Property has always been touted as a long-term investment, for good reason. The right property can gain appreciation over the years, bring greater returns than most other financial investments. Or, you can just buy a property to stay in to make sure you have a roof over your head in your remaining years.
No, this is not a post to tell you to invest in property. Or what property to invest in. I’m not a real estate agent, so I am not in the best position to tell you!
I’m sharing this from the perspective of a property buyer.
Why we need to know our monthly mortgage
If you are just regular mortal like me who does not have gold coins in a vault to roll in like Uncle Scrooge McDuck, then you’d have to purchase property just like how the rest of us do – take out a bank loan to make the monthly payments.
In fact, making the monthly payments is probably the biggest concern. I mean, sure we have to make the downpayment, which in Malaysia is 10-30% depending on how properties you already currently have (yup, that’s a Bank Negara Malaysia thing), or even higher if you are a foreigner. But before the title is put in your name, you would have to complete the payment of the downpayment anyway. However, once the title is in your name, it does not mean it is yours. Failure to make mortgage payments will subject you to your house getting repossessed to cover the loan amount – leaving you with no property in spite of a lot of money paid, a bad credit score, and possibly still have a huge debt to pay if the bank sale of the property still does not cover the loan amount.
Stressful! Right? And that is why we need to know how much our monthly mortgage is, so that we can determine if we can make the payment, whether from our monthly income or from rental.
Figuring out the monthly mortgage
One of the things I found frustrating when I was purchasing my first property was trying to figure out the monthly mortgage. I didn’t know how long a term I should take and if I could make the payments. The thing about mortgage is that the longer the term, the greater interest we have to pay. And let’s be honest – we don’t want to pay more than we need to. If I could, I would choose the shortest term at the monthly mortgage rate I could afford.
But my experience with the bank showed that they have no desire to be transparent. Why? Because they want to milk as much interest as possible from their customers. When I tried asking for various term options from the banker to compare the payments, they just threw a lot of numbers at me without much explanation.
In the end I just picked what looked like something I could afford from the available options. There might have been a better term option, but if there was, I did not know of it.
Mortgage Calculator to the rescue!
Sigh… if only. No, there were no mortgage calculators I knew of back then.
Today there are more tools available online than before… and that include a mortgage calculator.
Granted, this mortgage calculator seems to be based in United Kingdom because the currency is in £, but trust me, this calculator actually works for everyone. Just key in the numerical values, ignore the pound symbol, and it will still work for you regardless of the currency.
Give it a whirl here! FYI the current Malaysian base lending rate (BLR) is 3.44%.
Powered by Mortgage Calculator UK widget
They do have a whole bunch of other calculators related to loans as well, but I don’t know enough about that to talk about it, but you might find it helpful. (I browsed, I looked, I clicked, I got lost. Hopefully you do a better job than me). Check them out here: https://www.mortgagecalculator.uk/
Oh, Mortgage Calculator, where have you been all my life?