Bank Housing Loan facts

Was reading 3 housing loan plans yeste. And here are some of the interesting things i found out.

1.) Interest rates of housing loan, is set by bank itself. And the bank reserve the right to change these rates as they wish. (Currently, most banks are set at 4% to 4.5%)

2.) If the loan is for 10 years, u have to pay the said amount for 10 yrs. Any early payment will result in 1.5% of the repayment amount if it falls in the penalty period.

3.) Bank will required u to buy insurance from them in order to grant u the loan.

There are many more to the contracts. But i think the above mentioned is more or less the more important ones. I mean, if one is looking for a housing loan, obviously one will chose the lowest interest rate and most flexible one. But unfortunately, none of the banks really have that. Some offer 1.6% less for 1st year, 1.2% less for 2nd year and 0.9% for 3rd year etc so that the interest will be ard 3.5% instead of 4%.


Now comes the interesting part. If a house cost a mil, paying it over 10 yrs wif 4% will cost u $40k more, and if say u loan fully for 10 yrs - ard $9k per month. If u sign up for loan, and cancel it, u have to pay 1.5% = $15k. And if payment finished within 3 yrs, the amount u clear will be multiply by 1.5% too. Loan shark la. No wonder banks can open so many branch and keep expanding. Juz look at the ppl paying them.