The major distinction between Flexi, Semi Flexi, and regular term mortgage is the flexibility of prepayment withdrawal and charges incurred for such withdrawals to be carried out.
Flexi: As the additional fund is mainly accumulated within the current account for interest savings purpose while cheque books are provided, the withdrawal of fund is as easy as writing a cheque or via online transfer. The cost of withdrawing the funds is just merely equivalent to the cost of piece of cheque or online transfer's charges.
Semi Flexi: Payment of additional fund has to go to the loan account. Practically, having a Semi Flexi mortgage would require borrowers to open a regular savings / current account at the financiers' branch for installment auto debit purpose. Majority of mortgage products in the current market fall under this segment. Although additional payment into the loan account will not knock off the principal by default, it will still result in interest savings as well for the additional amount which paid (this interest savings feature might not applicable to all the banks). However, when it comes to time of withdrawal, the charge is around RM10-RM50 per transaction, depending on bank's discretion. Such withdrawal could be done by transferring the excess from the loan account to the savings / current account via online banking / instruction over the counter / via machines.
Regular Term: Payment of additional fund has to go the loan account. By default, all additional payment / excess will be treated as advance payment for the future installment, thus, the excess will not result in interest savings. Withdrawal of the additional payment to the loan account require written notice to the branches which hold the borrowers' file. Charges per transaction is around RM 25 ~ RM 50.
A simple illustration in calculating interest charge:
. "Semi" full flexi mortgages: Certain mortgages which given to the borrowers during 2009 - 2010 were labelled as "full flexi" with the provision of current account but without a cheque book. To certain extent, such mortgages do not fully cater the full flexibility of withdrawal but do offer the interest savings feature by maintaining balance within a current account but withdrawal of fund requires instruction given over the counters or via online transaction.
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