Housing Loan Deferment

Devadason Arulsamy
CA(M), FCCA, MDRT
Deva is a partner in the firm of Dason & Dason, Chartered Accountants who specialises in tax advisory and consultancy. He can be reached at deva@dason.com.my

82

On 1st April 2020 we were given a “once in a lifetime” loan installment deferment by our Government and banks until 30th September 2020. No doubt, the circumstance behind this “gift” is dire and grim. However, even the worst of situations has its advantages.

Although interest is accrued into the outstanding balance (except hire purchase), the impact is likely to be insignificant through increased instalments (when repayment resumes) or added tenure. So what do we do with the additional cash in hand? The following can be considered:-

[expander_maker id=”2″ more=”Read more” less=”Read less”]

  1. Reflect on your living expenses and see whether any excesses can be trimmed. Aim to accumulate at least 3 months of cash reserves. Better yet, go for 6 months!
  2. Settle other high interest bearing loans such as credit cards, personal loan, cash advances, and etc.
  3. Anything that costs higher than your mortgage loan should be “attacked aggressively” with the cash in hand.
  4. Just simply save the amount and at the end of the loan “honeymoon”, if there’s no reduction in income or retrenchment, pay into the outstanding mortgage in one lump sum.
  5. For those who are financially unaffected, just continue with the instalments by updating your Bank of your intention to opt in.
  6. Consider investing into Unit Trusts or Stocks. Prices are beaten down so badly that good companies are going for unreasonable prices. Go for dividend paying counters. These should provide you a good start towards creating a post retirement income.

However, a word of caution, it is wise to get proper advice from a qualified Financial Advisor who can assist you in stock or Unit Trust selection as well as price mitigation strategy. Prices can suddenly go down and if all your capital has been invested at one go, you can be stuck for a long time.

On a positive note, the rate of COVID-19 recovery has been encouraging so far, indicating that measures being put in place are yielding results. However, only time will tell whether this is true or just a temporary blip. Let’s continue to abide and co-operate with the authorities.

Let’s be the change we want to see in the world. We lead by action rather than just words.

Be strong. Be resolute.

 

**The facts and views expressed are solely that of the author/authors and do not necessarily reflect that of the editorial board.

[/expander_maker]