BANK NEGARA PRESS RELEASED: New Measures on Credit Cards to Promote Prudent Financial Management and Responsible Business Practices

Bank Negara Malaysia wishes to announce new measures on credit cards in continuous efforts to inculcate sound financial and debt management among credit card users. These measures are also aimed to promote fair and responsible business practices by credit card issuers with further enhancements in the cards security infrastructure. With immediate effect, the eligibility requirements for credit cards are revised as follows:

• The minimum income eligibility for new credit card holders is set at RM24,000 per annum;  For cardholders earning RM36,000 per annum and less, the following would be applicable:
• Cardholders can only hold credit cards from a maximum of two issuers.
• Existing cardholders who currently hold credit cards from more than two issuers are given up to the end of 2011 to select their preferred issuers. Cardholders will also be given at least two years to service their outstanding credit card debt for the credit cards that have been cancelled for the purpose of meeting this requirement.
• The maximum credit limit extended to a cardholder shall not exceed two times their monthly income per issuer.
• For existing cardholders, whose credit card outstanding balance exceeds the maximum credit limit, a grace period of two years will be given to them to meet with the new requirement.

Card issuers will engage with the affected cardholders to assist them in restructuring their repayments to facilitate the smooth implementation of this measure. In addition, cardholders can also seek the assistance of Agensi Kaunseling dan Pengurusan Kredit (AKPK) for advice on their debt management.

Responsible Business Practices in Provision of Credit Cards

Credit card issuers are required to adopt fair, transparent and responsible approach in marketing and offering of credit cards to consumers. Issuers are not allowed to increase cardholders' credit limit without obtaining their consent. Issuers are also not allowed to offer a credit advance in the form of cheque payable to the cardholders unless the cardholders have requested for the credit advance.

To facilitate consumers in making comparison and informed decisions, card issuers are required to provide a Product Disclosure Sheet that contains key information on the card's features, fees and obligations of the cardholders. Issuers are also required to display prominently alerts to communicate to cardholders the implications of meeting only minimum and partial repayments. At the end of each year, customised information on how long it will take to fully pay off the cardholder's outstanding balance and the total interest costs if the cardholder only makes minimum repayment will be issued to each cardholder. This will be effective for annual statements issued from December 2011.

Further Enhancements to Credit Card Infrastructure Security

In the effort to further enhance credit card security and to promote public confidence in the usage of credit cards as a safe payment instrument, effective 1 January 2012, transaction alerts via Short Messaging Service (SMS) will be implemented by card issuers for their cardholders after transactions are performed. This will be followed by the implementation of the Personal Identification Number (PIN) verification for all card transactions from 1 January 2015 onwards.

For further information on the new credit card guidelines, members of the public can contact ABM Connect at 1-300-88-9980, the contact centres of their respective card issuers and Bank Negara Malaysia's Telelink at 1-300-88-5465.

Bank Negara Malaysia

18 March 2011

Belaian Bayu Market Value....Is it True???

Last week there were a young couple and real state agent viewed the unit next to mine. They seem very interested to buy the house...

ME : What is your selling price?

AGENT: RM210 000

Wow!! That is a huge number. Last 2 years I bought my unit only at the price of RM151 000.

ME: Is it negotiable?

AGENT: A bit..

ME: Why the price is sky high???

AGENT: Maybe because the neighbourhood is matured and the public amenities is nearby. Esspecially the new carefour at sek23.

ME: Yes...it make sense.. How much the bank value the house.

AGENT: Around RM215 000..

ME: Wow again.......hahahah... 90% of it buyer will get a loan for RM 193500..Not inclusive MRTA and legel fees...

Thanks to Allah... Me and wife make a wise decision to buy the apartment. Hopefully the price will continue to rise and hit RM250 000.

T. Harv Eker’s JARS Money Management System

There are a lot of tools or methods out there to assist me on managing my money. I am interested to implement 6 JARS of Money Management System which I found is very useful . Anyone can start using this JARS method of managing their money even though if you think you do not have a lot of money to manage. The key is to develop a habit of managing your money, but not how much money you have available for you to manage. One must get into the habit of managing their own money, and you can start with as low as $1 to begin using this system.

Below are the recipes and ingrediants to prepare my JARS.
*Financial Freedom Account (FFA) = 10%

*Long Term Savings For Spending (LTSS) = 10%

*Education (EDUC) = 10%

*Necessities (NEC) =55%

*Play = 10%

*Give = 5%

Here are how the JARS system works:

*Financial Freedom Account (10%)

Put 10% into your FFA whenever you receive money, such as your salary. You must NEVER, NEVER spend the money that you put inside your FFA account. Any money inside the FFA account can only be used to purchase or acquire passive income streams to grow your money. You may spend the interest acquired from the FFA if you choose to, although it is recommended that you do not. Keep the interest inside the FFA to grow your capital and interest faster. Think of your FFA as the golden mother goose that lays you golden eggs, if you spend the money inside the FFA, it is akin to killing your mother goose that will bring you golden eggs (your riches). Instead, keep the baby geese (FFA’s interest) that the mother goose is giving you, and you can grow more baby geese (your wealth) even faster. As you may already get it, the idea is to create a golden goose! You may prefer to think of the FFA as a legacy that you can leave behind for your future generations. If you are one who believes in the law of attraction, this FFA is actually your money magnet. Keep putting more money into your FFA and attract more $$$ into your life! Put $$$ into your FFA account everyday if you can, even if it is just a penny.

In summary, the time to spend your FFA capital is NEVER! When you stop working, you get to spend the eggs but never the goose!

*Long Term Savings For Spending (10%) 

Put 10% into your LTSS whenever you receive money, such as your salary. The money inside LTSS can be used for major expenditure such as savings for your children’s education, buying a house for yourself, keeping aside contingency funds.

*Education (10%)

Put 10% into your EDUC whenever you receive money, such as your salary. You can use the EDUC funds for your self-education, for examples, books, seminars and events etc. Everyone needs to learn, especially in this changing world. Grow your comfort zone through learning and doing. If you are not growing, you are dying!

Take this quote from Ben Franklin: “If you think education is expensive, try ignorance!”

*Necessities (55%)

Put 55% into your NEC whenever you receive money, such as your salary. You should use the funds inside your Necessities account to settle all your essential bills such as phone bills, electricity, clothings, eating, driving, travelling, hair etc. If you cannot survive on 55%, simplify your lifestyle. Instead of driving a car, perhaps you can take public transport, or drive a Honda instead of a BMW. Buy Converse jeans instead of Armani. There are people who cannot live on 55% NEC when they started the JARS system but over time, these same group of people are able to simplify their lives and live on 50% or lesser!

When your usual needs for instant gratification kicks in, think this: “Wealthy people think Long term. Poor people think Short term.”

*Play (10%)

Put 10% into your Play account whenever you receive money, such as your salary. You are supposed to spend this money every month to pamper yourself. The key is to BLOW this Play money away every month so that you will feel good about having money and spending it! You should feel guilt-free when you spend this money every single month. Maybe you go for massages once every month, now you can use this money to really pamper yourself by going twice, thrice or as much as you want. Or you can try ordering champagne during dinner at a restaurant if you do not usually do. Or buy yourself a new gadget. Anything outrageous that you can do to pamper yourself and makes you feel really good. You are recommended to BLOW this money every month. However, if you need to save up for things such as short trips getaways that require a little more money, you can accumulate them up to a few months, say a quarter, before you use them.

*Give (5%)

Put 5% into your Give account whenever you receive money, such as your salary. You can use the money for donations to charities, use it to help someone in need. Giving is important. If you choose to give 10%, take the extra 5% from your NEC and change the % allocated for NEC from 55% to 50%.

P/S: For more info click this link http://secretsofachievers.com/financial-success/t-harv-ekers-jars-money-management-system/

Refinance Your House??? When Is The Best Time To Do It???

This knowledge sharing was given by Milan Doshi in his best-selling book “How You Can Become a Multi-Millionaire Real Estate Investor!”, The main objective for a property investor refinance their house is to gain their downpayment that they invest earlier. That large amount of money will be beneficial for the next property downpayment and others.

From my point of view, this method is a valuable tool esspecially for small time investor (Gaji Ciput) like me. In order to sustain in property investing I need a pile of money for:

1) Downpayment (Currently LTV only covered 70% for 3rd and onwards property I wish to purchase)

2) Legal Fees (So far Rafida Razak gave the chepest rate, if interested contact me for referal)

3) Repairing works (Only purchase a house which required minor repairing works)

4) Hidden cost that I failed to anticipate ( My bad...poor forecasting)

If you are property speculator, I dont think you will adopt this method.. The reason?? Refer to my previous post -----http://firkhld.blogspot.com/2010/11/who-are-you-property-speculator-or.html. Unlike other returns like Rental Yield, Capital Appreciation, etc., it’s not possible to come up with a number or do an “apple-to-apple” comparison against other investments.

Case Study For Reference

1) Purchase Price = RM116,000 (Sub Sale = Below Market Value)
2) Market Value = RM130,000
3) Manage To get 100% loan = RM117,000 (additional RM 1k in hand)
4) MRTA '+' Legal Fees = RM4,775
5) Total Loan applied = RM 121,775
6) Interest = BLR - 1.8% = 4.5%pa (Terapung nih..bkn fixed)
7)Tenure  = 40 years (Coz aku muda lagi...huhuhu)
8) Yearly Installment = RM6,569 or RM547 per month
9) Rental = RM850 per month which is enough to pay the monthly installment and service charges.
10) Hence the Cashflow = Ada la sikit utk anak bini makan....

Assumptions: Interest rate remains unchanged, no rental increase and price appreciation over 40 years

Take a look at how the loan of RM121,775 reduces over time from the Loan Amortization Table below:

 



 

There are 2 situations to derive both figures above:

 

1) I am as Mr. Investor:

 

In 20 years time, the Net Worth would increase from RM 8,225( Consider as downpayment... padahal dpt 100% loan..hehehe) to RM140,362,62. Meanwhile in 40 years time, the Net Worth is RM 411,713.51. This large amount is generated from twin benefits of property appreciation of 3% pa.

 

2) I am as Mr. Opportunist:

 

He is a person which not into properties and afraid taking loans from the bank. He chooses to diversify her RM8,225 into paper assets instead, the 20 years Net Worth grows to :

 

At 10% pa compound interest = RM 50,303.35

At 12% pa compound interest = RM 70,839.96

At 14% pa compound interest = RM 99,158.07


Conclusion Base on 20 Years
1) Net Worth wise, Mr Investor excellant all the way until the 20th year (Aku tak rase nk simpan rumah nih selama ini...huhuh). His Asset Value after deduct outstanding loan remaining is RM 140,362.62 . Wow!!! That is a huge amount.

2) Meanwhile Mr. Opportunist only chalk up compounded return maximum (14%) about RM 99158.07..

3) Pity to Mr. Opportunist, due to his procrastination and lack of self confident, he has missed the opportunity to become richer RM 41204.55 ( Topup sikit bole beli ZX10 mcm abg donny)

WHO ARE YOU??? Property Speculator OR Property Investor

I would categorized myself as an INVESTOR. Which one are you?? SPECULATOR or INVESTOR.. Article below will enable you to differentiate who you really are or what are you going to be.

Different between speculator and investor is SPECULATOR makes money only when he/she SELLS an INVESTOR makes money when he/she BUYS.

For example, a speculator buys a RM100K property for RM100K, and hopes to sell at RM120K. An investor buys a RM100K property for RM60K, thus making a "profit" when he buys. He might sell it at RM100K, but usually he sells it at RM90K (leaving "some" profit behind) for the speculator.

In my opinion, I think a property speculator is someone willing to gamble on the unknown in the hopes of making significant gains. A property investor is someone who decides exactly what it is worth (value-wise) and makes a 'safe' property investment in an established place.

Speculators in property have a short time horizon. Most are looking to flip properties & make a fast buck in times when property prices are moving upwards. They typically want to get out within a year or even weeks if possible.

In terms of knowledge, most speculators do not really comb through the property in detail. They have no interest in looking at rental yield, mortgage cost, location, condition, etc, factors most investors are concerned with. As long as they believe a property will move up in price quickly, they will jump into it. In short, most speculators are only looking for a rapid rise in capital appreciation. An investor on the other hand has a longer time frame & spends lots of time reading & researching his/her investments .

Micro & macro economic factors such as:

1) The rental yield & how it compares with comparable units

2) The mortgage cost, whether rental can cover mortgage cost & have some left over for time when units will be vacant.

3) Specific location of the unit, development & its comparison with similar properties. If other nearby projects are slated for development & how that would affect the property in question.

4) Tax issues, use of properties to offset taxes

5) The economy, how the economy will fare in 3, 5 or longer years & how that will affect the property concerned.

6) Only 70% Loan to Value (LTV) for third house and above

In short, an investor wants to maximize all possible returns from the property from all possible angles: from capital appreciation, mortgage payment, cash flow & taxes. Whereas, most speculators are only concerned with fast capital appreciation. Speculators try to anticipate and profit from price changes while investors seek only to acquire property at a reasonable price.

Property Speculator

1. Makes short term gain (30% or more), 3 months to 1 year.

2. Normally, buy at developer price & resell, and make significant profits

Property Investor

1. Using own system, plan well when buying.

2. Looking for rental/passive income.

3. Long term goals: 5-year plan, 10-year plan etc

4. More on buy & hold property as long as it makes significant passive income.

P/S : Most of the input taken from Properties Guru, Milan Doshi

Maximum Loan To Value (LTV) only 70% for 3rd house and above.

I hate to say this but our nightmare finally came out. To those who are interested to purchase their 3rd house or more.. Think twice, check your financial capability and know your limitation. For big pockets and high profile investor.. this is good news for them because less competition for them to gain houses in strategic places. My humble condolence to small time investor like me who need to work hard and save more for that 30% downpayment... It will took years to save RM 60K for downpayment of house valued RM 200K

Below are statement release by Bank Negara for further understanding:

Bank Negara Malaysia wishes to announce with immediate effect the implementation of a maximum loan-to-value (LTV) ratio of 70%, which will be applicable to the third house financing facility taken out by a borrower. Financing facilities for purchase of the first and second homes are not affected and borrowers will continue to be able to obtain financing for these purchases at the present prevailing LTV level applied by individual banks based on their internal credit policies. The measure aims to support a stable and sustainable property market, and promote the continued affordability of homes for the general public.

At the national level, residential property prices have increased steadily in tandem with economic development and the rise in income levels. This aggregate growth trend remains largely manageable and has not deviated from the long term trend in residential property prices. In the more recent period, however, specific locations, particularly in and around urban centres, have experienced faster growth, both in the number of transactions and in house prices. This is further supported by an increase in financing provided for multiple unit purchases by a single borrower, suggesting increasing investment activity that is of a speculative nature.

The targeted implementation of the LTV ratio is expected to moderate the excessive investment and speculative activity in the residential property market which has resulted in higher than average price increases in such locations. This has also led to increases in house prices in surrounding locations, thus contributing to the declining overall affordability of homes for genuine house buyers. This measure therefore remains supportive of the objective of encouraging home ownership among Malaysians which continues to be an important national agenda.

 

Introduction of the Financial Capability Programme

 

As part of the continuous efforts to raise the level of financial literacy and to promote sound financial and debt management by Malaysians, Bank Negara Malaysia also wishes to announce the introduction of the Financial Capability Programme. This Programme will be offered by Agensi Kaunseling dan Pengurusan Kredit (AKPK) through its establishments nationwide and will commence from January 2011. The Programme is aimed at equipping individuals with important knowledge for responsible financial decisions by gaining practical understanding and skills in money and debt management. This in turn will contribute towards preserving the sound financial positions of households and ensure that debt accumulation is commensurate with household affordability, including their ability to absorb interest rate adjustments and potential volatility to income and expense levels. Individuals particularly new prospective borrowers and young adults are strongly encouraged to participate in this specially designed programme. The details of the implementation of the Financial Capability Programme will be announced later in December this year.

 

Bank Negara Malaysia

3 November 2010 , http://www.bnm.gov.my/index.php?ch=8&pg=14&ac=2159

© Bank Negara Malaysia, 2010. All rights reserved.

Kadar pembiayaan rumah kekal 90% hanya untuk RUMAH PERTAMA dan RUMAH KEDUA

Utusan Malaysia
22/09/10

KUALA LUMPUR 21 Sept. - Bagi memastikan golongan muda dan berpendapatan rendah mampu memiliki rumah sendiri, kerajaan membuat keputusan untuk mengekalkan pembiayaan rumah kepada 90 peratus.Perdana Menteri, Datuk Seri Najib Tun Razak berkata, kadar pembiayaan rumah itu kekal untuk pembelian bagi rumah pertama dan kedua sahaja.

Beliau berkata, kerajaan juga tidak berhasrat mengurangkan kadar pinjaman perumahan daripada 90 peratus kepada 80 peratus pada masa ini."Bagi pembeli yang sudah memiliki beberapa buah rumah dan berhasrat untuk membeli rumah lagi, kemungkinan jumlah pinjaman akan dikurangkan kepada 80 peratus sebagaimana dicadangkan," katanya kepada pemberita selepas mendengar taklimat Lembaga Pengarah Bank Negara Malaysia (BNM) di sini, hari ini.

Beliau berkata demikian bagi mengulas cadangan BNM yang mahu mengkaji semula cadangan supaya bank-bank tempatan mengurangkan pinjaman perumahan daripada 90 peratus kepada 80 peratus.Namun, cadangan itu mendapat bantahan daripada beberapa pertubuhan bukan kerajaan (NGO) yang melihat ia akan menjejaskan peluang golongan muda untuk memiliki rumah.

Malah, ada gesaan supaya BNM menangguhkan cadangan menurunkan nisbah pinjaman berbanding nilai (LVR) pajakan sesuatu hartanah kepada 80 peratus. Dalam pada itu, Perdana Menteri berkata, kerajaan mengambil sikap terbuka berkenaan cadangan untuk membenarkan ringgit diniagakan di luar pesisir, 12 tahun selepas ia dihentikan. Ringgit kini diniagakan pada paras tinggi dalam tempoh 13 tahun pada RM3.10 berbanding dolar Amerika Syarikat.

"Ringgit kita mengukuh seiring dengan asas-asas ekonomi yang menggalakkan dan ini tidak menyebabkan sebarang kesan teruk pada perdagangan dan pelaburan ke Malaysia," kata Najib. Beliau berkata, kerajaan akan mengambil beberapa langkah serta mengkaji secara mendalam sebelum rancangan ringgit diniagakan. Katanya, kerajaan sentiasa berhati-hati dengan langkah tersebut agar kesan krisis kewangan 1997 tidak berulang di samping menjejaskan nilai ringgit yang dilihat begitu kukuh ketika ini.

P/S : Mcm mana nak beli rumah ketiga, keempat dan seterusnya??? Penat nak kumpul downpayment 20% tuh......