Should You Opt-In or Opt-Out?: Moratorium Explained for Normal Malaysians

6 min readApr 2, 2020

With the Covid-19 global pandemic worsening, the government enforced the Movement Control Order (MCO).

All non-essential businesses are required to close shop and everyone is forced to stay at home to minimize human physical contact.

Your spending is someone else’s income. When people stop moving and spending, the economy simply stalls.

To ease the financial burden of loan borrowers during this tough economic time, Bank Negara Malaysia (BNM) has introduced the Moratorium order to loan borrowers for 6 months.

In this article, I’ll be focussing on the 2 biggest financial commitments for the average Malaysian:

Mortgage repayments
Car loan repayments

Let’s start with defining what it is:

What is a Loan Moratorium?

In plain English, all monthly mortgages and car loan repayments are not required from 1 April 2020 for 6 months.

You’ll continue your monthly loan repayments as normal starting 1 October 2020 & your loan duration will be extended for 6 months.

The moratorium is automatically applied to every borrower. There’s no need for you to do anything.

Here’s a quick summary before we dive in a little deeper:

But My Loans Are Auto Debited. Does it Stop for 6 Months?

During the 6 month moratorium, the ‘standing/auto-debit instruction’ will stop, unless if you opt-out (we’ll cover how to opt-out later).

In other words, your bank will not automatically deduct money from your bank account for 6 months.

Will This Mess Up My CCRIS Score?

No. Your CCRIS score from March 2020 will be carried unchanged during the 6 month Moratorium period. Source: BNM Faq sheet (point #8).

Your CCRIS (Central Credit Reference Information System) is your loan repayment history kept by BNM for all borrowers.

What’s the Catch? (For Mortgages)

There’s always a catch to everything.

During the 6 month moratorium, the interest of the loan still applies and will be added to your outstanding loan amount.

After the 6 months moratorium, the bank’s profit will be recalculated based on your new outstanding amount (which is now increased compared to before the moratorium).

So by the end of the 6 months moratorium:

Your mortgage tenure will be extended for 6 months (30 years becomes 30.5 years).
Your monthly mortgage will increase ever so slightly to compensate for the interest accumulated over the 6 month moratorium period:

Sample for RM 300,000 loan amount. Source: BNM FAQ sheet, #24

Why Does Your Monthly Mortgage Payment Increase After the Moratorium?

A lot of us (including myself) don’t know how mortgages work and have no clue how much we’re paying in interest.

If you borrow RM 450,000, and by the end of the 35 years, you’ll be paying RM 865,419 in total, almost double what you’ve borrowed.

That RM 2,000 monthly repayment that you’re paying each month, about half of that (~RM 1,000) goes to interest:

(I am simplifying the interest calculation to make this easier to understand).

That RM 1,000 interest each month for 6 months, (RM 1,000 x 6 = RM 6,000) will be added to your outstanding loan amount and the bank’s profits will be recalculated.

So the Moratorium will help Malaysian borrowers access extra cash in hard times of this pandemic and job losses, at the expense of you having to pay more later and for longer.

Moratorium for Car Loans

For car loans, the interest is fixed. No interest will be added to your outstanding loan amount, unlike your mortgages.

After the 6 month moratorium, your monthly repayment for your car remains the same:

There are no financial repercussions to opt-in for the moratorium for car loans, you just increase your loan tenure (from 5 years to 5.5 years).

Which makes this a very attractive package for car owners with outstanding loans.

Should You Opt-Out of the Moratorium?

This will depend on your situation and how affected your income is during this Covid-19 pandemic & MCO.

There are 4 main categories that you might fall into:

In the most ideal financial situation, you would not want to opt-in the moratorium, especially for mortgages. Because you’ll have to pay more in the end.

Be honest with yourself on where you stand financially during this pandemic & MCO, and make the smartest decision that works best for you and your unique situation.

Why & How to Opt-Out?

Clearly, if you are financially healthy and with a bulletproof job and source of income, you’d want to opt-out and let the bank continue to auto deduct money from your account as usual.

You can opt-out by going to your bank’s website and simply filling out an online form. Here’s Maybank’s form, it’s on their front page:

What I am Personally Doing For My Scenario

My income is also severely affected by the Covid-19 pandemic & the MCO.

I personally am in category #3 from the table above. At the moment, here are my commitments:

Mortgage for my own apartment that I stay in
Mortgage for an apartment that I’ve rented out
Car loan
I have no credit card debt

Normally, I rent out my apartment on Airbnb for a few days in a month to help cover my mortgage. This is clearly not happening during the MCO.

My other property has been rented out (1-year lease) and I don’t think the tenant’s income is effected as she is a lecturer.

My current cash flow: My cashflow is in a negative state at the moment and I am bleeding my savings out to stay afloat.

But I was lucky enough to exit from a previous business venture right before the Covid-19 become a pandemic that I have a sizeable lump sum of money.

I have locked in the money into a Fixed Deposit account for extra safekeeping.

I plan to use this money to manually pay off all of my loans like normal during the moratorium period.

In the meantime, traditional jobs and businesses have clearly collapsed. I am aggressively working on finding my own way to make money online.

Wrapping the Moratorium Up

A lot of Malaysians will be affected financially by the Covid-19 pandemic & the extended MCO.

The government is helping us with a once in a lifetime moratorium order to help us with our cash flow problems.

But make sure you understand both sides of the coin and hope this article has been helpful.

Useful Resources:
Bank Negara Malaysia’s Moratorium FAQ sheet.
Maybank’s Moratorium FAQ sheet.

Originally published at https://balkonihijau.com.