When does the bank start counting the 1st year?

[hyenergix]

Hi All, I just bought a private property that is yet to be constructed. The bank states that the first year interest rate is 1.5%. As the developer hasn't asked for money since the work is not started, I'm not sure when the bank starts counting the '1st' year. Appreciate your comments, thanks.

[cher]

Hi All, I just bought a private property that is yet to be constructed. The bank states that the first year interest rate is 1.5%. As the developer hasn't asked for money since the work is not started, I'm not sure when the bank starts counting the '1st' year. Appreciate your comments, thanks.

First year will start counting from the day the bank makes the first disbursement.

[hyenergix]

Thanks for the fast reply.

[jencrs]

First year will start counting from the day the bank makes the first disbursement.Not necessarily. Eg. I believe DBS has packages where the 1st yr starts 3 mths from the time you sign for the loan, regardless of when's the 1st disbursement. Best to check with the loan officer who serviced you.

[hyenergix]

The starting day from date of disbursement is also what I heard from the loan officer, but the contract is too thick and after reading I still cannot find the clause. By the way, I borrow from Maybank.

[jencrs]

Go call n confirm again if u not sure lor. Everyone here give u opinions also won't change what's in ur contract.

[proud owner]

Not necessarily. Eg. I believe DBS has packages where the 1st yr starts 3 mths from the time you sign for the loan, regardless of when's the 1st disbursement. Best to check with the loan officer who serviced you.


huh got such thing ? thats worse than loan shark ...

never 'lend' yet and can charge interest ?

if true i sure complain to MAS ...

[eoc]

It is true, it depends on the clause.

I was going to take a loan from Maybank which claimed to be 1% fix the first year and increase for the second year and become even worst the third year and I am locked for 3 years. My property is not TOP until 1.5 years, so I asked the officer to explain the details.

By the time my property is TOP and the money is disbursed, I am no longer enjoying the 1%, but I would be still locked for 3 years after disbursement.

Needless to say I did not take that loan.

[Komo]

Not necessarily. Eg. I believe DBS has packages where the 1st yr starts 3 mths from the time you sign for the loan, regardless of when's the 1st disbursement. Best to check with the loan officer who serviced you.
that applies for resale property. u/c only starts from first disbursement.:)

[eoc]

that applies for resale property. u/c only starts from first disbursement.:)

Again, it depends on the loan package,

Below is my mail to the loan officer after I received the offer.


Hi xxxx,

Thank you for the offer,

however I am afraid we won't be able to sign it, I explain to you the reasons below:

1) Please take a look at point 1.d

The interest rate for the banking facilities is said to start on the "Effective Date", this effective date is defined in paragraph 4, page 2, as

i) 3 Months from the acceptance of the letter, or

ii) The date of the first withdrawn, whichever is earlier.

In our particular case, the TOP will be in December 2010 (October if we are lucky), so based on this clause, at the time of disbursement (TOP) we would be paying 2.6% already and we would be six months away to start paying 2.9.

2) Please take a look now at point 1g

The penalty period shall expire 3 years from the date of the first withdraw.

Which means that, after TOP, we will pay 2.6% for half a year, then 2.9% for a year and then we would be tight to a floating rate which is not very attractive for the next year and a half, before the penalty period expires.

I am sorry xxxx, but unless the "Effective date" kicks in from the date of the first withdraw, which would be end of 2010 (and not from 3 months of the acceptance of the offer), we won't be able to sing the letter.

Just to give you some feedback on why it does not make sense to us.

Many thanks for your help and time xxxx,

I am sorry we cannot materialize this.

Best Regards

[Komo]

my apology...so your case does not fall into the normal payment scheme, but a customised one, which should be open for negotiation. Shop around and apply your negotiation skill! I believe some loan officer may be more keen to close the deal with you (so can earn some commission) and willing to give in. All the best !

[Drez]

Hi Hyenergix, usually the first day of the facility starts on the first draw down/ disbursement. What package has the loan officer offered you? SB3? SBC? Customized package? Check with your loan officer if there's any loans package that allows you to increase your principle repayment as well as SMR(Smart Mortgage) packages. According to the rates you have supported here it doesn't makes sense. Lockdown period for most banks is 3 years. From what i know, usually banks offer declining/attractive rates during the lockdown period.

Do you intend to refinance after TOP? I suggest you pay attention to the "Subsidies" and "Partial Repayment and Fully Repayment" sections in the Letter of Offer.

[hyenergix]

I took up from Maybank. Lock in period is 5 years! Interest rate is 1.5% first year, 2% 2nd year, 2.25% 3rd year, and 2.5% for 4th and 5th year. I think interest may go up around 2nd half of 2011 onwards, and just a few years ago I think interest was 4%+, so I opted for this lor. Can pay down 20% within the 5 years. Can refinance free after 5 years. If the interest only start from the first disbursement around end of this year, then I will have more breathing space. Hopefully my decision is correct.