What is the difference between Non-Moving Cost and Zero Moving Cost?
You will come across these words when you look for housing loans and comparing between the financial institutions on the best rate in town, and deciding which loan to take. Even when you are looking to refinance your house, I believe you will be familiar with these words.
Sometimes, I wonder why the financial institutions must use these financial jargon to confused everyone. Let me enlighten you with the definition and these words.
Moving Cost – Housing Loan
Before we talk about non moving cost, let’s define the moving cost first. Moving cost in housing loan term is the cost of obtaining the loan for new property purchase or the cost of refinancing the house. In layman terms, it’s the expenses that you need to pay out of pocket in addition to getting the housing loan which is in addition to the property’s purchase price.
What does the moving cost consists of?
1) Sales and Purchase Agreement
2) Stamp Duty for Sales and Purchase Agreement
3) Loan Agreement (Legal fees)
4) Stamp Duty for Loan Agreement
0.5% of the loan amount
5) Valuation Fee (usually for refinancing only)
For First RM100K =0.25%
Subsequent up to RM2 mil = 0.2%
Subsequent up to RM7 mil = 0.167%
Subsequent up to RM15 mil = 0.125%
Subsequent up to RM50 mil = 0.10%
Subsequent up to RM200 mil = 0.067%
Subsequent up to RM500 mil = 0.05%
Subsequent more than RM500 mil = 0.04%
Minimum Fee : Subjected to the above rates or minimum of RM 400 per property
Non Moving Cost – Housing Loan
Buyer absorb all the moving cost of the housing loan processing.
So in essence, non moving cost package for housing loan means the housing loan applicant requires to pay all the above Moving Costs such as S&P agreement, stamp duty, legal fees and valuation fees. An estimated total amount of the non-moving cost is around 2% of the purchase price. So, when you purchase a house, do remember that you would have to reserve an additional 2% of the purchase price for all the subsequent purchase costs in addition to the deposit and the down payment for the unit even before you reserve the price for renovation or furnishing your property.
Zero Moving Cost – Housing Loan
Financial Institution absorbs all the moving cost of the housing loan processing.
On the other hand, zero moving cost is hassle free for the buyer. All the moving costs is covered by the bank or financial institutions. However, please note that these costs are then included as part of the loan amount. Good news is that you only need to reserve the deposit and the down payment of the property purchased or refinancing. You can have more cash flow for renovation or furnishing your beautiful home.
Which package to choose – Non Moving Cost or Zero Moving Cost?
If you have extra cash, suggest to choose the non moving cost because the effective cost of the property is lower on a long run. Sometimes, for new purchase, the developer absorbs the S&P Agreement (SPA) and stamp duty. So you will need to pay for the loan agreement legal fees only.
If you tight with cashflow, suggest to take up the zero moving cost. Less capital outlay, pay in instalment. Better for investment holding properties, minimize the cash outflow.
AIA also offers fixed rate housing loan with non moving costs package and zero moving costs package which you can meet your needs.
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