Comparing a 6.37% five-year mortgage quote in Kuala Lumpur

K

knitsAndPlan

Property investor
Established
The fees changed my view of the quote more than the headline rate did. I am looking at a Kuala Lumpur property priced at about MYR 3,384,000, with one lender offering 6.37% fixed for five years, but the actual cost varies with the borrowing tier and charges.

The possibility of refinancing later is being presented as a benefit, yet I do not want affordability to rely on being approved for a new loan in year five. My comparison currently includes cash paid over the fixed term, the balance remaining at the end, and any cost attached to early repayment or moving the loan.

Is that more useful than relying on APR alone? I would also like to know how others test the payment after the fixed period and account for fees that increase the amount borrowed.
 
I’d compare total cash paid over the same five-year period, plus the remaining loan balance at the end. That catches both fees and differences in how quickly principal is repaid. APR can be useful, but only if every lender calculates it on the same assumptions and includes the same charges.
 
A larger deposit reduces the LTV but ties up more cash. A smaller one preserves liquidity but may leave you with a worse rate and a less comfortable monthly payment.

To connect that with the five-year comparison, what loan amount and full repayment term are you considering? Run both deposit options through the same schedule and compare the instalments, total cash outlay and balance left after year five. It is also worth separating charges due at closing from any fee rolled into the borrowing, because the latter continues to attract interest.
 
I wouldn’t automatically use five years as the comparison period. If you might sell in three years, early-repayment costs matter more; if you expect to stay much longer, the post-fix rate matters more. Ask what happens after year five and how that rate is determined. Otherwise the attractive-looking fixed period is only half the quote.
 
Monthly affordability deserves its own test rather than being buried inside total cost. Work out whether the 6.37% payment is comfortable after normal ownership expenses, then model a higher payment after the fixed period. If that only works after a hoped-for refinance, the loan is already relying on the assumption you want to avoid.
 
I’d build three exit cases: repay or sell early, keep the mortgage through all five fixed years, and continue beyond the reset. Put every arrangement charge, early-repayment amount and fee-financing cost into the relevant case. One lender may be cheaper over five years but noticeably worse if your plans change in year two.
 
Portability also needs more detail than a yes/no answer. Does it merely allow a request to transfer the loan, or are there conditions tied to the replacement property, timing and a fresh affordability assessment? Those details could make it less dependable than it first appears.
 
That said, I wouldn’t pay a large premium solely for portability unless moving during the fixed period is a realistic possibility. Flexibility has value, but so does keeping the upfront cash requirement manageable. Compare the portable and non-portable offers as separate cash-flow scenarios.
 
The missing LTV is still the key issue. Since the advertised rate changed at your tier, ask lenders to quote on exactly the same loan amount, term and fee treatment. Otherwise you may be comparing a low headline rate from one tier with the actual all-in offer from another.
 
My shortlist would show five figures for each lender: upfront cash, monthly payment, total paid by year five, balance remaining at year five, and cost of leaving early at a couple of realistic dates. Then add the post-fix rate mechanism separately. That should expose whether 6.37% is genuinely competitive without assuming refinancing will rescue it.
 
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