How I Killed the 8.75% Debt: The Refinancing Move
In my last post, I talked about the RM2,300 year and the stress of that Maybank study loan. Today, I want to share how I actually got out of that trap.
When you’re stuck with a high-interest loan, you can’t just work harder; you have to play the banking game smarter. For me, the solution was House Refinancing.
The “Bank Game” Strategy
My parents had a house that had already appreciated in value over the years. We decided to refinance the property—essentially taking a new loan based on the current market value of the house to “cash out” enough money to pay off my study loan in one shot.
I remember the day I did it. I took a screenshot of my bank account and just stared at it. On one hand, I was happy. On the other hand, I thought, “Damn, now I have RM1 million in debt in total.” It was a scary number, but the logic was simple: I was trading a high-interest 8.75% “killer” loan for a much lower housing loan rate (usually around 4–4.5%). Mine was 4.25% at that time.
I rushed to the bank, did the transfers, and settled the paperwork. The weight off my shoulders was immediate. SIGH OF RELIEFFFF!!
How to do it (The 2026 Reality)
If you’re thinking of doing this, take note: it’s harder now than when I did it. Back then, I could stretch the tenure to 35 years to keep the monthly installments low. Nowadays, if you cash out for “personal use” (like paying off debt), many banks have capped the tenure to 10 years.
If you want to try this “Debt Consolidation” move, here is the general process:
- Check your Property Value: Get a verbal valuation from a banker to see if your house has enough “equity” (Market Value minus your Outstanding Balance).
- Calculate the Costs: Refinancing isn’t free. You have to pay for a new lawyer, valuation fees, and stamp duty (usually 2–3% of the loan amount).
- Submit Income Docs: Even if the house is your parents’, the bank wants to see your income (especially now that I have my AirAsia payslip) or a joint application to prove you can service the new debt.
- The Settlement: Once the bank approves and releases the cash, you use that “top-up” portion to settle your high-interest study loan immediately.
Don’t give up just yet
Looking back at that guy earning RM2,300 a year, I just want to say: Don’t give up. I’m no financial guru, and I’m definitely not here to tell you what to do with your life. But I am proof that there is always a way out if you’re willing to grind through the slow years. I went from selling houses during COVID to flying the A320 for AirAsia.
The debt was a mountain, but we found a path around it. If you’re a student pilot feeling hopeless about the money side of things, keep looking for options. The “clear skies” are coming, you just have to fly through the storm first.