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KUALA LUMPUR (May 1): Bank Negara Malaysia has issued a frequently asked question to answer public inquiries about the six-month moratorium on fixed-rate buy-rent loans and Islamic financing.
The following are the frequently asked questions issued by the central bank this morning:
It was previously announced that the six-month deferment for contract-purchase (HP) and Islamic fixed-rate financing is automatic.
1. Has there been a change in this decision?
No, deferment of payment remains automatic for HP and Islamic fixed-rate financing.
What is required now is an additional step to comply with the procedural requirements under the Procurement and Purchase Act of 1967 (HP Act) and Shariah. This additional step is unavoidable and requires that you incorporate changes to the payment schedule and / or amounts as a result of the six-month payment deferment in the loan / financing agreements.
2. Why are other loans / financing (eg mortgages, personal loans, business loans, etc.) not similarly affected?
Other loans / financing are not subject to HP Law or similar Shariah requirements. However, interest / earnings will also accrue during the deferment period for these loans and will also need to be repaid once payments resume after deferment.
3. Are there any changes for borrowers / customers to qualify for HP Islamic Fixed Rate Payment Deferment?
There are no changes to the eligibility criteria.
4. Since it is already the end of April, are there any changes in the deferment period for these financing facilities?
There are no changes to the payment deferment period, that is, it is effective for six months from April 1 to September 30, 2020.
5. For Islamic fixed rate financing, are there any additional legal costs if a new agreement is required?
In such cases, financial institutions cannot impose additional charges, including legal fees, on borrowers / clients.
6. How would my monthly installments of HP Islamic financing or fixed rate change after the deferment period?
Financial institutions will inform each borrower / customer of changes to their HP loan or fixed-rate Islamic financing payment schedule and installment amounts.
Borrowers / clients must weigh for themselves the pros and cons of deferring the payment, and pay particular attention to their ability to meet these payments after the moratorium.
You should call or email your financial institutions if you need more information or if you need to discuss alternative payment arrangements.
Here is an example to help you better understand the post-deferral financial impact.
For a RM50,000 HP loan with a remaining tenure of five years and a fixed interest of 2.71% (or an effective rate of 5.36%) per year, the monthly payment was RM712 before the deferment. The fee will increase to RM731 after the postponement, which means an increase of RM19. The increase in total interest will be RM1,130. In this example, the amount of the fee increases by 2%, or RM19 per month.
