In my previous blog post, I already discussed the Do’s and Don’ts of Getting a Mortgage in Malaysia.Now we are going to discuss how long should a mortgage loan be? A mortgage loan is perhaps the biggest and the longest loan you’d ever take in your life. The amount could likely go up to the million mark, and you could easily be burdened by it for at least 15 years and at most 30 years.
In a nutshell, it could practically see your family grow before you finally settle the loan and be off with it forever. You might actually pay it off just in time to get another one for your retirement home.
That is why it is very important to weigh in on the different affecting factors before signing up for a mortgage loan. After all, it is something that will burden you for a very, very long time for a dream house like one from La Grande Kiara so it should at least be something that you’d be comfortable carrying around.
Things to consider!
Apart from the price and interest rates of the loan, one of the biggest and prime factors of the mortgage in Malaysia is the term or length of time you’d have carry this loan. Much of the decision is shared between you and your Malaysian mortgage lender, decided on many factors of course. For the part that you can control, here are the factors that you have to consider before deciding on how long you choose to endure your financial obligation with the mortgage lender:
• Price of the home. The more expensive the home, the more likely it is to take longer. It does not take a genius to know that you have to purchase something that you can afford – especially in the long run.
• Interest rates. You can choose between the fixed and the variable interest rate. This is the amount of interest that you would have to pay for as long as you’re paying for your mortgage so you have to be comfortable with the interest rates setup because, like I said earlier, that would go on for as long as you are paying.
• Monthly mortgage fees. Like the interest rates, this is something that would remain for as long as your loan has not yet been paid in full. It should be something that you would be comfortable and capable of paying today and in the foreseeable future. A lot of other external factors may affect this amount but it would remain within the same bracket (except maybe in extreme changes in the financial situation, i.e. inflation and recession).
• Your projected capacity to pay. How old you are, how well your business is going in the Malaysian market, and however way you can see yourself earning money over the coming years should factor in when deciding for the length of your loan. If you take your loan too long, you may become too old to work and earn for your mortgage.
• Current financial capacity and the amount of down payment. If the mortgage lender sees that you are capable of making some huge amount of money over as DP, they may allow you a more comfortable term and rate for your loan.
Also, before making a decision, make it a point to ask your mortgage lender your options as far as ending your loan contract prior to term maturity is concerned.