How I saved RM 14,451 from bank’s refinancing mistake

(Last Updated On: 16/11/2016)

This is my existing loan offer letter back in Dec 2010 from Bank A.

Total loan = RM 321k, SPA only signed by Q4 2011 due to developer wanted to launch an adjacent residential condominium block.

Mortgage repayment started in Sept 2014 after Vacant Possession

loan offer letter lcf original

In June 2015, I decided to refinance only the outstanding portion of my loan.

Below is the redemption statement I got from Bank A. My outstanding balance is RM 319k only, but I need to fork out an extra RM 17k (337 – 321).

loan redemption statement lcf

Feeling something is not right, I checked further and discovered the breakdown is as below

  • Contingency fees = RM 3,162
  • Zero Entry Cost Chargeback = RM 4,817
  • Settlement Penalty = RM 9,634

loan redemption details

The question is – why is the penalty clause applicable here?

loan offer lockdown period penalty clause

Note: Some people may think the lockdown period is 3 years from the date of signed loan offer letter. This is normally not the case. It is counted from the date of first disbursement by the bank to the developer, which might be later (it usually is). In my case, upon checking with the bank, it is in May 2012. In spite of that, the 3 years lockdown should have ended by May 2015, and I should not be penalized for 3% of the outstanding loan amount.

Therefore, I submitted the “appeal” – which is a politically correct term for bank’s mistake in blindly penalizing me.

The revised redemption statement is as such at RM 322k – no more penalty fee and also waived zero entry cost charge back.

loan redemption statement revised no penalty

Lesson learnt: Two words – Caveat Emptor!

This Post Has 2 Comments

  1. Zero entry cost is any legal fees incurred by bank when they offered you FREE SPA and Loan Legal Fee in the first place, so they want to claw back that when you refinance the loan within lock in period.
    Contingency fees, are told by the bank officer to me, is to cover any incidental (if any) expenses incurred during the “transition period”. If none was incurred, it will normally be refunded to you afterwards.

  2. Hi, I think we are using the same bank. I have disposed my house recently and the disposal took place before 3 years lock in period.

    I was not aware that beside of penalty, I need to pay for “zero entry cost” and “contingency fee”.

    May I know what is contingent fee which BANK A charged us?

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