10 October, 2006

Conditional Redrawal- Loan

Whenever you see the REDRAW facility stated in the loan packages, try to ask few questions to the banker to clarify certain thing as it may vary from one to another.

1. How many time of redrawal is allow?
For instance, Public Bank got one loan package which only allow 1 withdrawal per annual.

2. Charge of Redrawal.
Friends, Nothing is free, all administration work will not be free. It imposed certain charge on every redraw! It could be Rm 50 per withdrawal.

3. Limitation of Withdraw Amount
Don't think you can withdraw whatever amount as you like and don't be too naive to tell, because there is your money. No way, since you sign the loan agreement you are bond to it. Understand the amount for withdraw is allow, eg. Public Bank allow minimum Rm 5k per withdraw and subsequent multiple of Rm 1k. So in other word, if your advance payment is only RM 4,500. Then, sorry you don't allow to withdraw that portion of money.

4. Notice of Redraw
Recently, i found Citibank offer a very attractive package as their loan product can allow for whatever amount of withdrawal (advance payment) without any notice and charge. Usually, for those who required to withdraw money are used for emergency, what if you still need to serve 1 week notice or more. It is killing off, right?

5. Commencement of Redraw Facility
Most of the borrowers thought that the redraw facility is implemented upon the signing of loan agreement. Here, to advise you again to read carefully on the book thick agreement note or ask the banker if it is not clear.
For completed property, it should be no problem, but for under construction property, it is always a risk or wrong interpretation that the redraw facility is upon signing of loan agreement. Most of the bank only allow withdrawal upon full release of loan, as for them to earn back their targetted profit because usually they offer a very low interest under construction stage.

Understand better on what you have signed can lead you to a safer position.