Friday, January 29, 2010

MRTA vs MLTA

I am not a first time buyer, but this time when purchasing a property then I realize actually we can opt  for MLTA instead of MRTA. If I knew the existance of MLTA from the first time, I would have choose for MLTA rather than MRTA. The differences are:

MRTA (Mortgage Reducing or Decreasing Term Assurance)
  • Coverage in case of death and TPD (total permanent disability) is based on reducing term. eg: If something happen after the 10th year u purchase a property, then the MRTA insurance will cover the rest.
  • The premium is non-transferable. If u sell the property and buy another property, new MRTA policy has to be taken up whenever a borrower changes his properties or refinances his loan with another bank
  • No cash value, it is an expense with zero cash value at end of the mortgage tenure.


 MLTA (Mortgage Level Term Assurance)
  • Coverage in case of death and TPD (total permanent disability) is based on level term. eg: If something happen after the 10th year u purchase a property, then the MLTA still will cover the insurance based on the value of your property
  • The premium is transferable and u can only buy once in your lifetime. If u sell the property and buy another property, just adjust the sum assured to match the new loan, as many times as you need.
  • Full cash value in returns, premium paid will be accumulated either as savings or savings plus returns. The cash value can be used when you have finish of your property mortgage.
For first timer property buyer, I would advice u to get MLTA so that when you are thinking to sell off and buy again a new property, u don't need to waste money again like we did!!!

5 comments:

Mojaro said...

Although there might be some merit to your points above, I'll add to that. If a Muslim homebuyer want to go for MLTA, please also ensure whether MLTA is in compliance with Sharia' requirements. This is the most vital consideration for Muslim consumers.

IreneYaya said...

Hi Mojaro: True. In most cases the bank will directly offer the MLTA (for Muslim I think they don't call it MLTA, they give it another name) in compliance with Sharia' to their muslim customers. But just in case, we need to ask and check-lah, kan?

Mohd Farhan & Dr Rosmawati said...

nowdays, so many Syariah compliant mortgage protection in the market. example :

1) HSBC Takaful Mortgage Protector Plus (TPD, Death, Critical Illness)

http://www.google.com/url?sa=t&source=web&cd=4&ved=0CC0QFjAD&url=http%3A%2F%2Fwww.hsbc.com.my%2F1%2F2%2Famanah%2Fpersonal%2Famanah-protection%2Fmortgage-protector-plus&ei=75AiTYHoGIq2sAPYxpzCAg&usg=AFQjCNHpzWEXiS1rQiPbq9b2d1U3jtIYAg

2) MAA takaful

3) ...

Please do survey before your buy.

Kris said...

Hi Irene,

It is not true that MRTA cannot be transferred to another property. That is a fallacy. It can be transfered :P


http://www.knowthymoney.com/2011/03/mythbusters-must-buy-mrta-when-buying.html

i-Solutions Financial Planning said...

Hi Guys,

To apply Fixed Rate Home Loan, please feel free to log on to

www.i-mortgage.com.my for more info.

Thanks & best regards,
Mortgage Specialist

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