You're about to commit yourself for 20 years, do you know what you're getting into?
Is your home loan going to be an easy thing to manage, or will it create a hole in the pocket? Getting a home loan is like starting a relationship that can tie you down financially or set you free to do more. The more you know about home loans, the better your chances of finding the right one and maintaining a fruitful relationship.

Take our fun quiz and find out whether you are ready to sign on the dotted line! 

Questions:

1. You're starting out in life and have a promising career. You're thinking of getting your first property. Which would you pick?
a) A small house in a not very good location - because it is cheap.
b) An affordable house, although it is not the most ideal for you.
c) A nice house in a great location, but it is just a little beyond your current means.

2. Make your hard earned savings work harder. You can withdraw from your EPF Account II to settle your home loan every __ year(s).
a) 1
b) 3
c) 5

3. Interest rates for home loans should be calculated on:
a) Daily rest
b) Weekly rest
c) Monthly rest

4. Your monthly instalment amount should not exceed ___ of your income.
a) 40%
b) 20%
c) 15%

5. You wish to pay off your home loan sooner, what are some ways you can use?
a) Put part of your bonus into your home loan account yearly
b) Withdraw from your EPF account every year to pay off your home loan
c) Deposit the profits earned from your investments into your home loan account

6. The house you're living in is looking a little sad. Some renovation, a new set of furniture and furnishings will whip it back into shape. But you're stretched for cash, what's your best move?
a) Ask your parents for money
b) Sell the car
c) Refinance your existing home loan for cash

7. You plan on renovating your house but you also wish to sell it in the future. Which of the following adds value to your house?
a) Fitted kitchen and bathrooms
b) A mature garden
c) Additional electrical points

8. You have a fixed income and don't like risks. Which loan offers you the kind of stability you desire?
a) A conventional home loan which entails charges on the borrower and prior notice to the bank for prepayments and withdrawals.
b) A fixed rate home loan which maintains the same rate throughout the financing tenure.
c) A flexible home loan which allows you to make extra prepayments and withdrawals of excess payments anytime without charges or prior notice.

9. You have a basic salary but you also earn commissions which may fluctuate according to your performance. Which home loan benefits you the most?
a) A conventional home loan
b) A fixed rate home loan
c) A flexible home loan 

10. Why is it a good idea to deposit your idle funds (savings and fixed deposits (“FD”)) into a flexible home loan account?
a) I save more by reducing my home loan interest than what I will earn through savings and FD interest rates.
b) It makes my idle money work harder and I can withdraw it anytime without fees or notice.
c) All of the above and it is also easier to manage just one account.

 Answers:

Give yourself 1 point for every correct answer.

1. (c)
Location makes a difference to the value of your property and is often a better investment than a home in a bad location. Look for home loans with innovative financing features that allow you to purchase a slightly more expensive property at lower monthly instalment rates. The instalments gradually increase as your salary increases.

2. (a)

3. (a)
Daily rest lets you save more. The earlier you deposit your payment, the more your save.

4. (a)

5. (a) (b) & (c)
Depositing excess payments into your home loan account is the surest way to shorten your loan tenure. Do check with your bank whether you can deposit excess payment anytime into your loan account or prior notice is required. 

6. (a) (b) & (c)
These are all possible ways of financing your renovations, if you don't mind asking for money or selling the car. Refinancing your current home loan lets you cash out against the equity value of your house. You still maintain only one loan and it will save you the embarrassment of asking for money.

7. (a)
Renovation may increase the value of your home but be careful not to go overboard, if you plan to sell the house in the future. Buyers will not pay more than a certain amount for a property in a particular area regardless of the improvements made.

8. (b)
Fixed rate home loans maintain the same rate throughout the financing tenure, regardless of BLR changes. All information such as monthly payment amount or compensation for late payment charges are laid out up-front to avoid any uncertainty or unexpected surprises so you know exactly how much you need to pay and for how long.

9. (c)  
Flexible home loans allow you to make excess payments anytime you want. All excess payments will go towards reducing interest payable, thus shortening your loan tenure and giving you lots of savings.

10. (c)
Due to the current interest rates offered for FD and savings accounts, your idle funds actually work harder in your home loan account. You reduce the interest on your home loan up to 6% instead of earning an average of 3% in an FD account. Choose a home loan that allows you to make extra prepayments and withdraw this excess payment anytime without charges or prior notice.

Score:

7-10 points
Congratulations! You are home loan savvy. You have done your home work and you're probably ready to take it to the next level – using your home loan to strategically save, reduce interest payable, finance your other ventures and manage your finances in one smart account.

3-6 points
You're probably new to the game and need help in deciphering and understanding the various aspects of home loans. A chat with a Mortgage Consultant is your best next move. 

0-2 points
It is still a blur to you. We would recommend that you do some research for more information on the types of home loans available to you. This will help you make informed decisions on your home loan and make your chat with the Mortgage Consultant more fruitful.

Benefit from HomeSmart features that help you pay off your home loan in half the time* or allow you to withdraw the excess payment for important things that just can't wait. To afford a more expensive home at a lower instalment amount, you can consider Step-up**, an optional feature for HomeSmart.

For more information on HomeSmart or our other home loans, call HSBC at 1 300 88 0181 or log on to www.hsbc.com.my.

 *This is dependent on fulfilment of certain conditions namely the loan amount granted and its tenure, monthly income and savings and/or idle funds that can be maintained by the individual in the HomeSmart account.

**Available for salaried individuals aged 40 and below (applicable only for new purchases that are under construction or completed).

Issued by HSBC Bank Malaysia Berhad (Company No. 127776-V)