The Three-Number Check tells you whether refinancing a home loan in Malaysia is worth it. Number one: interest left at your current rate. Number two: interest at a new rate over the same remaining years. Number three: the cost of switching. Refinance only if one minus two clearly beats three. Example: RM500,000, 25 years, 4.5% versus 3.9%: about RM50,000 saved before costs.<\/p>\n
You know your home loan instalment to the ringgit. It leaves on the same day every month, somewhere between the Unifi bill and the school van.<\/p>\n
The other number is harder. Not the monthly one: the total. What this loan will cost you in interest, from today to the last payment.<\/p>\n
Most owners couldn’t tell you, and that isn’t carelessness. Nothing in an ordinary month ever shows it. It was in the paperwork you signed years ago, and the paperwork has lived in a drawer since.<\/p>\n
Here’s why it’s worth digging out. Two neighbours on the twelfth floor bought the same layout in the same launch. Today each owes RM500,000, with 25 years to go. 12-05 refinanced last year at 3.9%. 12-03 is still on 4.5%, because nobody rang to say there was anything to do.<\/p>\n
Same lift. Same car park. Same view of the same construction site. Over the next 25 years, 12-03 will pay the bank about RM50,000 more. (These figures are an example. Yours are the point.)<\/p>\n
The question 12-03 never asked is short: what would a new customer pay for my loan today? Most home loan refinancing advice starts with the rate. This starts with the question, and three numbers answer it.<\/p>\n
Find three things on your latest statement or in your banking app: what you still owe, your current rate, and how many years are left.<\/p>\n
Put them into any loan calculator. For 12-03, RM500,000 at 4.5% over 25 years, the instalment is about RM2,779 and the interest still to come is about RM333,700.<\/p>\n
Read that again. On top of the RM500,000, she will pay the bank another two-thirds of it, simply for the 25 years.<\/p>\n
Now run it at the rate a new customer with your income and credit record might be offered. At 3.9% over the same 25 years, the instalment falls to about RM2,612 and the interest to about RM283,500.<\/p>\n
The gap is roughly RM168 a month, or about RM50,250 over the loan: some 18 months of instalments that stay in the family. On a RM500,000 balance, every 0.1 percentage point is worth about RM8,400 over 25 years. Handy to know when a rate is described as “only” a little higher.<\/p>\n
Why would a stranger pay less than you? A floating-rate home loan is a reference rate plus a spread. The reference follows the OPR, for everyone. The spread was fixed on signing day, and it stays put until the loan changes. Since 1 August 2022, new and refinanced loans price off the Standardised Base Rate, which is tied to the OPR; existing loans still reference the older Base Rate or Base Lending Rate (Bank Negara Malaysia<\/a>). iMoney’s explainer on SBR and BR<\/a> walks through the difference.<\/p>\n One warning, because this is where most refinance sums go wrong: keep the years the same. Stretch the new loan to 35 years and the instalment drops by almost RM600 a month, which feels wonderful. The interest climbs to about RM417,000, some RM83,500 more than doing nothing at all. A cheaper rate, a longer road, a bigger bill.<\/p>\n To run your own three numbers, iMoney’s home loan refinance calculator<\/a> is free and lets you set the years yourself. See what banks are offering now: current home loan refinance rates<\/a>.<\/p>\n This is the part the adverts tend to leave out. The bill for switching, roughly in the order it arrives:<\/p>\n Add up number three and divide it by the monthly saving from number two. That’s how many months pass before the new loan starts paying you back. Here’s what the bill does to 12-03’s RM50,000 (all figures illustrative):<\/p>\n<\/span>Number three: what it costs to refinance a home loan in Malaysia<\/span><\/h2>\n
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<\/span>Refinance break-even: when does the RM50,000 become yours?<\/span><\/h2>\n