Compare the same remaining term and include fees plus the balance you would still owe when you sell or refinance again.
First remove the term-extension illusion
A refinance can lower the instalment simply by restarting a long term. Our example keeps RM300,000 outstanding and exactly 20 years remaining on both loans. The nominal annual rate falls from 4.3% to 4.0%, with monthly interest calculated as rate ÷ 12. There is no cash-out and neither rate changes. Actual floating-rate loans can behave differently as benchmark rates move.
Put every switching cost in one number
Assume switching costs RM5,000 paid from cash. This is an invented budget, not a Malaysian legal-fee quote. Ask for an itemised estimate of legal work, valuation, duties, disbursements, discharge fees and any lock-in penalty, less confirmed subsidies. If costs are added to the new loan, increase its principal and recalculate; do not count them as both financed debt and a separate upfront cash payment.
Background source: Maybank: Refinance my home
Calculate the simple cash break-even
The payment falls from RM1,865.71 to RM1,817.94, saving about RM47.77 a month. RM5,000 divided by the unrounded saving is 104.66 months: roughly 8 years 9 months when rounded up to full payments. This is a cash-budget indicator. It ignores the difference in outstanding principal and the time value of money, so it is not the complete economic break-even.
| Item | Existing 4.3% loan | New 4.0% loan |
|---|---|---|
| Monthly payment | RM1,865.71 | RM1,817.94 |
| Balance after 60 payments | RM247,176.15 | RM245,771.35 |
| Switching cost paid now | RM0.00 | RM5,000.00 |
What if you sell after five years?
Compare 60 months of repayments plus the outstanding balance at month 60. Add the RM5,000 switching cost to the new loan scenario. Under these assumptions the refinance is about RM728.82 more expensive at that exit date, before discounting cashflows. The lower balance on the new loan helps, but has not yet offset all switching costs. Different sale dates or fees can reverse the result.
Use a decision date, not just a headline rate
Choose a realistic horizon: the date you might move, sell or reconsider the mortgage. Request balances at that date from both lenders and compare total cash paid plus remaining debt. Also compare redraw access, account charges and prepayment flexibility. Keep the fee quotation and rate assumptions with your calculation, so you can revisit the decision when an actual offer changes rather than relying on an old screenshot.
Put it into practice
Use the same RM300,000 and 20-year term for both rate scenarios. The calculator models repayments; add the lender’s switching fees separately.
Open the home loan calculatorRead next
Found an error? Contact NumNum
Calculate with these assumptions
Public examples only. Follow the link, then explicitly load the values. Saved personal plans are not changed. Compare assumptions before interpreting the results.
Load existing loanLoad new loanThe two examples reproduce repayments only. The article’s RM5,000 switching cost and five-year exit comparison are not included in the loan calculator. Compare the balance at payment 60 and add costs separately.