? Here’s What You Should Know About It

Now, more on the Bank Rakyat’s new refinancing package here are all the details.

What is Bank Rakyat Home Financing-i?

To ease the monthly burden of homebuyers, Bank Rakyat came up with this refinancing package, eligible for both completed units and under-constructed properties. Bank Rakyat believes it can benefit homebuyers if they want to make joint applications or need a more favourable way to make their monthly instalment.

Bank Rakyat Home Financing-i has two types of loans under its wing, applicable for both primary and secondary property markets.

1. Bank Rakyat Home Financing-i Manzili Selesa

   This package is suitable for its conventional payment method.

   • Complies with the needs of Islamic banking customers.
   • Government employees can pay their loan instalments via Biro Perkhidmatan.
   • Employees working in private sectors can directly pay from their savings or current account.
   • The loan is capped at a floating profit rate of 10.6%, protecting the borrowers against any interest hikes throughout the loan period.
   • If borrowers pay more than their monthly instalments, the extra portion is carried forward as an advanced payment.

2. Bank Rakyat Manzili Home-I Financing

   This package is for those who want to automate their loan instalment payment.

   • The monthly loan instalment is automatically deducted out of the borrower’s salary through Biro Perkhidmatan if they are a Government employee.
   • Or else, the amount is deducted from the employer’s payroll or savings account.
   • Any excess payment made reduces the loan principal instead of the interest charges.

What do homebuyers find most beneficial about this package?

1. Higher margin of financing

   People can borrow up to 90% of their house purchase price in addition to 5% for Mortgage Reduction Term Takaful (MRTT) insurance. The insurance safeguard’s borrower’s financial concern, relating to the house, against unforeseen circumstances. And the higher margin of finance allows homebuyers to spend less from their pocket on upfront fees.

2. No limit on the financing amount

   If borrowers choose to increase their financing amount, they can do so with this financing package without any cap. As long as they have enough income to cover their monthly instalments and have a good financial standing, Bank Rakyat will grant them the amount they ask for.

3. Flexible financing tenure

   Under Bank Rakyat Home Financing-i, borrowers can extend their tenure up to 35 years or 70 years of age, whichever is earlier. The longer tenure helps them to ease their monthly obligation. This option is especially beneficial for those who foresee an increase in their household income for reasons such as their children starting college or couples expecting a new baby.

4. Cash payout option for renovation or personal use

   Homebuyers often renovate their new home, which in turn does require substantial cash. Or sometimes, they need additional cash to support extra costs at home similar to the ones described above. In such instances, Bank Rakyat’s cash pay-out option can be used to cover the cost.

5. All financing consolidated under one roof

   People who own more than one home have to manage multiple loans simultaneously. With Bank Rakyat’s refinancing package, they can put all the loan obligations under one roof for easy management. The bank believes this helps their clients to keep track of their commitments, pay their dues on time, and settle their obligation faster.

In hindsight, the Bank Rakyat refinancing package has one of the longest lock-in periods of 5 years. Plus, if borrowers wish to settle their loan early or repay the full amount before 5 years, they are subject to a 5% penalty fee. Hence, borrowers choosing this product should weigh their options to maximise their refinancing outcome.