Mortgage Training Slides Single License 2013

AIA Home Loan
Training
Presenters name
: Qua Boon Leong
Contact No.
: 012-372 0291
AIA.COM
AIA confidential and proprietary information. Not for distribution.
Today Outlines
Introduction To Mortgage Business
AIA Mortgage Packages
Why Sell AIA Mortgage
Features & Benefits
Loan Process Overview
Terms & Conditions
How To Start
What Is Mortgage?
Mortgage =
$$$ borrowed from AIA / Bank to buy

a house / property
Also known as HOUSING LOAN

Loan is secured by the house
Security / House = Collateral
If the customer does not pay back the bank for the loan, then the
bank will sell the house to pay back the loan.
AIA MORTGAGE PACKAGES
AIA Mortgage Rates
Interest Rates
Non Zero Moving Cost (NZMC)

Package 1
4.85% p.a.
Fixed for entire loan tenure
Non Zero Moving Cost (NZMC)

Package 2
4.25%p.a. (1st 2 yrs),

4.99%p.a. thereafter.
Zero Moving Cost (ZMC)

Package
5.25% p.a.
HOW LOANS CAN

HELP YOU SELL
MORE INSURANCE
MRTA
RM500k
Covers for an average

interest rate (ie. 5%)
30 yrs
A single premium product make payable upfront at the beginning of

the loan
Based on the concept cover the outstanding loan balance
However, it only covers the borrower for an average interest rate
(ie. 5%, 5.5%, 6.5%, etc)
If the purpose is to cover a BLR-loan, It would not ne able to offer
100% coverage all the time due to the fluctuating elements in the
loan
MRTA
RM500k
Actual curve when taken into

consideration BLR fluctuations
30 yrs
In addition, banks does not offer cheaper MRTA, just lower premium
due to lower coverage (ie. 4%)
A fluctuating BLR would result in the loan being under-protected. In
the event of claims, the borrower would still need to continue to pay for
the portion not cover by MRTA
The basic MRTA only covers death and permanent disability. Adding in
CI (critical illness) would double up the premium at a minimum
MRTA
RM500k
The gap widens further when the

loan tenure is extended due to
increase in rates
30 yrs
40 yrs
In the event the loan tenure is extended further due to increase in

BLR, the differential gap would be even wider.
Another limitation on MRTA is that it cannot be transfer from 1 loan
to another.
What happens to the MRTA when your customer decides to buy a
bigger house in 5 years time?
PREPAYMENT PENALTY
A prepayment fee of 0.62%p.a of the full prepaid amount together
with an Administrative fee of 0.40% of the full prepaid amount or such
other rate as may be imposed by AIA at any time or from time to time
shall be borne by the Borrower if the Borrower prepays the Facility in
full within five (5) years from the date of first drawdown of the Facility
or half of the total loan tenure, whichever is shorter. The prepayment
fee will be calculated based on the remaining years of the first five (5)
years of first drawdown of the Facility or half of the loan tenure of the
Facility, whichever is the shorter.
There will be NO prepayment fee imposed if prepayment is done via
own savings, Employee Provident Fund (EPF) withdrawal and/or sale
of property except for refinancing.
PREPAYMENT PENALTY How To Calculate
0.62% x Tenure Factor* x Full Settlement Amount

plus
Admin Charge of 0.40% x Full Settlement Amount
* Tenure Factor is derived from:

(Half of Loan Tenure minus Years with Payment Already
Made) or (Remaining Lock In Period), whichever is
shorter.
PREPAYMENT PENALTY
Example:
Loan tenor of 20 years.
Borrower refinance out from AIA on the 4th year.
The full settlement amount is RM500,000
Lock In Period is 5 years
Full settlement occurs on 4th year:
New Prepayment Calculation
Tenure Factor:
Half of Loan Tenure (10 years) minus Years with Payment already
made (4 years) = 6 years
or Remaining Lock In Period = 1 year
0.62% X 1 year X RM500,000.00
Admin Charge of 0.4% X RM500,000.00
Total prepayment charge
= RM3,100/= RM2,000/= RM5,100/-
* Previous prepayment calculation = RM20,000/AIA confidential and proprietary information. Not for distribution.
10
PREPAYMENT PENALTY
For Zero Moving Cost package, you will also be required to
reimburse AIA for all fees, costs and expenses whatsoever including
but not limited to valuation fees, stamp duties and legal costs on a
solicitor and client basis incurred by AIA in connection with the loan
in the event the loan is refinanced or fully settled within 5 years from
the date of the 1st drawdown.
Discount Cost (Applicable only for tiered Fixed Rate Loan)

If you choose to refinance the loan within five (5) years of first drawdown or
half of the loan tenure of the Facility, whichever is the shorter you will have
to:
Reimburse AIA for the difference between the original Prescribed Rate and
the discounted interest rate (First Fixed Rate Period) based on the
number of years where the discount is given on the approved loan amount.
11
Basic Mortgage Terms

Loan Principal
Amount of money lent to customer
Interest (%)
Price of the loan charged to the customer

Revenue and income earned by AIA
Usually quoted in % to customers
Loan Tenure
Period of time to repay the loan
LTV (Loan to value %)
Value of loan against the value of the property

Formula:
Total Loan Amount Total Value of Property
PTI
(Payment to Income %)
Loan Commitments over Net Fixed Income

Formula:
Total Loan Installments /
Total Net Fixed Income

12
HELPING YOUR CLIENTS- MORTGAGE ADVISE
3 Ps
1) Property
- Not negative list, no auction properties, no land, no land &
construct, not in panel developers, no shop apartment, no Malay

reserve land & bumi lot, no low & medium cost
2) Payment to Income (PTI) / DSR

All loan instalments + 5% outstanding Credit card
Income (Employee: Salary incl fixed allowance
Biz owner: 2yrs income declared in Form B divide 24)
3)
Payment Track Record

CCRIS, CTOS
13
Property Sectors Vs Types
Sector
Segments
Commercial
Office
Space
Residential
Retail
Shops
Completed
Under
Construction
14
Why You Need To Promote AIA Mortgage

Multiple Income - 3 Birds with 1 Stone
Faster & Easier Door Opener (Loans vs. Insurance )
Good Insight on Customers Financial Position for Future Insurance
Business
Build & Conserve Your Customers Base
Be An Outstanding Unique Financial Planner (vs. Great Eastern,
Prudential etc)
Easy Recruitment
Bottom Line More Clients & More Income!
15
MLD
AIA MORTGAGE REFERRAL FEE

Product
Home Loans
&
Shop Loans
Referral Fee
Zero Moving Cost

0.35% (Agent)
0.10% (Total given to up-line)
Non-Zero Moving Cost
0.35% (Agent)
0.10% (Total given to up-line)
Subject to other terms & conditions and is at AIAs discretion. Please seek further consultation with AIA for more information.
16
INCOME POTENTIAL
Loan Amount
: RM 300,000
Referral Fee
Life Insurance
Houseowner
: RM 1050
: RM 1148.70
: RM 47.52
TOTAL for 1st Year
(yet to include renewal premium)

Based on :
RM3,282 FYP for a traditional life policy
Current market value of RM380,000

INCOME POTENTIAL
Loan Amount
Referral Fee
Life Insurance
Houseowner
: RM 1,000,000
: RM 3,500
: RM 14,000
: RM 1,880
TOTAL for 1st Year Only
(yet to include renewal premium)

Based on :
Life commission (investment link) earned in 1st year based on Male aged 30
(non smoker) with loan tenure at 30 years
18
AIA Mortgage
19
Meet Customer
Signing Letter of
Offer
Instruction to
valuers
Submit Application
Instruction to Lawyer
Loan Approval
Signing Loan
Documentation
Completion of Legal
Process
Advise AIA for

Disbursement
Normally, the process will take

about 2-3 months.
20
AIA Mortgage
Terms
&
Conditions
21
TERMS & CONDITIONS

Who Can Apply
Minimum age is 18. For applicants age 23 and below, an older coapplicant is required
Maximum age is 70 years of age upon maturity
Open to:
i.Malaysians & Permanent Residents
ii. Singaporeans & Bruneian Nationals
iii. Foreigners with a valid work permit / registered business in Malaysia /
married with Malaysian spouse
iv. Participants of Malaysia My Second Home Program (documentary
evidence / approval from Malaysia Government under the MM2H
program ~ prior to loan disbursement)
22
Klang Valley
Penang, Seberang Prai, Parit
Buntar, Sg Petani & Kulim
Johor Bahru, Batu Pahat, &
Muar
Ipoh, Kampar & Taiping
Seremban
Melaka
Kuantan
Kuching
Kota Kinabalu
Non- Landed
Landed
Location - Completed Properties
Klang Valley
Ipoh
Melaka
Johor Bahru
Penang
Kuantan
Kota Kinabalu
Kuching
With Permanent Certificate of Completion & Compliance (CCC)

Excluding - residential properties located at landslip/flood prone area/ oxidation
pond/power station, T-junction, auction properties, negative factors and within
negative list
Under construction properties - available within AIAs approved list
of developers and projects
of panel
23
Location - Completed Properties

Landed Properties
Minimum Property Value:
Minimum Marketability Factor:
RM150,000
6
Non-Landed Properties
Minimum Property Value:
Minimum Marketability Factor:
Minimum Features:
(outside Klang Valley & Penang Island)

RM200,000
6
24 hour Security & Guarded
Minimum Loan Amount:
RM100,000
Completed service apartments could be consider.
Leasehold titles are accepted subject to remaining / unexpired lease of at least 20

years upon maturity. For East Malaysia, this could be at least 15 years.
Income - Calculation
Guideline for Debt Service Ratio (DSR - based on net income)
Net Income
DSR
Above RM8K
Up to 70%
Above RM5K to RM8K
Up to 65%
RM3K to RM5K
Up to 60%
Below RM3K
Up to 50%
* The percentage quoted is served as a guideline and variations to it will be applicable to

customer's profile and managements discretion.
DSR =
All outstanding loan instalments, 5% credit card minimum payments

and non-banks loan instalments (including those not covered by CCRIS)
Income after statutory deductions (ie tax, EPF, SOCSO)
For high net-worth customers (ie. customers with total net personal assets exceeding one million
ringgit), flexibility is provided to consider the customers deposits, assets and/or investments in
assessing the customers ability to repay the financing.
Salary Earners / Employed
Type of Income
Basic Salary
Based on monthly average

100% of gross salary
Fixed Allowance
100%
Annual Contractual Bonus
100%
Rental
70% with tenancy agreement and 3-6 months bank

statement to show the crediting of rental income
Commission
50% if provide 6 to 12 months evidence

(Taking out high & low Showing Consistency)
Non Fixed Allowance
50% if provide 6 to 12 months evidence

(Taking out high & low Showing Consistency)
Self Employed
Minimum 2 years income tax return will be the basis of income recognition.
Latest 6 to 12 months business bank statements may be provided as further

estimation of business income especially for professionals such as Accountants,
Specialists, etc.
Applicants who own more than one business entity may submit more than one
business current account for computation of income consideration.
Personal bank account statements may be used as supporting documents.
Net income is derived after minus off tax (taxable amount is per latest Tax Schedule
available).
Loan Tenure
Up to 40 years or age 70, whichever is earlier
Minimum loan tenor is 5 years.
Maximum is 40 years but borrowers age should not exceed 70 years old,
whichever is earlier.
Borrowers age is based on the age as of the current year.
Applicants can only be deemed to be contributing to the repayment of the loan if

they are employed or self employed with evidence of earning capability.
If the younger applicants income is sufficient to support the case, loan tenure can
be solely based on the younger age.
28
Loan Tenure
For joint applicants, the average age of the applicants who are contributing to
the repayment of the loan will be used to determine the loan tenure. Example is
as follows:
Borrower 1 = age 25, income 10,000
(max age for income earning 70) 70 25 = 45
Borrower 2 = age 50, income 70,000
(max age for income earning 70) 70 50 = 20
Total Income = 80,000
Age calculation = 25 * (10,000/80,000) + 50 * (70,000/80000)
Weighted average age = 47

Maximum tenor = 23
29
Loan to Value (LTV) / Margin of Finance

LTVs breakdown in accordance to the nature of the loan:
Purpose
LTV / Margin
Purchase from Developer
Up to 90%
Purchase from Subsale
Up to 90% (Open Market Value or Purchase

Price, whichever is lower)
Refinance
Up to 90% (with or without cashout)
Investment
Up to 80%
Foreigners
Up to 70% to 80%
3rd Housing Loan
Up to 70% (as per BNMs guidelines)
5 Cs of Credit :
Character
- habits - good paymaster.
Capacity
- income/revenue to support.
Capital
- commitment in investment.
Condition
- market / industry outlook.
Collateral
- movable/immovable property
as security.
31
Legal Documentation Process :

Fees incurred :
1st RM150K- 1%; Bal. loan - 0.7% (upto RM1mil)
Legal Fee
Stamp Duty
Stamp 0.5% of loan amount;
Disbursement
Disbursement RM1,500.
Valuation Fee :
0.25% on value + RM100;
For refinancing cases to add the followings:
Discharge
RM600
32
FEES STRUCTURE LEGAL FEES

Sale & Purchase
Agreement
Loan Agreement
First 150K
First 150K
Subsequent up to 1M
0.7
Subsequent up to 1M
0.7
Subsequent up to 3M
0.6
Subsequent up to 3M
0.6
Subsequent up to 5M
0.5
Subsequent up to 5M
0.5
Subsequent up to
7.5M
0.4
Subsequent up to
7.5M
0.4
Stamp Duty
Stamp Duty
First 100k
Loan Amount
0.5
Subsequent up to
500K
Subsequent onwards
33
Others
Houseowner Insurance on the property to be taken with AIA
Berhad.
Valuation reports & loan documentation to be handled by
AIAs panel Valuers & Solicitors.
34
ANALYSIS OF LENDING RATE
(source: Bank Negara Website)
12.80
11.51
12.25
11.51
10.33
8.70
10.33
8.24
6.72
6.99
6.83
AIA FIXED AT 4.85%
6.41
6.45
4.92
Average BLR for 32 years : 7.88%

Average Lending Rate for 32 years : 8.83%
AIA HOMELOAN AT 4.85%
35
AIA Mortgage Packages
Historical
Lending Rates & SRR

What is the
Trend?
36
Historical Rate of the Statutory Reserve Requirement

SRR Rate
Effective Date
3%
1 June 2011
2%
1 April 2011
1%
1 March 2009
2%
1 February 2009
3.50%
1 December 2008
4%
16 September 1998
6%
1 September 1998
8%
1 July 1998
10%
16 February 1998
13.50%
1 June 1996
12.50%
1 February 1996
11.50%
1 July 1994
10.50%
16 May 1994
9.50%
3 January 1994
8.50%
2 May 1992
7.50%
16 August 1991
6.50%
16 January 1990
37
HISTORICAL BLR & AVERAGE LENDING RATES IN MALAYSIA

YEAR
BASE LENDING RATE
AVERAGE LENDING RATE
1980
7.75
10.13
1981
8.50
11.89
1982
8.50
12.40
1983
11.02
11.78
1984
11.35
12.21
1985
11.54
12.55
1986
10.69
12.23
1987
8.19
10.36
1988
7.25
9.30
1989
7.00
8.90
1990
7.16
8.79
1991
8.02
9.35
1992
9.22
10.16
1993
8.85
10.03
1994
7.29
8.76
1995
7.44
8.73
38

YEAR
BASE LENDING RATE
AVERAGE LENDING RATE
1996
8.89
9.94
1997
9.53
10.62
1998
10.61
12.13
1999
7.29
8.56
2000
6.77
7.67
2001
6.66
7.13
2002
6.39
6.61
2003
6.13
6.30
2004
5.99
6.05
2005
6.00
5.95
2006
6.61
6.49
2007
6.72
6.41
2008
6.70
6.08
2009
5.62
5.08
2010
6.02
5.00
2011
6.45
4.92
2012
6.53
4.78
Source:
BNM
Website
39
AVERAGE LENDING RATES

Over last 5 years = 5.17%
Source : BNM Website

40
ANALYSIS
OF LENDING RATE
WHAT DO I GAIN IN SELLING HOME LOANS??
8
Average BLR
6.75%
6.00%
(1.20%)
5.55%
5
2004
2005
2006
2007
2008
2009
41
IN THE NEWS INTEREST RATES INCREASES FURTHER
Series of Rate Hikes

1)
2)
OPR before the financial meltdown 3.50%

OPR reduced to 2.00% last year 2009
OPR increases in 2010

i) 0.25% hike in March to 2.25% BLR:5.80%
ii) 0.25% hike in May to 2.50%
BLR:6.05%
iii) 0.25% hike in July to 2.75%
BLR:6.30%
OPR increases in 2011

i)
ii)
0.25% hike in May to 3.00%

Next rate hike in.?
BLR:6.60%
IS THIS THE END OF RATE HIKES???

42
EFFECT ON INCREASE IN BLR

EFFECT OF BLR INCREASE FROM 5.55% TO 6.60% (Increase by 1.05%)
LOAN AMT
MONTHLY INSTALMENT
(30yr loan at BLR 2.40%)
ADDITIONAL
INTERESTS
(30yrs)
IF INSTALMENT REMAIN
UNCHANGED
3.15%
4.2%
500,000/-
2149
2446
106,920
30 yrs increase to 40 yrs & 3 mths

(additional RM264,327 in instalments)
1,000,000/-
4298
4891
213,480

The increase in BLR by 1.05% will have

-increased instalment by RM300 pm (RM500K loan)
-increased loan tenure by 10 yrs and 3 months! (if instalment
unchanged)
What if rates
increased further?
Disclaimer : Whilst every care has been taken in compiling this publication, AIA Bhd. and its officers are unable to accept any liability whatsoever
for the accuracy of its contents or for the consequences of any reliance which may be placed upon the information contains.
43
EFFECT ON INCREASES IN BLR

EFFECT OF BLR INCREASE FROM 6.60% TO 7.60% (Increase by 1.00%)
LOAN AMT
MONTHLY INSTALMENT
(30yr loan at BLR 2.40%)
ADDITIONAL
INTERESTS
(30yrs)
IF INSTALMENT REMAIN
UNCHANGED
4.2%
5.2%
500,000/-
2446
2746
108,000

1,000,000/-
4891
5492
216,360

An increase in 1% will extend your loan tenure

by 11 yrs and 11 months! (if instalment unchanged)
What if rates increase further?
Disclaimer : Whilst every care has been taken in compiling this publication, AIA Bhd. and its officers are unable to accept any liability whatsoever
for the accuracy of its contents or for the consequences of any reliance which may be placed upon the information contains.
44
IN THE NEWS OPR MAY INCREASE TO 3.25% BY 2011
.. 2 series of 25 basis point hike is hardly a

normalisation in the OPR given the previous 150
basis point cuts..
..most countries in emerging Asia signalled readiness
to normalize interest rates
Scource: StarBiz Week 6th March 2010
45
IN THE NEWS
Article Star Biz 24th March 2011

..borrowers would also be stressedtested in the event interest rates were to
rise by 100 to 200 basis points from the
time the loan is applied..
Meaning:
BORROWERS SHOULD BE PREPARED IF
THEY ARE ABLE TO AFFORD A
FURTHER RATE HIKE OF 1% TO 2%.
46
New Guideline from Bank Negara
Banks are now obligated to perform a stress test for each loan
application to show the impact of an increase in increase rate (1% and
2%) on the total repayment amount.
47
New Guideline from Bank Negara
2010s Rate
(4.20%)
After BLR goes up

1% (5.20%)
If BLR goes up 2%
(6.20%)
RM3,083
RM3,356
(increase by
RM273 )
RM3,641
(increase by RM558 )
Total interest
cost at end of 20
years
RM239,795
RM305,126
(increase by
RM65,331 )
373,418
(increase by RM
133,623 )
Total repayment
at end of 20
years
RM739,792
RM805,126
RM873,416
BLR Rates
Monthly
Instalments
Impact of further increase in BLR

Would anyone want a further rate hike of 1% to 2% in their home loans?
Whether we like it or not, it has already happened and the financial
implications can be seen below based on a loan amount of RM500,000 for a
20 year tenure.
48
IN THE NEWS
RAM SAYS CLOSE MONITORING NEEDED
Household Debt rose 77% (2011) of GDP
mortgages 45% - largest component
RAM-We do not discount additional prudent
regulations to be imposed..
Implication of new capital requirement
under Basel III in 2013 will impact consumers!
Quote:
Although these new capital measures would
elevate banks funding costs, which may in turn
be passed on to consumers it would ensure the
banking sector was safeguarded against
unexpected shocks
Net Interest margins (NIM) under pressure for loans
such as residential mortgages.
Will this give pressure to banks to increase
interest rates in longer term?
NIM- difference between interest income less interest paid

to depositors.
In The News 4th July 2012
Real Capital
Gains
We expect the overnight policy rate to be held at

3.00% until end-2012, and up towards 3.0-3.5% in
2013.
CIMB Research Paper
50
In The News 10th May 2012
Real Capital
Gains
expects to resume
tightening* no later
than next year.
* raising interest rates
~ Director of Economic Research ~
AmResearch Sdn Bhd
odds of a rate hike

would start to increase
from end 2012 and
2013
~ Citigroup Economist
51
IN THE NEWS
Article 4 http://www.starproperty.my/PropertyGuid
e/Finance/9134/0/0
UNBIASED VIEW FROM RENOWN
AUTHOR & PROPERTY CONSULTANT
AZIZI ALI :_
Quote ..take a fixed interest rate
mortgage. While the interest rate charged
for a fixed interest rate mortgage may be
slightly higher than the interest charged
for a variable interest rate mortgage
today, you should be paying a lower total
repayment in the long run.
Next, the fixed repayments mean that you
can plan your cashflow better, reduce
your workload and also your problems.
Most important of all, you will be
protected from interest rate rises
throughout the period. And oh ya, it will
help you sleep better at night.
52
IN THE NEWS
The higher the loan amount, the
higher the quantum of increase
Borrowers are concern of what they

can do to protect themselves
If you cannot handle the extra
payment, if tenure is longer than ten
years, convert yourd to fixed rates
Why? (1) Be protected from rate
rises (2) avoid much pain (3) be able
to make payment on a regular basis
(4) be able to keep the house (5) sleep
better at night
Most important point: It is a worthwhile sacrifice that Ive done myself
53
Article Points To Consider

When Buying A House To Avoid Future Complications
Clauses in the loan agreements give the lenders the absolute

rights to alter both the Base Lending Rate (BLR) and/or the
margin of interests (the minus X%).
One cannot make a special low interest offer in the sales
campaign and then contractually (through the loan agreement)
creates a clause to allow that special offer interest rate to be
invalidated.
Chang Kim Loong, secretary-general of The National House Buyers Association
(The Star Biz, 25 August 2012)
54
COMPARISON BETWEEN
AIA FIXED RATE VS BLR
55
Impact on BLR packages

Loan RM400K, for 30 years,
Bank BLR 2.4% => 4.20%
Instalment is RM1,957
Total interest payment RM304K
AIA Fixed rate 4.85%
Instalment RM2,111
Total interest RM359K
Save RM55K.
If interest rate goes up by (1yr later)

0.32% only (4.20% to 4.52%)
If instalment remain the same,
Loan extended from 30 years to 32yrs 5mths
.. 4.52% <=> 4.85% .... ?
56
Impact on BLR packages

Loan RM400K, for 30 years,
Bank BLR 2.4% => 4.2%
AIA Fixed rate 5.25%
Instalment is RM1,957
Instalment RM2,209
Total interest payment RM304K ;
Total interest RM395K
Save RM91K.
If interest rate goes up by (1yr later)

0.49% only (4.20% to 4.69%)
If instalment remain the same,
Loan extended from 30 years to 33 yrs 11mths
.. 4.69% <=> 5.25% .... ?
57
FACTS OR MYTHS?
No problem, you can always refinance every 5 years if interest rates goes higher.
Changing loans every 3-5 yrs will mean - paying high interests to banks &
barely reducing your principal loan. Every 5 yrs means your eligibility to
shorter loan tenure with same principal outstanding! Who will be the biggest
loser?.
2) Only BLR will change but the spread (eg BLR-2.30%) is guaranteed fixed
Spread or interest margin is NEVER fixed. (Always refer to letter of offer and
loan documents rather than hear say)
3) You can save more in interests with the withdrawal facility ie when you have
more money to pay into the loan
The impact of savings may not be much as it will depend on how much you
have to credit in and for how long vs the rising BLR trends which will add on
the burden of increasing instalments and interests.
More importantly to manage your investment wisely:
You should never use your housing loan as an investment tool. If you have
surplus money, it should be used to invest into other assets or investment
tools eg ILP with better returns rather than paying surpluses to a mortgage
loan.
58
No Such Thing As A Fixed BLR Package
The Bank has the right to vary the

loan pricing i.e. the interest spread
and/or BLR..
Important Note:
1)Banks can change and
increase at its SOLE
DISCRETIONBLR, interest
margin/spread.
2)Borrowers can do NOTHING to
control this situation.
3)BLR can affect borrowers
financially as home loans are the
biggest liability
59
BLR Packages The Small Print

In the event the difference between
OPR and BLR reduces to below 3.5%
during the loan tenure, the Bank
reserves the right to increase the
prevailing interest rate spread
Should the difference between OPR
and BLR increase back to 3.5% and
above, the prevailing interest will take
effect
entitled to vary the Banks BLR and/or
the Margin of Interest imposed above
the Banks BLR
A redraw fee of RM50 per transaction
is chargeable
60
Study of Banks Letter of Offer (Effective July 2012)
New Clause:
Real Capital
Gains
If you have One (1)

month outstanding
arrears, we shall revise
the interest rate to
0.50%p.a. above the
prevailing prescribed
rate of your facility.
61
FACTS OR MYTHS?
4) BLR rates on average is lower than fixed rates
Based on BNM website of BLR and lending rates since for the past 30 years (19802010), average lending rate for the past 30 years is 8.92% and 10 years is 6.11%. This
is much higher based on the fixed rates offered by AIA over the years.
5) Our instalment is lower and you can save thousands if you take a BLR loan
-There is no comparison with BLR & fixed loan packages.
-Last year, BLR is 5.55% and now it is 6.60% p.a. and is expected to rise further.
Eg if you have taken a BLR last year, the increase by 1.05% for a RM500K loan
would mean that your instalment would increase by RM300 pm and would still
increase as interest is expected to increase further. Even if your instalment remains
the same your loan tenure would be extended by 10 years, which means you pay
another RM265K in additional instalments. Is this managing well your biggest single
liability?
-In short, never be in a position where you cannot control your highest liability
whereby the additional interests would severely put you financially to great risks and
financial ruin.
- Compare other European countries vs France (80% of their loan borrowers are fixed
rate mortgages) and France was not at all impacted by the financial crisis
62
The Big Picture
UNCERTAINTIES AND MORE UNCERTAINTIES

- Interest rates to normalize (how much more? How frequent?);
- GST (Goods Sales Tax) looming;
- Subsidies taken out;
- Prices eg petrol prices, essential goods will go up;
- Inflation & cost of living up;
- Uncertain global markets;
- impending war/disasters/bankruptcy of countries?
- Subject to banks, interbank volatility No say in BLR or spread.
SHEILD YOURSELVES FROM FINANCIAL UNCERTAINTIES

~ LOCK in your BIGGEST financial commitment (ie. YOUR HOME LOAN)
to the:-lowest historical rate,
-More importantly a rate that you have absolute control.
-Dont lead your family to financial uncertainties and ruin without
weighing first your ability to finance the risks..
63
In The News 4th May 2012
Real Capital
Gains
Survey showed 42% of

affluent Malaysians were
smart wealth builders who
make use of credit to
enhance their investment
returns. Borrowing is no
longer seen as a liability to
ones wealth. Used carefully,
it is a wealth management
tool.
The Future Priority 2012 Report ~
capturing the sentiment of over
2,700 wealthy Asians.
64
How to Maximize Wealth Through Leveraging

Before leveraging
After Leveraging with AIA FIXED RATE
Liabilities (RM530K)
Liabilities (RM980K)
Loans RM400,000 @ BLR-2.20%

Instl: RM2051 Gains
Loan RM980,000 @ 4.85%

Instl: RM5171
Credit Card @ 18% RM 30,000

5% RM1500
Settled
Personal Loan @ 7.60%

RM 100,000 Instl: RM1193
Settled
Total loan payments: RM4744
Total loan payments: RM5171
Real Capital
(Additional payment of RM427)

Assets (NIL)
Assets Created (RM450K)
No savings.
No assets
ASB RM450,000 @ 8% p.a. returns

Income : RM3000 per month
Nett : RM 2,171 (RM5,171 RM3000)
1) Assuming ASB dividends of RM3K is invested to compound at 8% p.a. yearly,

accumulated ASB = RM971K (10yrs), RM1.731Mil (17.5yrs) & RM2.097Mil (20yrs)!
2) Assuming client did not take loan but only saves RM1,000 a mth, need 17.5 yrs to
accumulate ASB RM450K (with compounding interest 8%)
65
Case Study
HOW DO YOU MITIGATE THE RISKS BY USING CREDIT TO
Real Capital
INVEST?
Gains
Take loans whereby interest is capped such as AIA fixed rate
housing loan. BLR loans will subject investors to
fluctuating BLR which may even put you at a loss eg an
increase in BLR by 1% & 2% would have increased interest
costs to RM214,196 and RM439,598 (based on loan of
RM980K @ BLR-2.20% for 30years)
Invest carefully ensuring your asset yields constant returns and
are principally secure.
66
Cashout for ASB (Amanah Saham Berhad)

Property brought in 2006
Same Property now in 2011
Purchase Price = RM400,000
Current Market Value = RM700,000
Loan Taken = RM360,000 (@ 30 yrs)
Loan Balance = RM334,500 (est)

(@ ~ 25 yrs left)
Monthly Instalment = RM2,159*
Re-finance to AIA @ 4.85%p.a., 25 yrs

(without cashout)
Loan Taken = RM334,500
Monthly Instalment = RM1,927

Total Savings = RM69,600
OR
What You Gained!!
# Savings From Loan Instalments
of RM69,600.
# Net Profit From Additional
Cashout via ASB of 3.92%p.a.
or
RM196,000*** for remaining 25 years.
Re-finance to AIA @ 4.85%p.a., 25 yrs

(with cashout of RM200,000 for ASB)
AIA Cost of Funds = 4.85%p.a
ASBs Annual Returns = 8.77%p.a. **
Net Profit = 3.92%p.a.

* Based on interest rate of 6%p.a.
** ASBs annual returns is based on average last 3 years
(2007 2009) net distribution and bonus per unit.
*** RM200k x 3.92% x 25 years.
67
AIA HOME LOANS
ITS TIME TO MAKE THE JUMP!!
NO MORE HURDLES TO SWITCH THEIR HOME LOANS TO AIA
Enjoy LOW, GUARANTEED fixed rates. Avoid hardships when

BLR goes up.
Maximize SAVINGS by restructuring & consolidating loans
Maximize INVESTMENT RETURNS by leveraging on current

property.
No barrier to refinance with Banks removal/reduced early exit fee
No costs to refinance with AIA Zero-Moving Cost package.

(Valuation, legal fees, stamp duty, disbursement for loans are
absorbed by AIA)
DOCUMENT REQUIREMENTS
70
What documents required :

CATEGORY
EMPLOYED
SELF-EMPLOYED
Personal
~ NRIC
~ NRIC
Income
~ 3 mths latest payslips; 6-12 months

payslips if including commission /
allowances
~ 3 years latest Borang B + tax

receipts;
~ Latest EPF Statement;
~ 3 years latest financials (P&L) for

Sdn Bhd company; (if required)
~ Letter Fr Employer
(if required)
~ Form 24, Form 49 and M&A

(1st pg) for Sdn Bhd company;
~ Borang A & Borang D for soleproprietor / partnership.
Bank
~ 3 mths latest Savings a/c

statement; 6-12 months
statement if including commission /
allowances
~ 6 months latest personal Current

a/c; (if required)
~ 6 months latest company Current
a/c.
~ Credit Card statements

(if required)
Property
~ SPA (if available)

~ Purchase confirmation
= SAME =
~ Title Deed (if available)
71
SPREAD THE GOOD NEWS & MAKE YOURSELF

PROMINENT
USE HOME LOANS TO TIE UP WITH MANY CHANNELS
1) SMS and reach out to your policyholders, friends and public eg :Good news! AIA Home loan fixed at 4.85% and 5.25% (zero moving cost) for whole loan tenure!
No penalty for early settlement from savings, EPF & sale of property. Financial stability & peace
of mind when prices, BLR increasing. For more info, call HP :
2) Distribute flyers to your neighbourhood Make yourself a prominent

Financial Consultant in your neighbourhood.
3) Email blast/ Facebook/Twitter to your clients, friends and everybody.
4) Conduct Road Shows & Set up Booths to get leads.

5) Source from panel of lawyers.
6) Obtain leads from Real Estate Agents.
7) Use your contacts to penetrate MNC, corporates, panel of developers.
8) Advertise in metro classifieds.
72
DOOR
OPENER
-How to secure
more appointments
-How to use loan to
sell more insurance
73
FREE MORTGAGE HEALTH CHECK

BLR has increased by 1.05% since last year & is
expected to rise again in the near future.
Just Ask 2 questions?
Q1 : How much more additional interest will you be paying?
Q2 : How much longer your loan tenure will be extended?
1)
2)
3)
4)
A simple Mortgage Health Check can help you :Know your actual financing position
Cut the no. of years off your loan
Save in interests costs
Structure your loans to maximize returns
GET A FREE CONSULTATION TODAY!!
74
MORTGAGE HEALTH CHECK CALCULATOR
75
NEW AIA SHOP LOAN RATES
AIA MORTGAGE
SAVE
Non Zero Moving

Cost (NZMC)
Package
Zero Moving Cost

(ZMC) Package
Interest Rates
5.55% p.a.
5.79% p.a.
76
AIA FIXED RATES
Who can apply?

Individual Malaysian Citizens or permanent residents.
Commercial Properties Financed
Completed commercial properties with Certificate of Fitness for
occupancy.
Completed shophouses with or without individual or strata titles.
For leasehold land, the unexpired land lease must be at least 50 years
upon maturity of the loan.
Subject to minimum required marketability factor of 7 by our panel of
valuer and site visit.
AIA FIXED RATES
Commercial Properties Financed

Factories, commercial retail lots and offices are excluded.
Commercial properties on Malay Reserve or native land, located at
landslip/flood prone area/Oxidation pond/power station and any
negative factors that affect the open market value would also be
excluded.
Selected commercial areas located in Klang Valley and Selangor.
AIA FIXED RATES
Prepayment Fee
For both packages, there will be a prepayment fee levied should the
loan be settled within the 1st 5 years from the date of 1st
drawdown.
The prepayment fee is chargeable at the rate of 0.45% times the
number of remaining years of Loan (subject to maximum of 6% to
a minimum rate of 3%) times the amount prepaid.
In addition, for the Zero Moving Cost package, all fees, costs and
expenses whatsoever including but not limited to valuation fees,
stamp duties and legal costs on a solicitor and client basis
incurred by AIA in connection with the loan shall be payable by
you on demand, on a full indemnity basis in the event the loan is
settled within 5 years from the date of 1st drawdown.
AIA FIXED RATES
Loan Tenure
Minimum
: 5 years
Maximum : 30 years
(Maximum age upon maturity of the loan is 65 whichever is earlier).
Minimum Loan : RM 300,000
Margin of Financing
New Purchase : Up to 80%
Refinancing
: Up to 70%
(based on open market value (OMV) or purchase price whichever is
lower)
CONTACT US FOR MORE DETAILS:

KUALA LUMPUR
Tel: 03-2056 3333
Fax: 03-2056 3325
Sam Wong
DL: 03 -2056 3341
H/P: 012-290 0386
Allison Ng (North / East Msia)
DL: 03 -2056 3383
H/P: 012-233 6693
Darren Yap (Kuantan)
DL: 03-2056 3387
H/P: 012-621 9152
Teresa Sia (Johor State)
DL: 03 -2056 3343
H/P: 012-690 8788
Sze Ling (Melaka)
DL: 03 -2056 3323
H/P: 012-222 1636
Mohd Amin (Seremban)
DL: 03 -2056 3353
H/P: 016-623 0990
Victor See
DL: 03 -2056 3319
H/P: 012-346 0656
PETALING JAYA
Tel: 03-7680 8686
Fax: 03-7680 8655
Qua Boon Leong (Klang)
DL: 03 -7680 8625
H/P: 012-372 0291
PENANG
Tel: 04-222 6262
Fax : 04-222 6300
Lau Beng Hock
DL: 04-222 6301
H/P : 016-442 6301
(Northern & East Msia)

Email : my.loan@aia.com
81

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AIA Home Loan

: Qua Boon Leong

AIA confidential and proprietary information. Not for distribution.

AIA confidential and proprietary information. Not for distribution.

$$$ borrowed from AIA / Bank to buy

Also known as HOUSING LOAN

AIA confidential and proprietary information. Not for distribution.

AIA MORTGAGE PACKAGES

AIA Mortgage Rates

Non Zero Moving Cost (NZMC)

Non Zero Moving Cost (NZMC)

4.25%p.a. (1st 2 yrs),

Zero Moving Cost (ZMC)

AIA confidential and proprietary information. Not for distribution.

HOW LOANS CAN

AIA confidential and proprietary information. Not for distribution.

Covers for an average

A single premium product make payable upfront at the beginning of

Actual curve when taken into

The gap widens further when the

In the event the loan tenure is extended further due to increase in

AIA confidential and proprietary information. Not for distribution.

PREPAYMENT PENALTY How To Calculate

0.62% x Tenure Factor* x Full Settlement Amount

* Tenure Factor is derived from:

= RM3,100/= RM2,000/= RM5,100/-

Discount Cost (Applicable only for tiered Fixed Rate Loan)

Basic Mortgage Terms

Amount of money lent to customer

Price of the loan charged to the customer

Period of time to repay the loan

LTV (Loan to value %)

Value of loan against the value of the property

Loan Commitments over Net Fixed Income

AIA confidential and proprietary information. Not for distribution.

Total Net Fixed Income

HELPING YOUR CLIENTS- MORTGAGE ADVISE

construct, not in panel developers, no shop apartment, no Malay

2) Payment to Income (PTI) / DSR

Payment Track Record

AIA confidential and proprietary information. Not for distribution.

Property Sectors Vs Types

AIA confidential and proprietary information. Not for distribution.

Why You Need To Promote AIA Mortgage

AIA MORTGAGE REFERRAL FEE

Zero Moving Cost

AIA confidential and proprietary information. Not for distribution.

TOTAL for 1st Year

(yet to include renewal premium)

RM3,282 FYP for a traditional life policy

Current market value of RM380,000

TOTAL for 1st Year Only

(yet to include renewal premium)

Loan Process Overview

AIA confidential and proprietary information. Not for distribution.

Loan Process Overview

Advise AIA for

AIA confidential and proprietary information. Not for distribution.

Normally, the process will take

AIA confidential and proprietary information. Not for distribution.

TERMS & CONDITIONS

Location - Completed Properties

With Permanent Certificate of Completion & Compliance (CCC)

Location - Completed Properties