The cash-out amount can be used as business capital, house renovation cost, children’s education fund, or even to buy another property, he says. So now you can use the property as collateral to apply for a new mortgage from another bank to settle the RM200,000 balance and obtain a cash-out amount of up to RM600,000.” The loan has been paid down to RM200,000 today and the value of the property has gone up to RM800,000. Second, the appreciation in the value of your property, or both factors,” U elaborates.įinancial Group wealth adviser head (mortgage division) Ken Liew cites an example: “Let’s say you got a property loan of RM500,000 20 years ago. First, the amount of principal that you have paid down over the years, which is, using the above example, the RM100,000. If there is a need for extra cash, the borrower could actually seek a higher refinancing amount, subject to meeting the new financier’s margin of financing requirement, U adds. The maximum loan tenure of the new mortgage could be up to 35 years, or when the borrower is 70 years old, whichever is earlier. The new loan of RM200,000 will be used to pay off the original loan with Bank A. The borrower could consider refinancing the mortgage by taking a new mortgage from Bank B for the remaining RM200,000. The original loan amount of RM300,000 has been paid down to RM200,000. However, if you have a property under a mortgage for some years, you can actually make use of the property’s increased market value to apply for a new loan from banks.Ĭalled mortgage refinancing, the new mortgage will be used to pay off or redeem the existing mortgage in the process, using the property as collateral, explains RHB Banking Group head of group retail banking U Chen Hock.įor example, let’s say a borrower’s existing mortgage has been with Bank A for 10 years, with a remaining tenure of 15 years. IF you need a loan to finance your property purchase, or for business investment or children’s education, you may be put off by the current tight lending environment.
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