Ok lah.. I'll put this here for info. Heard from a friend of mine who blur blur go and buy a house and never heard of the options available for MRTA. Here goes..

Mortgage Life Insurance

Mortgage Life Insurances are designed to pay off the outstanding loan balance in the event that the borrower dies or suffers from total and permanent disability (TPD) before the loan is fully paid off.

Basically there are two types of mortgage life insurance available in the market. One type is commonly known as Mortgage Reducing or Decreasing Term Assurance (MRTA or MDTA) and the other choice is Mortgage Level Term Assurance (MLTA).

Mortgage Reducing Term Assurance (MRTA) or Mortgage Decreasing Term Assurance (MDTA)

MRTA or MDTA is a reducing term life assurance specially designed to protect a loan borrower against death or TPD (total permanent disability) due to natural or accidental causes. Some lenders will allow you to finance and add the premium to your home loan (up to a certain percentage of your loan amount).

MRTA or MDTA is a simple insurance policy and has become a common and acceptable policy taken up by the borrower whenever he takes up a mortgage loan. The premium is paid upfront in one lump sum. Some lenders will finance and add the premium to your loan. The borrower can choose the amount and tenure of the coverage and the amount of premium will be determined by these factors as well as his age and gender. Banks normally encourage the borrower to take up this policy by giving better pricing on their interest rates if the borrower signs up a MRTA or MDTA policy.

To the borrower this is relatively a hassle free, affordable and necessary policy as their mortgages are covered in the event of any unfortunate incident that may caused death or TPD.

Mortgage Level Term Assurance (MLTA)

MLTA is a slight variation from MRTA or MDTA and offers an alternative for a borrower who is looking for a life insurance which offers protection plus savings and in some policies returns on the premium.

Premium is paid on a monthly, quarterly, half yearly or yearly basis and the policy holder can choose to have a wider coverage other than death and TPD. The amount of the premium will be determined by the usual factors and the scope of additional coverage.

Comparison and Features of MDTA and MLTA

Life-MLTA
1. Transferable
This policy is transferable whenever the borrower buys a new property or refinances his loan with another bank.

Example: Transfer this policy, adjust the sum assured to match the new loan, as many times as you need.

2. Insurability is Guaranteed
You purchase only once, with the same sum assured, there is no need to prove your health condition again.

3. With Savings or Returns (Cash Value)
Premium paid will be accumulated either as savings or savings plus returns. The cash value can be used to reduce or pays off your mortgage.

MRTA
1. Not Transferable
In most cases, new MDTA policy has to be taken up whenever a borrower changes his properties or refinances his loan with another bank
Example: 5 yrs later, refinancing at the older age, for same tenure of same loan amount, the MDTA cost is higher.

2. Insurability is not Guaranteed
Most of the time every time you finance your property, you have to prove that you are healthy to purchase MDTA.

3. No Cash Value
It is an expense with zero cash value at end of the mortgage tenure.

In lament term with example :
For example : The applicant name is Ken. He's a 24 male and bought a property for 230k but he only take 100k loan.

MRTA scenario
So if he purchase RM100k for 30 years MRTA the premium will be RM2165 and the surrender value from time to time is less and less. So, if anything happen to Ken at 5th year, the benefit he get from insurance com will be RM95299 while 10th year will be RM87319. So at the end, the value will be zero at 30th year.

MLTA scenario
If he purchase same RM100k and 30 years MLTA, he needs to pay RM61 every month and gets the level protection. He can choose to pay monthly, quarterly, semi-annually or annually. If Ken is TPD and can't make a source to pay for monthly installment, the benefits he get is RM100k no matter at which year. If Accidental death it would be X 2, the benefits will be RM200k. This is consider savings and you get the level benefits no matter 1st year or 18th or 30th year. Because the surrender value is high and higher. If Ken have nothing happen at 30th year, he can get back the value he prepaid. This is the benefit you get from MLTA. And, Ken is only 24, if he buy a better property, he can bring this MLTA over to that property and extend it.

This post has been edited by suiteng: Jan 9 2009, 09:18 AM

Thanks for the info
all the while i only heard of MRTA

Any idea which serve better?

If you have a life insurance or if you want to gao dim 1 shot, then MRTA lor..

If you don't have a life insurance, you can get MLTA. But you must fork up some to buy the rider (i.e. 36 CI).

for laymen, which is the best?
i still cannot make out the different.

Just buy life insurance. MRTA or MLTA are essentially the variant of this.

what life insurance gotta do with MRTA and MLTA? if got life insurance then buy MRTA, if no buy MLTA?

from the 1st post it seems that MLTA is alot better.

can we choose MLTA or MRTA when we apply loan? or the bank fix it?

Wrong concept.
If got life insurance, go for MLTA.

If you have no dependency, you could also assign your life insurance to insure your property in the event of death....but not advisable.

so.

my scenario is like this

property value is RM260
loan at 90%
Completed Property 2nd hand.
i'm only 23...

so.. in this case shud the MRTA benefit me more or MLTA benefit me more?

referrring to
"If Ken have nothing happen at 30th year, he can get back the value he prepaid"
The money i put in MLTA i can get back at the end?

MLTA is not transferable.
Also, it depends on which type of loan you took.
MRTA is calculated upfront and if you included into your loan agreement; try and imagine how the interest amount hyped up over the years.

Back to type of loans. I'll give mine as an example.
I took flexi loan.
Ok first thing first. The insurance coverage is for "what if" situation. It's meant to paid of your mortgage when you're hit by unfortunate incident mainly death or permanent disability whereby you can't work to pay off your mortgage.

On flexi loan, the principal value of the loan fluctuates but definitely getting lower by years. So why would I insure on the initial high amount up front if I know that I'm going to pay it off in 10 years time while I took 30 years loan? Every year, the amount I owed the bank is getting lower....think of the premium as car insurance. I insure only the amount I owe the bank.

In this above case, I would loose out on MRTA as it's not refundable also. So in the case of early settlement than the initial tenor or refinancing, one definitely loose out. Unless one plans not to refinance and just follow the repayment tenor.

Btw, I do not know about this getting back of money. It might be true if one "pre-paid" the amount. As for my case, I don't pre-pay for insurance or includes it in my loan. I renew yearly based on the amount I owe the bank.

i get from a blog

1.Mortgage Reducing Term Assurance (MRTA) or Mortgage Decreasing Term Assurance (MDTA)

Main = Protecton (reducing)
Premium = LumpSum

-------------------------------------------------------------------------------------
2.Mortgage Level Term Assurance (MLTA)

Main = Protecton + Saving + Cash Value
Premium = monthly, quarterly,yearly

agree on not to add the MRTA as part of loan.

if MLTA can get back then defiantely MLTA is alot better.

MLTA is transferable by re-assigning the policy back to the insured or another financial institution, however continuity is up to the term length only.

Example: You took a MLTA for 20 years, after 5 years you refinance your loan and took another new loan with same amount for another 20 years. You can assigned the MLTA over, however with only 15 years left in the term, you might need to buy a new policy at an older age at a higher premium, subjected to health checks & etc.

Subjected to different insurer rules & regulations, another alternative solution would be to convert it into a whole life policy, which will also be subjected to a higher age based premium as well as health checks and etc.

Both MRTA and MLTA does not have cash value built up, only Mortgage Whole Life Assurance (MWLA) have cash value & savings over the years.
Basically MWLA is a form of Whole Life Insurance with specify focus on debt protection with features like lower cost, guaranteed cash value, etc.

However, you can have a combination of either 2 type, or even all 3 should you wish to, hence why some agents may tell you MRTA or MLTA can have cash value.

Basically if you can afford it go for MWLA, best value for money. But if you have enough Life Insurance, go for either MLTA (if you wanna leave behind extra for family) or MRTA (at least a roof over thier heads during your absence) or a combination.

Hope my explanation helps.

Should you have any further questions or want a quotation, you can always pm me.

Thanks. Best Regards.

This post has been edited by Zarth: Jan 31 2008, 02:51 AM

areankim,

Are you buying insurance to insure something, or trying to get money back?
Do you know how much you'll be paying for a level term insurance compared to a reducing term insurance?
And do you know why you really need to have mortgage insurance in the first place?

If you want to insure yourself according to the value of the loan you took, then you take MLTA. If you want cukup cukup to cover the "remainder" of loan then MRTA is enough.

In a way, MLTA is like insurance. You take RM200k loan, you insure yourself for RM200k. And if "choi choi choi" ADD, you get double the amount.

MRTA on the other hand, e.g. you took RM200k loan. After 10 years, you have paid off until left RM80k hutang (I didn't really count, illustration purposes only). If anything happens to you, you only get RM80k.

Recently i was approached by an insurance agent
he recommended me to buy Life Insurance over MRTA,
as Life Insurance able to cover the death + if the mature date reaches, you can withdraw the money + interest to payoff the homeloan.
(fyi, i've already have an lifeinsurance plan)

is this called MLTA?
coz i asked if it is MLTA, he said no if im not mistaken (he's from great eastern btw)

so, it's now like MRTA vs MLTA vs LifeInsurance

It's assigning your life insurance to your house.
I.e. if anything unfortunate happened, the pay out from your life insurance would go to the property first and the remaining towards your dependent.

MLTA as explained is termed insurance i.e renewal upon term expiry. MRTA is one shot at the time of purchase and non-transferable.

Dear forumers,

Would anyone be interested in an MRTA/MLTA that is transferable?

Its basically a product with the same low cost as a MRTA/MLTA but instead of assigning it to the bank, you can opt to assign it your beneficiaries first.

Traditionally, the MRTA policy would follow the bank, however this new product serves as an individual policy following the insured instead.

If you're getting a new loan and banks insist that you must have an MRTA/MLTA, you just need to assign the policy to the bank.

However according to Bank Negara ruling, that is optional.

If you have previously opted not to get MRTA from the Banks, you can opt to get it now.

Also, as it acts like an individual debt protection that can be extended to not just cover home loans but also overdrafts, car loans, or even personal loans.

I'll share more info should anyone is keen to know more.

Thanks.

Best Regards.

This post has been edited by Zarth: Mar 27 2008, 09:12 AM

Zarth, yeaps i would like to know more. can email me or something?

Zarth,

Sounds interesting. Kindly let us have more info.

Ok, here's some of the features and differences from MRTA/MLTA:

1. Transferable and Portable - policy stays with the owner no matter how many times you refinance.

2. Joint-life applicants, each have thier own policy. This allows any of the joint applicants the option to continue the policy should one passes away. Also they get to enjoy 20% Instant Savings off the normal premium. Joint-life applicants can be anyone, friend, brother, sister to business partners, Etc.

3. Flexible coverage term from 5 up to 40 years + 3 years construction period. Good for those who plan to settle their loan early. Option to continue on even if the loan has been fully settled.

4. Single premium - one time payment. Coming soon, 6-12 months Interest-free Instalment Payment Plan for PB, Citi or Maybank Credit Card holders.

5. Covers Death and TP Disability - sickness, natural or accidental. 24 hours Worldwide Coverage.

6. In the event of Death, sum assured is paid to beneficiaries. If the bank insist they should get it first, then just assign it over to them and revoke it once you have settled the loan. If there is a balance after settling the loan, it is paid to the beneficiaries.

7. Affordable and able to cover other types of loans such as overdraft, car loan, personal loan.

If anyone wants a quick quotation, just provide me with your D.O.B. , Loan Amount, Interest & Term.

Thanks.

Best Regards.

Not much different from normal Term Life Insurance

Normal MRTA/MLTA is underwritten on a Group basis hence the lower in premium compared to conventional Term Life Insurance which is underwritten on a individual basis.

This new solution is underwritten on a Group basis while still giving you the benefits of a normal Term Life.

Hence when you compare the cost, it is much more affordable.

When you buy your houses or properties. You can actually use your personal life insurance as replacement of MRTA. Just tell your Banker that you will morgage out your life insurance. In case anything happen to you yourself. The banker to claim the remainder payment on your life insurance. But there are few things you need to remember before you really use this method to save your MRTA premium.

1) Always ensure you have more than 2 life insurance on hand. One for necessary illnesses protection, second one is for add on protection (opt to have).

2) this method is good for short term properties investment. Less than 5 years investment is prefered.

3) Do not use Critical illnesses life policy to replace MRTA, what if you need this money to cure your illnesses.

Recetly I found that there is another way to save your MRTA money but at the same time u invest without affecting insurance protection. How?

Also, was wondering if anyone thought about this, if you have already purchased 2-3 properties, let's say 150k each, and you have MRTA on all of them, then effectively that's like having term insurance value of 300-450k should anything happen to you. If so, why do people buy life insurance on top of that? The premiums for life cover is much more expensive than term too... not sure if one needs to pay for all the product features when all you need is protection.

Personally, if I were to choose between MRTA / MLTA for my property, I choose MLTA.

1) MLTA = gets back whatever I pay at the end of the period

2) The interest (supposedly earn) from the payment, I consider it as premium to buy the insurance protecting the house and me.

3) based on the 100k loan example in TS first post, I would prefer to get 100k coverage no matter which installment year I am in.

4) No doubt, paying rm61 x 12 mth x 30 yrs = rm21,960 which is much higher than MRTA 2k+. But I get back full 21k at the end.

Thanks for the reply. I've heard of some plan recently..

Any idea? Nothing much in google.

This post has been edited by suiteng: Apr 9 2008, 12:28 PM

Could be the plan zarth is talking about...

Anyway, to me; I would never assigned my life or accident insurance to my property.
I would rather have it to be awarded to my beneficiaries and let them decides what to do.
I bought term loan with no cash awarded back to me as I do not see the needs for receiving cash at the end of the term. It's a yearly thingy. And I insure the amount I see fit (forecast on how much to pay down on my mortgage for the year) and not necessary up to the loan value. And I do not intend to insure it over the rest of my tenure. That's my own plan.

Traditional MRTA is no longer marketable when financial education and plans are properly educated to consumers. Thus you see that a lot of finance company is actually leaving that as optional when taking up mortgage loans. Obviously besides taking up mortgage loans from insurance companies.

MRTA is marketable during the early years because:
1. Ppl buy properties for own stay, nowadays ppl tend to buy for investment.
2. Ppl stay in the said property for their whole tenure or majority of the tenure, nowadays ppl tend to flip properties when they see fit and according to lifestyles.
3. Lack of refinance packages and competitions so not many ppl switch loans.

Went to CIMB bank just now, for 70K LA with 11yr tenure:
MRTA is around RM 800
MLTA is around RM 1550

both if not include in the LA it will be slightly (RM 20-50) cheaper. But what i dont understand is that MLTA is said to be payable in monthly/yearly basis (from the previous few replies). Is it advisable if i paid it in lumpsum in the beginning, or i can neg with bank to pay it in installment basis? and if i paid in lumpsum and i manage to settle my loan earlier, will i get discount or more interest?

You may charged interest if pay monthly. This you have to check with the bank. If you settle your loan earlier, you can either surrender the policy and get back the cash value or you can keep it for further usage when you take up another loan for a new house

BTW, never finance the MRTA/MLTA into your loan else you be paying interest for them for the first 3 years.

hi, is your term loan here equivalent to MLTA?

Normally I don't think it's refundable on the premium. You can check with the insurance company you're buying though.
Thus for my case, I do not plan to insure for the full tenure. I paid yearly something like when you buy a car than yearly you insure based on the amount you owe. My plan is when my loan amount goes below RM100k, I might not want to buy MLTA anymore.

Also another word of advise. Never include the premium into your loan as the amount might be lesser, but than again if you are tro compound it into a say a 30 years loan.......
Say 5.7% interest per annum.
MRTA - RM800 premium = RM871.55 interest charged = RM1671.55 total paid.
MRTA - RM1550 premium = RM1688.63 interest charged = RM3283.63 total paid.

yeah....Mortgage Loan Term Assurance which I renew yearly. Might have used the wrong word.

i thought for MLTA once you finished your loan, you can option to withdraw all the premium?
they printout a copy of the full amount paid for the premium included/excluded into the the loan. and the different is around RM20-RM80 only...

What I quoted is based on 30 years.
If based on 11 years like you mentioned, at the interest of 6%...it's RM2137.16 which is still RM587.16 difference.

Calculate using this excel formula PMT(Rate,Nper,Pv,Fv,Type)
Thus yours is PMT(6%/12,11*12,1550) = RM16.07 which is the monthly installment for your MLTA if charged into your financing.
RM16.07*11*12 + RM16.07 = 2137.16

Note:
Rate = interest rate = 6% per annum
Nper = total installment = 12 years
PV = present value = 1550
FV = future value

p/s: ask them how they get their number and you'll know whether or not you talked to the right sales person.

i got all the numbers from a printed sheet. I think they just keyed in the value and wola...
that's the reason why i see the different is only so small...

Finally found a thread relating to MRTA and MLTA.

Im planning to refinance my home because the current bank isnt offering me good rates.

I did ask advices from several mortgage advisors and all of them suggest that i take MLTA due to its good benefits. Is there any con about MLTA other than it is much more expensive than MRTA.?

Thanks for the help

Is this property for investment or for own stay?

Own stay

If own stay then MLTA lor..

jus like to get n opinion here, i jus received n offer letter for housing loan, MRTA included cost RM6695 for 20 yrs, shud i pay dis MRTA separately so s not to b charged more interest, n also do i have n option not to accept MRTA but opt for MLTA since dis property is for own stay n not for investment...thnx in advance

if two person buy one house.

then one ppl got unfortunate. then will the loan no need to pay?

Yes you have the option to not accept the MRTA and opt for MLTA. Do take note that MLTA will be more expensive but then again if you take MLTA you are able to get all your premium back after keeping it for the full term.

---

Added on March 18, 2009, 1:44 pmerm.. with no insurance? Who's covered?

This post has been edited by DriedIce: Mar 18 2009, 01:44 PM

Depends on what you buy. If MRTA, then the loan no need to pay. If MLTA, then the money will go to the beneficiary and the beneficiary will decide on what to do with the money.

MRTA mar... what i read , if single person. got unfortunate then no need pay installment.

but if joined name, two person. one person disabled... how ler?

Depends on the coverage you pay for.

E.g. 1
If loan amount = 100k for 30 years.
Borrower 1 : cover 50% = RM1101
Borrower 2 : cover 50% = RM1101

Either one TPD on first year, you will get 50% of 100k = 50k.
Either one TPD on 15th year, you will get 50% of (principle, e.g. 50k) = RM25k.

E.g. 2
If loan amount = 100k for 30 years.
Borrower 1 : cover 100% = RM2202
Borrower 2 : cover 100% = RM2202

Either one TPD, you will get 100% of 100k = 100k.
Either one TPD on 15th year, you will get 100% of (principle, e.g. 50k) = RM50k.

Estimation only, ok? But once claimed, all your debts will be paid first before any amount of $$ reach your hand (if there's any left).

e.g 2 pay double wor..

if only one person borrow. same 100k 30 years. for 100% coverage.
will it be RM2202 or RM4404?

The premium is an example only.

The difference is coverage, full or half or whatever you wanna choose, 80:20 also can.

If 1 ppl borrow, then buy 1 person, premium RM2202 for 100% coverage. Means if buy yourself, if anything happened to you then your beneficiary can claim. If anything happen to your beneficiary.. erm, too bad.

oh. i can also insured one person only.

This post has been edited by daruma: Mar 18 2009, 04:07 PM

Hi everybody...

I just followed the topics recently. I just want to share something i took for my housing loan. Beside MLTA, there exist another mortgage protection which is call MPRP (Mortgage Protection & Reduction Plan)..
The idea is we have saving, protection and at the same time reduce the tenure of housing loan..
My housing loan for example:

Loan RM220K
Face amount=RM220K (TPD,36CI,Death)
Monthly payment= RM1200
Tenure =32 years..


I took MPRP from this marvellous insurance company,i pay RM300 monthly.In nearly 21st year later, i will get about RM100K plus in my MPRP account and the premium will be taken to settle up the remaining 11 years(32years-21years) housing loan from bank!!!
I think it is a good idea to sacrifice RM300 now and get saving for about RM158,400(RM1,200 x12month x 11 years) later...

If you can manage your money wisely, i think there shouldnt be any reason you won't took MPRP man...

Email me if you're interested:syazwan.tsm@gmail.com

There shouldn't be a problem to share good things with all of u my frenzzz:)

Remember, THE GOOD INVESTMENT IS NOT BUYING A HOUSE;
THE GOOD INVESTMENT IS HOW TO SAVE/REDUCE THE INTEREST RATE OF HOUSING LOAN!!

This post has been edited by skyside: Apr 3 2009, 06:28 PM

Is the 100k plus GUARANTEED?
Why not you just say which insurance company?

If I read that correctly you're saying:
RM300 monthly
20 years i.e. RM300*20*12 = RM72000

And you get back RM100000, so total profit is RM28,000
Now to calculate simple interest wow....you got a 39% profit from your RM72,000 investment

But on second thought, you're getting only 1.9% return per year if you divided it by the 20 years. I'll say it's not worth it as many other form of investment can gives more returns. On the other hand, many other insurance premium is much lower than the RM300 monthly repayment.

So nope....not exactly a good deal.

You mean your are paying RM1200 installment + RM300 for the MPRP = RM1500 per month? I dun think it's good deal if so.
And same question, does your RM100k+ guaranteed?

Thanks for the reply everybody..

Attached herewith the premium table for your review..

The calculation is based on the lowest return according to BNM.

You can see in 20th year, the return is more than RM100K (RM106,124.00)

The return should be more which will definitely lower the loan tenure less than 20 years..

What i want to share is i would sacrifice now (RM300 x 12mth x 20years=RM72,000) rather than survive in the future

paying loan installment (RM158,400(RM1,200 x12month x 11 years))

At least i can save RM86,400 (RM158,400 - RM72,000)

This post has been edited by skyside: Apr 4 2009, 10:52 AM


Attached thumbnail(s)

In scenario 2, it could be just about 54k!!!
Which means
- There is no guaranteed interest at all.
- There is possibility of getting less than what you paid (premium)

your sacrifice RM300 is mean RM1200 loan installment + RM300 for your policy total RM1500 per month?
Or the RM300 already include in the RM1200?

Your not guarantee return after 20years is RM106K, I get another quotation which give me RM214K (not guarateed also) at 20years also. With same amount RM300 per month. With this you may settle your loan in 20years also and also extra cash for you at that time, you get a house and cash. Will that be alot better?

This post has been edited by onnying88: Apr 4 2009, 01:41 PM

Hi everybody,

Well, scenario 1- account value is projected value or in other words returns

after certain years. All quotation must based on Bank Negara Malaysia

5.5%.By right policies should entitled for 6% to 8% in long terms.

This is why the QUOTATION says non-guaranteed.

Secondly, scenario 2- always comes when the country economically

collapse in a sense like sri lanka or indonesia. It is something like third

world country.Currently it is true that we are partially effected with this

economic problem but it is absolutely truth that our country cannot be worst

to that level. Usually and normally, we should follow scenario 1 only.

Anyway, i hope we can help each other conveying good msg pertaining to

MRTA/MLTA/MPRP...

What hav u said is just wrong because MRTA they do have the surrender value , its not totally refundable. Depends on which insurance company u taken from. Lets say u insured ur loan amount and took for 30 years insurance of MRTA , and u settle earlier like wat u said in 10 years, the remaining coverage of 20 years they will calculated the premium and refund back to u. But of coz the amount is not like wat we are expected because its call Mortgage reducing term assurance so the premium will depends on how early u settle the loan and calculated accordingly.

So you're saying Scenario 1 is 5.5%?, but Scenario 2 is less than that?
Are you sure the fund consistently makes 5.5% return every year? Do tell me which fund in Malaysia makes 5.5% return every year. I would really like to invest in it.

Furthermore, Sri Lanka & Indonesia's economy has not collapse yet. (That's another thread for debating)

buying insurance from every insurance companies, same, they have also fund managers manage funds and invest into bond and blue chip stocks. Mostly 80% will invest bond othrs in blue chips. Its depends on the proportion.

For bond return yrly 4-7%, its subject performance. Senario 1 told if the market good, assuming 5.5% , if performance low will be 4% or even 3% yrly. That why, this company (AIA) made it 2 senario and you may estimate how much the return in 20 yrs later.

its give more protection to the valueable customers..Its not the company just wana made money, but also market demand. Each person has own needs for protection..'Chinese always said (Got money scare no plc use') something sound like that...Most rich people need more protection. Who knows one day ..... bla bla..

Hi all!

Need an advise. Let's say I'm refinancing my house after 4 years with another bank. How about the MRTA that I've paid for the loan with my current bank? Will I get some refund on the premium back or I got nothing?

Yup,basically there is some value for the MRTA
Just take your MRTA policy and go to the insurance company to claim the remaining value.

i had sell 50 mlta for my client

mrta and mlta also cover the person in case of any premature death. is it is consider as insurance. but both of them are serve for the purpose of mortgage. u may have ur own life insurance, but it is leave for ur family, or ur beloved one for their living, and maintain of the currently lifestyle when we are out of that picture.

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

4.1K is annual or 1 time deal ?
sorry, I'm noob for mrta / mlta.

It's one time payment.Either you choose finance into the loan or you pay by cash yourself. Please take note that all MRTA is not transferable. Meaning everytime you refinance or sell of the property, You have to buy another new MRTA to replace it and will be quote higher price as your age go up. Any question or quotation feel free to ask me. I'll be glad to help everyone here.

This post has been edited by onnying88: Aug 16 2009, 09:12 PM

As far as i know, MRTA is 1 time pay, either cash or finance into loan amt.
But MLTA is paid on a monthly, quarterly, half yearly or yearly basis.

But the OCBC agent told me, OCBC have MLTA 1 time pay off. Anyone can clarify this?

Normal MLTA also can 1 time pay off which is by full payment, but the price will be . Of cause there will be some discount if you do full payment for MLTA.

I would like to know the OCBC MLTA also. If the premium is around the same with MRTA, then it's good news to everyone.

hi,

prudential quote rm878 monthly for 20 years to cover for the loan amount 800k. if let's say end of the day nothing happens.. will get back only 140k.

if take the mrta would be 45k.

which one is more worth it ??
or is there other insurance that have better offerings than prudential ??

Can pm me your D.O.B? I can make a quotation from Hong Leong Assurance for you to compare.

Here is a example of quotation for a 30years old client with RM800k level coverage. Which mean through out 20years also cover for RM800k.
Monthly payment = RM 745.50
Total payment for 20years = RM178,920
Surrender value at 20years = RM202,704 (Guaranteed)
Break even years at 16 years. Because surrender value at 16 years = RM151,448 (Guaranteed)
while your total payment for 16years= RM745.5 x 12mth x 16yrs = RM143136.

This policy can be use for up to age 100 and can continue serve as a policy even you refinance in the future while MRTA will be burn and have to buy again.
This policy have have break even years of around 15years. So that you get back what you pay for this insurance in shorter time in case you settle the loan in shorter time.

For more information, feel free to Pm or contact me.

Onn
017-6100337

if u have the extra money.. u can go for the life insurance.. as it wil have some cash value and still continue to cover ur life even after ur hse loan finish or transfer name.. like sell off..

more benefits.. but come with a price.. montly payment...

agree with what jusco1 said.Life policy would be a good option if you want to cover all which is life, disability and critical illness. May I know what your DOB ,darlyn . I can quote for you MRTA and MLTA from GE. I will quote for you after know your age. darlyn, I have PM you some details

This post has been edited by leecy: Sep 13 2009, 12:57 AM

Hi:
Here I'll roughly explain about MRTA, MLTA and Life Insurance. Hope this info will help those newbies to get a right idea about what they really need.

MRTA
One lump sum, cheap (If the premium is not integrated into the loan).
Non-transferable. If you refinance your property, you have to buy a new one.
It will be a good deal if you have cash to pay for the MRTA and you don't intend to refinance your property before you settle the loan.
No surrender value.

MLTA
You are paying more premium if compared to MRTA, but after you settled the loan, you can get back your premium paid, together with some interest. Looks like a very nice plan but I don't suggest my client to take this plan. To know reason why, e-mail me at cheahyang_0@hotmail.com

Life Insurance
You pay the premium on annual basis. Premium is higher than MRTA. However, if you integrate your MRTA into the loan, MRTA will cost higher.
Transferable. No need to buy a new MRTA when you refinance your property.

Normally I don't suggest decreasing term to my clients. Even though the loan outstanding is decreasing, but normally your other commitments is keep on increasing throughout your lifetime, especially for those businessmen and investors. Ask yourself, does your assets value and life value is increasing or decreasing over your lifetime? Unless you're telling me that the property you want to buy is the one and only commitment you have in your lifetime, otherwise I don't see a reason why life insurance is not meant for you.

Furthermore, it is advisable to buy life insurance when you're young and healthy. Some more it will cost lesser than you buy it later.

Any questions you can send an e-mail to cheahyang_0@hotmail.com . I'll try my best to solve your problems. Thanks!