Just My Money Journey, Honey

Home ownership plan in Malaysia

Malaysia’s BLR (base lending rate) currently is 6.60%, one of the highest in recent years. Back in 2009 it was only 5.55%.

I’m ralking about BLR because it hugely ridiculous how that small percentage can affect how much and how long you pay off your mortgage. Banks in Malaysia usually offers vastly varied home ownership loan packages. The interest ranges, and it usually looks like this -> [BLR - (minus) 1.8*]

*the higher the better, explained below.

So for example you’re buying a house in a high BLR year like this one (6.60%). Your interest is actually 6.60 minus 1.8 (example) which is 4.80%. This means that ideally, YOU’D WANT A LOW BLR AND A HIGH MINUS NUMBER. I can’t remember source now but I can recall a property forum telling people that a year back you can get BLR minus (up to) 2.5 which is freaking AMAZING.

(Last year’s BLR was 6.30% if not mistaken. 6.30-2.5 is a mere 4.05% interest rate!!)

To put that in perspective, to purchase a Rm100,000 home in 30-year mortgage with a 4.80% interest rate is Rm188,879.71.

Where as the same valued home with a mortgage of 4.05% is only Rm172,909.43.

That’s about Rm16,000, or roughly 32 MONTHS of monthly mortgage payments you don’t have to
do, assuming you pay the same amount monthly!

(I’m using the home loan calculator app to get this figure, feel free to try yourself)

Conclusion? Wait until the BLR drops. Historically it will. After all, the highest BLR in Malaysia was 12point something percent (!!) back in 1998.