STANDARDISING and simplifying housing loan documents is a step of progress. Kudos to Pemudah (Special Taskforce to help business), Bank Negara and the Association of Banks in Malaysia (ABM). It shall be a great move to reign in the rogue banks, finance institutions (FIs) and development finance institutions (DFIs). The National House Buyers Association (HBA) views the recent standardisation of loan contracts for housing loans below RM500,000 positively. For quite some time, HBA has been phoning for greater security for house purchasers when they obtain developers as well as for borrowers when taking a casing loan.
As a typical housing loan varies between 20 and 30 years, debtors are stuck with the conditions and conditions (T&Cs) of the housing loan for a long period. They are filled with legal terms and jargon that even borrowers with a legislation level will still need their legal dictionary for guide. For debtors who are law-savvy Even, the loan agreement is a one-way traffic; the debtor must acknowledge all the T&Cs or find another loan company, as the banks shall not vary any T&Cs. However, the scenario is the same for all those banks and borrowers are in their mercy.
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HBA has been urging banks in Malaysia to be fair and clear in their dealing with debtors. Hence, credit must get to “participating banks” for finally agreeing to adopt a standardised template for casing loans with simplified language which is simple for the layman to understand. HBA demands the RM500,000 limit for the Standardised Loan Agreement to be removed.
This contract should be applicable for all housing loans regardless of the amount, as the type of the housing loan is the same. Already, most landed properties in areas such as Puchong and Kota Damansara are more than RM500,000. Even strata-properties in locations such as Bandar Utama, Ara Damansara are more than RM500 already,000.
Why not extend the coverage to all or any housing loans by itself? Any difficulty . the standardised loan agreement has been used by certain participating banks on a voluntarily basis and not all commercial banks which hand out housing loans are adopting this agreement. How come this the full case? Bank Negara should compel all commercial banks to look at this standardised agreement.
In addition, non-banking Institutions that give out casing loans, such as DFIs, insurance companies must be compelled to adopt the contract also. Why shouldn’t the house buyers offered similar protection here? Non-members of ABM such as DFIs include Bank Islam, Bank Muamalat, Bank Rakyat, Agro Bank, Bank Industri, Bank Simpanan Nasional and EXIM Bank that are formulated under their particular legislations.
Certain banks presently impose unneeded fees and charges on borrowers when they request for bank statements which are needed when sthey want to negotiate/refinance their casing loans, or when coming up with EPF withdrawals to lessen their housing loans. While the fees of up to RM50 may not seem much to some people, it still is an exorbitant amount as it cost banking institutions next to nothing to produce such statements. Moreover, it’s the borrowers’ right to settle/refinance the loan and/or to make EPF withdrawals to reduce their loans. A lender statement showing the principal sum outstanding is required to help such transactions.