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True
Partial Prepayment
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Usually, the housing loan payment is the single biggest expense in a family's budget and most of us are intended to payoff the mortgage loan as early as possible by Partial Prepayment. There are many way of Partial Prepayment such as withdrawal from
retired fund (such as EPF), personal saving, annual bonus, etc. Theoretically, you could, but this doesn't really work if you never carry out it correctly and waste thousand of extra dollars in interest to your mortgage or loan lender.
Many will ask: "If this is true, then how to carry out the Partial Prepayment
correctly?"
Firstly, let me show you where your monthly payment go after you have served your mortgage loan for the period stated. On a typical RM100,000 mortgage loan for 25 years repayment with 7% interest rate monthly compounding, the monthly
repayment is RM706.78.
Do you know that...
?
After paying 120 repayments (10 years), you will STILL OWE 78% of the RM100,000 you borrowed?
? 9;
After paying 180 repayments (15 years), you will STILL OWE
60% of the RM100,000 you borrowed?
? 9;
Your total interest pay for the RM100,000 you originally borrowed is RM112,033.06?
Table 1: A Typical Loan Type Personalized Amortization Schedule
|
No |
Payment |
Interest |
Principal |
Balance |
|
120 |
84,813.60 |
63,446.77 |
21,366.83(21%) |
78,633.17(78%) |
|
180 |
127,220.40 |
88,092.33 |
39,128.07 (39%) |
60,871.03(60%) |
|
300 |
212,033.06 |
112,033.06 |
100,000.00 (100%) |
NA |
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As refer to Table 1, if you never make any Partial Prepayment
for the mortgage loan, you are required to pay at least
RM112,033.06 of interest to your mortgage lender.
If you intended to save your mortgage interest and payoff the
mortgage loan as early as possible, you need to carry out
Partial Prepayment for your mortgage loan.
However, if you do not know the correct way of Partial
Prepayment, you could end up waste thousands of dollars in
interests to the mortgage lender. In order to better understand
which is the correct way of Partial Prepayment, please
check on
Big Savings for House Owner. |
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