Just wondering how do they calculate how much we're to pay for MRTA or MLTA?

Guys,I am totally new to the acquisition of new house...Recently my family planned to buy a new house,from the developer...we had paid a 3k deposit...The house price is Rm225k...my father planned to take only RM80k loan,so paying RM145k upfront....But today an Agent from a home loan consultancy company told me about a new plan....His advice to us is not to pay that much as upfront,due to this might cause in Taxation problem...secondly...the agent said they do have a package for the client to save interest rate....

The idea is roughly about borrow higher amount from bank...and don take any MLTA or MRTA,but use another type of insurance,which is called as MIA ( Mortgage Insurance Account)..the benefit of doing so is that the MIA mentioned is some kind of saving insurance,which at the end of the insured term,we can get back the money we invested in the mortgage account..So the agent told me not to pay the big upfront,but instead paying upfront amount,lets say 40k...so the remaining RM105k(RM145k-40k) can be use to pay the premium for MIA..then maybe after few years i can use the premium paid to pay off the remaining loan amount for my house...

Actually can anyone advice me for this? and my situation is,we planned to take as least loan amount as possible(to save interest)..then after maybe 5 years ,we planned to settle all the remaining loan amount.....

Ps : there is no consultancy fees or any charges for using the homeloan consultancy firm....and from wat the agent told me,i could save some legal fees by appointing them,as compare to the normal way,which mean we get our own lawyer and settle everything..the agent said they will help us to settle everything from the beginning till the end...

Thanks in advance....

MRTA or MLTA premium is calculate base on your Age, Loan Amount and Tenure.
You may pm me if you need some quotation for MRTA or MLTA.

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Added on July 15, 2009, 12:11 amMost likely will be investment link product. If it's a investment link product, bear in mind the return that they show you are not guaranteed. You need to double check for it. How many yoear will take to have the enough money to settle the loan? izzit can be done in the 5years time that you planned? Even for some guaranteed return insurance saving. The return will be guaranteed, but the loan interest will not be guaranteed. The BLR can rise anytime, so If in the case BLR rise, the earlier plan that show you may settle the loan in X years might end up at Y years.

Of cause the agent also right about some fact. If you pay more up front, you might be taxed for it.

For your case,you might consider using Flexi Loan also. The way is you take 80% loan, Then the remaining money that you plan to use to pay upfront earlier, you just dump in to the flexi account. Just after 5 year if you have the money to settle it, you can settle the loan without without any penalty also. Even that you may choose to just leave the money in the flexi loan and let it deduct the installment until your principle or loan settle. The bank will not charge you any interest at all in this time. Please note that the money you dump into the loan is just for interest offset, NOT settle the loan, so the money you dump in will not be taxed.

This is one of the way you can consider, of cause there's might be others way that may suit your needs too.
Goodluck in everythings


This post has been edited by onnying88: Jul 15 2009, 12:11 AM

@bold, no such thing.

Saving interest rate package? I guess it's more towards flexi.

If you plan to pay it off early, there's no need to take an "investment" like product. Just an MRTA will do. If it was me, I wouldn't even buy MRTA if the bank permits

the problem is...the bank manager told me that it is compulsory to buy MRTA....probably due to the age of my father(54)...and im not working..but as i know ,bank Negara had make it optional to buy MRTA? thats y i am considering the MIA i mentioned previously...which had cash value at the end of loan term,and the premium paid is recoverable.....instead of choosing MRTA,of which the premium paid is not recoverable at the end of loan term....any idea?

PS : the MIA is from AIA...anyone heard of it?

This post has been edited by kent1988: Jul 16 2009, 12:26 PM

They will be taxation issues if the buyer unable to "justify" where the big funds come from....

Thats why we have a lot of people out there who buy a house or side by side and break it down completely when its new and renovate into a super duper "banglo" in a DSL or low cost area. The renovated house can cost twice as much....

As for MLTA and MRTA, just how many of you expecting to stay the full term. I think most will likely to settle all loan within 40-50% of the term.

So with MLTA, do you get back the money if you settle in 10 years for 25 yrs loan?

As for MRTA, you can chose to cover only 10 yrs for 20 yrs loan if you expect to clear the loan fast. Beside 50% into the term, you left about 50% so maybe you not too worry of the repayment in that period...

How many years the MIA will need to get back the money to settle the loan? is it guaranteed? Is it same with the 5 years planning?

If not, I think the better way is to buy a 5 years MRTA Or 5years Leval Term (both also very cheap only) and then just settle the loan in 5years time as your planning.


This post has been edited by onnying88: Jul 16 2009, 01:37 PM

actually the 5 years plan to settle the entire home loan is just an example...but for sure my family will not wan to wait until the whole tenure term to end,so we probably will settle it in between the tenure period...the problem im facing now is...i do not know whether i should trust this agent,about this MIA....thats why im trying to check the existence of this product (MIA)..i tried to call AIA just now...but no one pick up my phone...anyone here working for AIA ? or did heard bout this product?

from wat the agent told me....after a particular years,we can take out 70% of the accumulated premium we paid,to pay off partially or the whole loan amount....if we did not do so,at the end of the tenure term,we are still able to recover the full premium we paid ,plus an interest earned from the mortgage account.....so from what MIA offering and its benefits,it sounds very good ...but i am just afraid this could be a cheating product,which mean AIA did not offer this kind of mortgage product?

This post has been edited by kent1988: Jul 16 2009, 02:29 PM

Donno about all these MIA and MLTA, sounds very not worth it for me.

If want life insurance, get a proper life insurance. For house insurance MRTA is good enough.

I think these MIA and MLTA are sort of not good deal, because I guess they end when you finish pay the loan. But that's the time you really need life insurance. Product packaging guys comes out with smart products like these, tie with house loan, because generally loan only last until retirement age, and within this period most people don't get sick

Maybe the MIA is just another term/name of AIA's product that the agent use to convince and sell together with the loan.
If you wanna know clearly, ask the agent what's the product name in AIA's website. Or you ask him to show you a quotation for the surrender value. Then you can check it from the AIA's website or counter.
In the quotation you should able to see the surrender value at different years. And there will be a words GUARANTEED if the return is guaranteed.
If not, then the value is just a projected value that base on pass years record.

Even in Hong Leong Insurance we do have the same similar product also. If you interest to know the benefit between Hong Leong and AIA, you may contact me also. I can make a quotation and compare both for you too. No harm to know more different product right

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Added on July 16, 2009, 11:52 pmThere are lot type of MLTA out there. Some of them can be use until your age 100. With Guaranteed return + interest also. Maybe you haven't found on that suitable for you. But i do agree MRTA is also a good choice if it's suit your needs.

Ya,I agree with you when we finished the loan, that's the time we really need life insurance. But do you know we can continue to use the MLTA as your life insurance also? As i mention some MLTA can be use until age 100.

Benefit for MLTA?
Can refinance as much as you like. Because you will need to buy MRTA again everytime you refinance. And MRTA premium will higher due to age. MLTA premium will just remain the same.

After settle the loan, where's the time you really need life insurance.
You can continue to use the MLTA as your life insurance also. And it's alot cheaper then you buy life insurance after settle the loan, because you brought the MLTA when you'r still young.

Within this period most people dont get sick?
We will never know, that's why we have insurance in this world

All the best





This post has been edited by onnying88: Jul 16 2009, 11:52 PM

ING offering something call OLTA for housing loan too.
Wat is the difference and/or similarity of OLTA to MRTA/MLTA?

we need more information about the OLTA before we can compare the different for you.
For example the surrender value, term, premium.

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Added on July 17, 2009, 1:22 amThis is an example of quotation i've make for a forumer between MRTA and few type of MLTA. Loan amount for RM230k for 30years @age 26

For MRTA,

MRTA, RM230k, age 26 , 30years = RM5931.7 one time payment.
(MRTA is not transferable, no surrender value at the end of tenure and need to buy again everytime refinance)



For MLTA,

MLTA 1st type (1 to 1 guaranteed at the end of tenure)
Coverage for RM230k , 30 years tenure @ age 26
= RM303.60/mth or RM3643.20 if you pay yearly
RM3643.2 x 30yrs = RM109,296
Total surrender value at 30years = RM109,296 GUARANTEED
(You will only get back 1 to 1 at the end of the tenure. If you settle the loan in 25years,you will get lesser from what you've paid so far. You will still need to serve this MLTA for another 5 years until 30years total to get back 1 to 1. The another extra benefit compare to MLTA type 2. This MLTA will pay double RM230k x2 = RM460k if your death is cause by accident.The rest benefit is the same.)



MLTA second type (1 more then 1 guaranteed after break even years)
RM230k , 30 years age 26
= RM189.38/mth or RM2164.30 if you pay yearly.
At 14th years, you paid RM2164.30 x 14= RM30300.20
And at this time your MLTA surrender value is = RM30438
Which mean your break even years is at 14years.
(If you settle your loan in this time, you have nothing to lose as you already can get back 1 to 1.)

If you continue use this MLTA, you actually start earning some interest
If let say you settle the loan or continue using this MLTA for 20years.
Your total paid is RM2164.30 x 20yrs = RM43286
Your MLTA surrender value at year 20 is = RM50451 GUARANTEED
And if your loan settle at 30years,
Your total paid is RM2164.30 x 30yrs = RM64929
Your MLTA surrender value at year 30 is = RM87993 GUARANTEED (=Free 30years MLTA + RM23063 interest)

And the good point of this MLTA second type is you can use this MLTA until age 100. Meaning you can use this as your life insurance after settle the loan. Why? It's very cheap compare you buying a new RM230k life insurance at 56years old. And the return is GUARANTEED



MLTA third type, Investment link MLTA
The monthly installment can be as low as RM100, but the return will be very little as most of the money already use for insurance coverage. Only left little portion will go to investment fund. The higher you can pay, the more money will go to the investment fund and thus your surrender value will be more at the end. So i can't show you the return as it's not guarantee and it's depend on the investment fund performance.

This post has been edited by onnying88: Jul 17 2009, 01:22 AM

For MLTA Type 1 & Type 2, if I transfer it to a different house say after 5 years,
do i need to recalculate the whole tenure again to consider "end of tenure?"

For MLTA Type 2 got double amount if death by accident?
Also, what's the average per year interest if i surrender the value at year 20?



-removed, you already had your blog in your signature-

This post has been edited by b00n: Jul 17 2009, 11:18 PM

For ALL MLTA, you no need to recalculate again. You just keep on using it until the end of tenure/maturity years that you choose at first.

For example
MLTA type 1,
You brought the MLTA type 1 at 2009 for 30years. At 2014, you decide to sell/refinance the current property. So you just continue to serve this MLTA for another 25years to get back 1 to 1 o what you've paid.


For MLTA type 2,
You brought the MLTA type 2 at 2009 for 30years. At 2014, you decide to sell/refinance the current property. So you just continue to serve this MLTA for another 9years (for example on above post, 14years to break even) to get back 1 to 1 of what you've paid, or continue use this MLTA up to age 100 and enjoy some extra interest.


For the interest, given example 26yrs old @ RM230k
Your total paid is RM2164.30 x 20yrs = RM43286
Your MLTA surrender value at year 20 is = RM50451 GUARANTEED
So the interest will be RM50451 - RM43286 = RM7165 (and you get free RM230k insurance for 20years also)

Please take note that for MLTA type 2, Different age and different coverage amount will have different break even years and interest. But once the quotation is make and you brought it, the surrender value will be black and white GUARANTEED.

This post has been edited by onnying88: Jul 17 2009, 07:53 PM

Today i just signed the S&P agreement..and i agreed to take the loan from Alliance Bank..BLR - 2.1% (is it good this rate?)......plus a loan,thats not MRTA....is called MIA (I mentioned previously)...actually this MIA uses the concept of Universal Life Insurance from AIA......it generates minimum guaranteed 2% interest from the savings in MIA account....

Can anyone tell me is this Universal Life Insurance good? from what i know is the premium paid is recoverable,unlike MRTA....but the premium for Universal Life Insurance is higher than MRTA...

loan amt : RM157,500
tenure : 30yrs
age : 26

the bank quote me RM4.1k for the MRTA (dunno which insurance company)

but when i asked my colleague (who has a program to calculate the MRTA), she got RM2k++

i was wondering why the big difference in the premium. what is the rough MRTA premium for me based on the info above? tq.

My quotation also show for RM4.1k for your MRTA. From Hong Leong Assurance.

Thanks onnying88 for the confirmation!

what about Group Mortgage Term Assurance? mine 1 is RM1750.. its for 30 years or per year?

Welcome

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Added on August 16, 2009, 7:56 pmPlease provide more info about the Group Mortgage Term Assurance so that we can give you come clarify or info. Such as the company, buy from who? (bank provide with your letter offer or from agents outside?), or your loan amount and tenure.

This post has been edited by onnying88: Aug 16 2009, 07:56 PM