Thursday, December 24, 2009

Islamic lagi teruk dari ceti or ah long haram?

I just had a revelation.

And I'm in a heartache.

I bought a house with a RM147k loan from Bank Rakyat. The interest rate capped at 7.75%. By taking my pay and age at the moment, my loan tenure was maxed at 35yrs. My monthly installment is RM1060.
No, I am not loaded with $. Just a little,what I considered a smart planning but then I realized that I'm straying and leading a straight way to succumbing to the trap of credit cards. .

Putting that aside, my point is, the issue on my housing loan..

So, after 5 years time, my monthly installments have, well, with simple mathematics, accumulated to, rm1060 x 12mths x 5yrs = RM63,600. Sounds good. That is more than half of my original RM147k loan from the bank.

Before we go any further, I would like to explain a little on how Islamic housing financing works, based on my understanding.
1. The Bank will purchase the house at the said price, RM147k.
2. The bank will sell the house to me where, this will be a bit tricky, with an interest rate, that is based on the value of my house, at the end of my loan tenure of 35yrs.

In my agreement with the bank, it was agreed that in 35yrs' time, my house will have a value of, that was house they calculated my interest rate of 7.75%...I think.

Nevertheless, even if I am wrong, no matter what explanation i get, it will not change my perception when I proceed with a little maths a bit later on...

I have been thinking of refinancing, for the second time already, to take advantage on the low blr rate currently in the market, public bank is 5.55% (blr - 1.80% for refinancing housing loan = 3.75%, pretty attractive). So I called my Bank Rakyat,

me : may i know the balance of housing loan, my ic num is ......
bank : your balance is RM300k+
me : (duh! ok fine..) may i know my settlement value...? (buat apa hang bagi figure tu.hang expect aku tanya value rm300 ribu tu sbb aku nk settle semua ka? kalau ya pun hang akan bg value lain jugak)
bank : your settlement is around RM141k.

OK, let's do another simple math.

After 5 years, I have paid a monthly installments of RM63,600 for my housing loan of RM141,000, which well, obviously looks like half of my total loan, but subtracting my settlement value from my total loan, RM147k - RM141k = RM6k....

Only 6 thousand ringgit settled after 5 years of a total of RM63,600 monthly installments ?!

RM57,600 gone under the Islamic interests??!

Almost RM60k of my pay for the past 5 yrs....wasted into their pockets....

6 ribu saja settle....

oh dear...I'm feeling heady and tensed...what a STUPID 'investment'...

What's the difference this islamic financing with ah long or ceti ....only cause the banks are registered and them ah longs aren't?

Note : I will be reading more on the complex math behind these nonsense. will update if there's any further interesting finding.

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