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What is a Non-Flexi Loan?

Updated 19 Nov 2018 – By Helena Varkkey


So you’ve finally found your dream home! If you’re not among the lucky mortals that can afford to pay for it in cash, you’ll need to get a loan. This can be pretty scary, especially with all the different types of property loans out there.

You may have seen banks offering “non-flexi” loans. That can’t be good, right? Flexible good, non-flexible bad, right? Well, yes and no. Let us break it down for you.
 

How Does It Work?



A non-flexi property loan, or sometimes known as a basic term or term loan, is an old-school property loan. This is probably the type of loan that your parents took on their first house back in the day. 

Non-flexi loans are pretty straightforward – your bank extends you a lump sum credit, and you pay the bank back a set amount based on a pre-agreed schedule. Say if the loan term duration is 30 years, you have to pay within 30 years, no more, no less.

The downside to non-flexi loans is that it’s difficult to pay off your loan earlier than scheduled, even if you happen to come into a huge sum of money. 



See, banks maximise their profit by ensuring that the principal amount you owe them stays as high as possible for as long as possible so that they can continue charging you interest on a higher principal. If you pay the loan off early, the bank will rugi lah!

However, if you do happen to have extra money and you really, really, really want to pay off your loan early, you could write to your bank to request a special arrangement (no promises though)! 

If you don’t do this and simply pay extra, your money will just sit with the bank as pre-payment for future dues. Even worse, you can’t take the extra money back if you suddenly need it for an emergency.
 
Pros Cons
  • Low-interest rate
  • Additional payments will not reduce principal
  • No withdrawal with additional payments

This lack of flexibility is a legacy of the olden days before all the canggih banking systems were invented. Back then, banks couldn’t handle changes in payment schedules so easily. 

Property loans have evolved since then, now offering semi-flexi and flexi options. However, non-flexi loans are still in demand for one important reason. They usually offer the lowest interest rates in the market!
 

So, Is a Non-Flexi Loan Right for You?

If you are not the type that has extra money lying around, and instead just has ngam-ngam budget every month to pay your instalment, a non-flexi loan may be right for you. Your repayments should also be slightly lower due to the low-interest rate. 

Win-win, yo!

Oh, not sure if you’re eligible for the loan? Loanstreet’s Home Loan Eligibility Report is a comprehensive report which will automatically provide you with all the accurate (up to 95% accuracy) information you’d need, instantly at your fingertips. You’ll be given both the loan and instalment amount for 15 banks, and rating guidelines to show which banks are likelier to approve your application.
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