Bkk Bank Loan Confusion

[BlaMuek]

Hi all...

We applied for a loan at said bank. Approved all well and good.

When they eventually got the 'approval' notice to us the figures look like this:

loan: 4.6m

period: 360 months

monthly payment: 34.2k

(Plus theres a 90k additional loan they add in for credit insurance and something else - 'bragun addipai'. - if anyone can explain these, please do).

The problem I have is that every loan calculator I've run comes up with a different set of numbers. Even bkk bank's own,

EG:

30,603.9 7pc 30y 4,600,000

35,663.8 7pc 20y 4,600,000

whereby a 35k monthly payment should be paid off in 20 years, not 30; and a 30 year repayment would cost closer to 30.6k per month.

OR

5,260,764 7pc 30 y 35,000

whereby paying off 35k would actually give a loan amount of 5.25m

Anyone able to explain the discrepancies here? Thanks.

[noob7]

Interest

[Overthetop]

yep something not right with there figures.

I come to the same amount as you on the 30 year loan at 7% interest per year.

I must say though seems high % for what must be a mortgage.

I would go to the bank and ask them to break down the figures, as from my experience they are often wrong. If it is down to the extra insurance that you mentioned, try to pay that as a lump sum first or even do a separate 1 year loan as it may help you save a packet.

I would also ask about early repayment penalties. ie: if you win the lottery and want to pay it back early

good luck and let us know how you get on.

[noob7]

Maybe I get something wrong here:

You get 4.6 million baht from the bank, right?

At 7% interest, that ~27k interest a month, in the beginning.

"(Plus theres a 90k additional loan they add in for credit insurance and something else...)"

Probably you have to 'kill' this loan first?

Means, you pay first only interest but no redemption on the 4.6m?

Ask for a listing of particulars or ask, where the difference to the calculator comes from.

[dave111223]

The "30 year term" is in fact variable due to the fact that the interest rate is variable.

They pad the monthly payments so that in the event of future interest rate increases they do not need to constantly adjust your month payment, it will still be enough to pay off the loan by 30 years.

This does not mean you keep paying the monthly payment for 360 times. You will keep paying the monthly payment until the loan balance is zero.

In most cases this will result in you paying off the loan well before the 30 year term. There is no penalty for early repayment, there are only fees if you refinance within the first 2 years.

P.S. Bangkok Bank are one of the few banks that try and hit you with the 90K upfront fire/health/life insurance tacked on to the loan. You may considering visiting Krung Thai or Krung Sri as they do not charge this. They only charge insurance to cover the first few years of the loan, instead of Bangkok Banks 30 year coverage.

Edited January 1, 2013 by dave111223

[BlaMuek]

Thanks guys. Will be making appointment with bank this week - they were supposed to deliver the breakdown before new years, but didn't.

[Soutpeel]

Bangkok Bank are one of the few banks that try and hit you with the 90K upfront fire/health/life insurance tacked on to the loan. You may considering visiting Krung Thai or Krung Sri as they do not charge this. They only charge insurance to cover the first few years of the loan, instead of Bangkok Banks 30 year coverage.

and after the first few years have gone by then what happens ?, you dont carry insurance on the loan ?.....highly suprised if a bank will let you do this on a home loan, you will require some form of insurance, otherwise a big risk is being carried by both the bank and the person who has the loan...

90k for 30 years insurance is only THB 3000 p.a. or THB 250/m....would say thats a very good deal

[dave111223]

Bangkok Bank are one of the few banks that try and hit you with the 90K upfront fire/health/life insurance tacked on to the loan. You may considering visiting Krung Thai or Krung Sri as they do not charge this. They only charge insurance to cover the first few years of the loan, instead of Bangkok Banks 30 year coverage.

and after the first few years have gone by then what happens ?, you dont carry insurance on the loan ?.....highly suprised if a bank will let you do this on a home loan, you will require some form of insurance, otherwise a big risk is being carried by both the bank and the person who has the loan...

90k for 30 years insurance is only THB 3000 p.a. or THB 250/m....would say thats a very good deal

We paid 2 years upfront with Krung Thai at about 3000 per year, after the first 2 years they never sent us another bill. We have the building insured independently with an insurance company (not a bank), but they (Krung Thai) don't know that.

Let me illustrate how bad of a deal the BKK bank insurance is. Let's say instead of getting a BKK bank loan you put the 90K in a bank earning just enough interest to cover inflation, and you pay insurance 3000 per year, instead of 30 years up front.

The insurance would have cost you 90K (adjust for inflation but still your original 90K)...

With BBK Bank they charge you interest of 7% per year. In the OPs case the insurance value is about 2% of his total loan, so 2% of his monthly payment (680) would go towards paying off the 90K insurance balance. After 322months the insurance would be paid off, and he would have paid a total of 218960THB

Of course this is not even considering the fact that the Bangkok Bank insurance is NOT a "good deal", when compared to insurance companies it is a very crappy coverage.

Edited January 2, 2013 by dave111223

[Stjohnm]

Ask them if you have to by the banks credit & accident/injury insurance or whether you can obtain a policy elsewhere. Also 7% is high for a secured loan these days, you may do better to secure a loan in a currency with a lower interest rate & favourable ex rate

[TommoPhysicist]

loan: 4.6m

period: 360 months

monthly payment: 34.2k

OK .... here we go ......

4,600,000 at 3% for the first year = 138,000Bht interest per year = 11,500Bht interest per month

BKB like interest + approx 2x for capital repayment for the first year = 11,500 x 3 = 34,500 repayment per month (11,500 interest + 23,000 repayment)

At end of first year you will owe 4,600,000 - 23,000 x12) = 4,324,000Bht

Year 2, start again using the new interest rate of 7% and a different formula (which I don't know as I only asked about year 1)

So there you go, I make the first year repayments at 34,500Bht per month.

Edited January 2, 2013 by TommoPhysicist

[dave111223]

Ask them if you have to by the banks credit & accident/injury insurance or whether you can obtain a policy elsewhere.

Nope got to buy their policy.

[dave111223]

4,600,000 at 3% for the first year = 138,000Bht interest per year = 11,500Bht interest per month

BKB like interest + approx 2x for capital repayment for the first year = 11,500 x 3 = 34,500 repayment per month (11,500 interest + 23,000 repayment)

This is not the way loans are amortized in Thailand, the principle in reduced with each monthly payment and the ratio between interested and principle repayment will vary with each payment.

See example of this here: http://www.amortizationtable.org/

[TommoPhysicist]

4,600,000 at 3% for the first year = 138,000Bht interest per year = 11,500Bht interest per month

BKB like interest + approx 2x for capital repayment for the first year = 11,500 x 3 = 34,500 repayment per month (11,500 interest + 23,000 repayment)

This is not the way loans are amortized in Thailand, the principle in reduced with each monthly payment and the ratio between interested and principle repayment will vary with each payment.

See example of this here: http://www.amortizationtable.org/

I went in BKB and asked them, it's the way they want to do it at my local branch (less than a month ago).

They showed me on their computer, then went through it again on paper.

Maybe something to do with their 3% for the first year special offer currently running.

Edited January 2, 2013 by TommoPhysicist

[dave111223]

4,600,000 at 3% for the first year = 138,000Bht interest per year = 11,500Bht interest per month

BKB like interest + approx 2x for capital repayment for the first year = 11,500 x 3 = 34,500 repayment per month (11,500 interest + 23,000 repayment)

This is not the way loans are amortized in Thailand, the principle in reduced with each monthly payment and the ratio between interested and principle repayment will vary with each payment.

See example of this here: http://www.amortizationtable.org/

I went in BKB and asked them, it's the way they want to do it at my local branch (less than a month ago).

They showed me on their computer, then went through it again on paper.

Maybe something to do with their 3% for the first year special offer currently running.

Maybe they were trying to put it into simple terms, or maybe the officer was just wrong, but they don't calculate the entire year's interested then divide it by 12...doing this would mean the interest rate was actually much higher than the supposed "interest rate".

They send you a bill each month which states how much interest and how much principle your last payment covered. The next interest/principle paid we will be based on the principle outstanding from your last bill.

Edited January 2, 2013 by dave111223