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> Dangers of short-term MRTT/ARTT, check your ASB/Mortgage insurance policy

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TSwild_card_my
post Aug 15 2018, 07:18 PM, updated 6y ago

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I made this for my client today, so it would be a waste to just throw it away

1. This graph shows the dangers of short-term MRTT/ARTT coverage

2. The graph is displaying terms for ASB-financing and ASB-reducing-term-assurance (ARTT) but it can be easily adapted to mortgages, they have the same concept and similar financing (interest) rates

3. Check your mortgage or ASB-financing policies, to see if the coverage is the bare 5-year minimum or it tracks your mortgage/ASB-financing tenure of maximum 35 and 30 years respectively

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SUSMNet
post Aug 15 2018, 07:59 PM

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TSwild_card_my
post Aug 15 2018, 08:35 PM

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It shows that the protection is inadequate to the loan. In just 5 years there would be no protection at all, in fact, even in the 5 years, the protection amount is in sufficient to covert he loans outstanding

A full-tenure ARTT/MRTT would solve this, but at a cost. Just highlighting the dangers that some people do not know about their MRTT/ARTT. Some bankers, for the sake of getting the loan acceptance, would go all the way to reduce the tenure just to make the loan cheaper (shorter tenure, lower premium)

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