Thursday, November 4, 2010

New rule from Bank Negara to cool property market, on loan for 3rd house.

New rules to cool property speculation

国行:即日起生效 第三房贷顶限70% 


Lets analyse this.

If you are buying 3rd house with loan, you may be caught by the LTV (Loan-To-Value) of 70%.

Example:
Seller asking for RM105
Final agreed price RM100
However, bank's valuer give only RM90
Based on LTV of 70%, max loan you can if only RM63
Therefore, you still need to pay cash upfront of RM37 (effectively 37% on the Purchase Price)

Can a potential speculator (aggressive property investor) overcome this issue?

Mortgages For Dummies, 3rd Edition

Home Buying For Dummies, 4th Edition

Reverse Mortgages For Dummies