Should I apply for 6-month moratorium begins 7 July 2021 (today)?

In line with the announcement of the Pakej Perlindungan Rakyat dan Pemulihan Ekonomi (PEMULIH), individual and microenterprise borrowers, as well as SMEs affected by the pandemic, we may start applying for the six-month moratorium from 7 July 2021 onwards.

In this regard, borrowers - whether individuals, microenterprises, or SMEs - should be assured that opting in for the moratorium or any other repayment packages will be easy with no need for borrowers to provide supporting documentation. Approval will be given automatically.

In addition to the moratorium, banks will also offer a reduction in installments and other packages, including rescheduling and restructuring financing to suit the specific financial circumstances of borrowers.

How to apply?

Borrowers can opt-in online through a web form or an auto-generated email that will be available on banks’ websites to provide their personal and financing details. Borrowers may also phone their banks and guidance will be provided by the customer service officer. If borrowers are unable to use these digital channels, they may also visit their bank branches to submit their request for the moratorium.

Who can apply for the moratorium?

All individual customers with conventional & Islamic loans/financing who are impacted by the pandemic are eligible to request for the moratorium, as long as you fulfill below requirements:

• Includes Ringgit and foreign currency-denominated loans/financing approved on or before 30 June 2021
• The loan/financing must not be overdue for more than 90 days
• Customers must not be adjudicated bankrupts or under bankruptcy proceedings

What are the options available?

Any individual with performing credit facilities (not defaulted loan) approved on or before 1 July 2021 has the following two options:

1. 6 months deferment repayment/payment (zero installments)
   ¬ loan tenure will be extended for 6 months
   
   ¬ Interest will continue to accrue at monthly/daily rest with simple interest (non-compounding interest) at prevailing rate during the new 6 months repayment assistance period
   ¬ after 6 months, the total accrued interest will be added into the principal outstanding balance
   
   
2. 6-month 50% reduction of existing monthly instalment
   ¬ loan tenure will be extended for 3 months
   
   ¬ after 6 months, the total accrued interest WILL NOT be added into the principal outstanding balance
   ¬ after 6 months, adjust to the new installment amount for the agreed revised duration

Illustration of additional financing cost for housing loan (Source: Public Bank's FAQs)

Source: Maybank's FAQs

*** Note: The examples above are for illustration purposes only. The length of tenure extension and interest/profit charges will vary depending on the loan / financing’s interest / profit rate and remaining tenure.

Not enough?

Nevermind. This is an illustration from Hong Leong bank.

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Update

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Conclusion:

By taking the moratorium plan, it might increase your borrowing costs as the interest will be charged (although it is not compounded) during the moratorium period. Therefore, if you can afford your current loan instalment, it is advisable that you continue with your existing loan repayment.

Stay safe everyone!

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