Most Malaysians heaved a sigh of relief, when the government announced a 6-month moratorium on loan repayments, to help the rakyat cope with the financial impact of the Covid-19 pandemic.
Photo via New Straits Times
However, Noorhaliza Abu Bakar, Deputy Manager of the Financial Education Department at AKPK cautions that there are some bank clauses that you need to be aware of, before accepting the moratorium, especially for home loans.
If it’s a conventional loan, Noorhaliza says the interest will continue to be charged on the outstanding balance comprising of both principal and interest portion, but some banks may decide not to do so.
As for Islamic financing, she says the profit will continue to accrue on the outstanding principal amount but such profit will not be compounded in line with the Syariah principle.
Noorhaliza also says those with financial difficulties, especially, should use this six-month moratorium as an opportunity to get your finances back on track.
“Let’s say your total instalment comprising of housing loan, hire purchase, personal loan is RM1500. So with this moratorium, you’re having RM9000 in 6 months. So with this RM9000 you can either settle one of your loans such as may be your credit card or may be your loan with a non-financial institution.”
Meanwhile, Noorhaliza has this advice on how to keep your finances in order during the moratorium
“In October, what happens to your cash flow? How would you want to manage it? The first important thing we always advise the public is you need to maintain your lifestyle during the Covid pandemic, especially in variable expenses, in managing your personal financial management, your variable expenses… it costs more actually. Based on our pie chart normally your variable expenses consist of 50-60%. So you need to put your needs first rather than your wants.”
But, she suggested this, for those who don’t have a cash flow issue…
“You’re already able to service your loan as usual, you’re financially secured, then you may consider opting out of the deferment programme. Because why…you already said you have emergency funds, you can pay everything in a normal payment, normal instalment. This programme is aimed at those affected by Covid-19. But let’s say you want to take this, you must remember that for your housing loan, you’re actually paying more because of the accrued interest.”
Having said all this make sure you check with your respective banks before taking up the moratorium.
By: Roshini Ravindran