Acceptance
Letter
A letter from the applicant indicating his williness to accept the loan after
the loan is approved by the banking institution.
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Application Form
A form used to apply for loan.
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Appraisal/valuation
report
A written analysis of the estimated value of real estate prepared by a licensed
Valuer/Appraiser
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Base Lending
Rate (BLR)
A minimum interest rate calculated by financial institutions based on a formula
which takes into account the institutions' cost of funds and other
administrative costs.
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Commitment Fee
A fee charged by the financial institution for setting aside funding that are
not utilised by the borrower. Usually only applicable to overdraft facility.
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Default
Failure to pay the monthly instalment/interest payments to financial
institutions when due.
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Disbursement
Fees
Various type of fees such as registration of charge fee, land search fee,
bankruptcy search fee incurred by financial institutions and solicitors
attending to the loan documentation in relation to the loan which are payable
by the borrower.
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Documentation
A set of agreements, forms, and other documents to be signed in connection with
a loan. The documentation will form a full set of records for the loan.
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Downpayment
An initial payment made by the buyer to the seller of the house.
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Financial
Institutions
All commercial banks and finance companies licensed under BAFIA 1989 and
Islamic banks licensed under the Islamic Banking Act 1983.
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Flat Rate
A term used to describe interest that is charged as a fixed percentage of the
loan amount throughout the tenure of the loan. The flat repayment amount is
usually determined before the commencement of the repayment programme. For
example, interest charged on a RM10,000 loan at a flat rate of 10% per annum is
RM1,000 annually until the loan is fully settled.
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Floating Rate
Loan
A term used to describe a loan, where the interest charged fluctuates due to
the rise and fall of a certain indicator such as the Base Lending Rate.
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Foreclosure
Legal action available to the financial institution for recovering outstanding
sums owed by a borrower who has defaulted on his/her loan. The property pledfed
by the borrower to secure the loan is sold and the proceeds of the sale used to
settle the outstanding loan amount.
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Graduated
Payment
A scheme that allows the borrower the flexibility to pay a lower instalment sum
at the beginning of the loan tenure before progressing onto a higher instalment
sum as the borrower's purchasing power improves.
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Gross Monthly
Household Income
The sum of gross monthly pay of all working family members before deducting
income tax, Sosco, EPF, loan instalment or other deductions plus any additional
income from overtime, commissions and other sources.
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Guarantor
Person or entity who is legally bound to pay a debt incurred by the borrower if
that borrower fails to pay.
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Homeowners
Insurance
An insurance policy that combines liability coverage for a homeowner together
with protection from damages caused by wind, fire, vandalism and other risks.
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Interest Rate
The amount charged by the lender to the borrower fo borrowing a sum of money
expressed as percentage of sum borrowed.
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Late Charge
A penalty charged by financial institution for not paying instalment due on
time.
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Letter of
Administration
A Grant of representation issued by the High Court to a person to allow him to
administer the estate of the deceased who died without a will.
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Loan Tenure
Number of years taken to fully repay the loan principal and interest as agreed
under a specific repayment programme.
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Margin of
Financing
The loan amount granted by the financial institution, expressed as a percentage
of the value of property pledged to secure the loan.
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Mortgage
Reducing Term Assurance (MRTA)
A term insurance which reduces over the tenure of the loan. This form of
insurance is used to provide cover for the outstanding loan amount, in the
event of death or total permanent disability of the insured. MRTA is normally
calculated to meet the outstanding loan amount.
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Outstanding Loan
Remaining loan not yet paid, including interest and other charges.
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Overdraft
A type of credit facility granted to the eligible current acount holder. The
borrower is allowed to issue cheques exceeding the credit balance in the
current account but subject to a certain pre-approved limit granted by the
financial institution.
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Power of
Attorney
A formal legal document giving authority to one person to act on behalf of
another person.
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Prepayment
Payment of all or part of a loan before maturity
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Prepayment
Penalty
A fee charged by financial institutions for early payment of loan in full. The
fee charged is usually based on a percentage of the loan amount or "X" months
of interest.
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Principal
The amount borrowed from financial institutions, excluding interest and other
charges.
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Property
Refers to landed properties (like house, apartment, condominium) and land (like
bungalow lots).
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Refinancing
The process of paying off a portion or the entire amount of the existing loan
with the intention of obtaining another loan from the same or another financial
institution.
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Sale and
Purchase Agreement
A written contract signed between the buyer and seller stating amongst others,
the terms and conditions under which a property will be sold.
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Security
Real or personal property that guarantees the repayment of a loan. The borrower
risks losing the property if the loan is not repaid.
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Term Loan
A loan which is repaid through regular periodic payments, usually over a period
of time, for example 10 years.
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Title
A legal document establishing the right of ownership on a property.
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