Anyone know How Bank calculate interest on Loan

Anyone out there know how the bank calculate interest for housing loan??

After served my housing loan. today I get a shock on why I keep paying higher interest.

For Example. I still owe the bank RM5,000 (payoff Amount). But the bank calculate the interest based on (Loan outstanding x current interest rate. )

Why the bank dont charge based on the money that I owe x the interest rate?

Is other bank also practice the same method? To me, tis is totally wrong.

I by right, should paying (RM5,082.95 x 6.55%) /12 =RM 27.74
But i’m been charge of (RM13,677.09 x 6.55%) / 12 = RM 74.65

I have to pay EXTRA RM46.91 every month. Anyone can advice??


Wow, your interest rate seems to be quite high at 6.55% (i.e. BLR 6.3% + 0.25%).
Now most of the rates are BLR - ??? % and not BLR + ??? %.
You can ask the bank to review and reduce the rate.

For housing loan, initially you serviced most of the interest portion and less on the principal as the interest is charges based on your outstanding principal balance. The interest portion will gradually decreases over the period and the principal amount paid will increased. Therefore, you will not see much reduction initially for the first few years of your outstanding balance.
If you have additional money to pay, better pay off the principal amount instead of the monthly instalments.

now,i owe the bank RM5K.

but the bank charge the interest based on Loan outstanding x 6.55% (which is RM13,677.09 x 6.55%)

Dear Mirian. do you aware how your bank charge you. Can others advise. Maybe your housing loan’s interested charged based on the money owe x interest.

the loan outstanding is the amount u still own the bank rite?

I dont know how the bank come out the figure on the oustanding amount.
Now, I owe the bank RM5K (payoff amount)