Facing Mortgage Problems in Malaysia – Here’s what you can do!

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Have you been struggling with your loan commitments because of the economic crisis brought by the COVID-19 pandemic? Are loan repayments causing you stress and affecting you? When it comes to home loans, this can be very distressing because you could potentially lose your home if you do not fulfill the obligations.

Be prepared for rainy days

Not everyone faces such situations but it always good to be ready if they ever occur. With the pandemic, no one can predict if they will lose their job or when they are trying to make ends meet which could mean missing out on a payment. This also depends on the type of mortgage you have. If you are in a variable rate home loan, you need to be aware of how much you need to pay if the rate changes (especially when it goes up). So, what should you do (or what game plan you should have) when you are facing such situations?

What are your options?

At the end of the day, we are all humans and at some point, we will face some form of difficulties and struggles which means such issues can always be discussed. So, when you know you might not be able to pay your loan and such, what should you do?

  • Refinance your home – This would be one of the most common ways for people who are having trouble financially. Refinancing would give you some extra cash and perhaps a lower monthly payment too. However, you must have serviced the loan for a certain number of years and this means you are prolonging your loan for a longer-term.
  • Discuss with the bank – Or whoever that lender is. The last thing you want to do here is to avoid the bank or their calls. If you know you cannot pay your monthly loan repayment, talk to the bank. You should know that the bank would be very happy to help you because they would like to get their payment too. Make an appointment to speak to someone, be open to any suggestion and see what can be done.
  • Use your EPF – Your Employee Provident Fund has provisions to help you with your home loans. While it might not be a long-term solution, you can cash out from your EPF to help with some temporary payments while you find another job. You can do this through your Account 2 with certain criteria.
  • MLTA-related – If you took out an MLTA or Mortgage Level Term Assurance loan, it comes with a guaranteed cash value (after a certain term). If you are having any form of financial difficulties, you can consider taking the cash value out to help with your loan repayments. This is usually not very much but it will surely help you for a month or two (or more).
  • Selling the property – If you have another option to stay, like in your parent’s home or to your family member’s house, you should consider selling your home if you are unable to keep up with the loan payments. This might not be the best option, but it would be better than having the bank issue letters or reminders.

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