The average home buyers in Malaysia end up paying almost two times the original amount they borrowed from lenders, by the time they finish paying off their mortgage.
Most home buyers are advised to take a loan of 30 years to get a lower monthly repayment amount.
But they do that, they end up paying more for their property.
For example, if they buy a RM500,000 property and take a 30-year loan (after putting a 10 per cent down payment), the total interest payable is RM370,830 based on an interest rate of 4.5 per cent.
This means, after 30 years, the buyer would have paid back RM870,830 for the property.
According to the Financial Consulting Cooperative Ltd (Ficcop) chairman Datuk Ismail Nordin, there were ways to reduce mortgage payments.
Ficcop has introduced a Mortgage Interest Reduction Planning (MRP) programme to help ease home buyers’ financial woes.
The MRP was capable of helping buyers save up to 80 per cent on interest, and at the same time shorten the loan tenure, said Ismail.
Over the next two years, Ficcop aims to collaborate with the top 50 cooperatives in Malaysia, which have almost eight million members combined, to expand the MRP programme.
“Some cooperative members who took loans a long time ago may not be aware that the current interest rate is lower compared with the time they first signed up for the loan.
“They might actually be overpaying the interest rates. Most of them are not aware and do not know how to negotiate with their respective banks for lower rates.
“We can help buyers by talking to their respective banks. That is the role we play. We know the law, the rights of customers, and also the current rate, so we’ll be able to help them,” said Ismail, who was one of the speakers at the NSTP MyRumah Property Showcase held in Johor Baru last month.
Ficcop charges a fee for its services.
Ismail said if the bank rejected them after negotiation, Ficcop would refund the fee.
“We will only charge customers if we manage to get a better deal for them and reduce the period of payment,” he said.