Hi all, I bought an apartment this year and get loan from the bank.
At the same time I also purchased the MRTA from the same bank.
However i have been asking to pay the MRTA interest during the project construction.
Is it correct? I have thought we only have to pay the progressive interest, i did not expect that we have to pay interest for MRTA as well.
Please comment on this, thanks!

You took loan for your MRTA?

Yup, MRTA is bundled into the loan.

Bank pay first on your behalf, definite have to charge int every month ... same as bank paying on your behalf to your seller through housing loan.

This post has been edited by mini orchard: Oct 22 2019, 02:44 PM

Exactly this. The bank lends you money to buy the MRTA. Bank lends you money to buy anything of course they charge you interest as long as the principal isn't paid off. If you don't want to pay interest for the MRTA portion, pay into the loan account to reduce the amount of principal equivalent to the MRTA premium (assuming your loan is flexi or semi flexi)

This post has been edited by Aurora Boreali: Oct 22 2019, 03:17 PM

That's why I go for loan package without MRTA/MLTA

can lump sum the MRTA/MLTA so it does not go into your loan package. or dont buy any MRTA/MLTA at all.

Well if it's bundled into the loan then yes you are required to pay the interest.

Lump sum MLTA? The amount will be big over the span of the number of years/months for the loan.

Does it means, during construction I have to pay 2 types of interest: MRTA interest and progressive interest.
Until unit VP then I can start pay the monthly loan instalment, is it correct??

Try ask your bank whether you can choose to start paying your monthly installment, else yeah you don't have choice but pay progressive interest for both until your unit VP.

What do you mean by bundled with housing loan?

Say loan 500k
Mrta 30k

Did your loan agreement 530k for period say agreed 30yrs
Or

Loan agreement 500k
Mrt agreement 30k payable over max 10 yrs?

530k for 30 years

Interest payment until full settlement of loan.

Monthly installment after vp is inclusive of mrta portion.

This post has been edited by mini orchard: Oct 23 2019, 07:47 AM

Yeah but progressive interest payment won't reduce principal but only monthly installment, anyway not many bank allow to do that..

whoa...…...you are paying 60k or more at the end of MRTA...…(assume 30k was the original sum).

When I bought MRTA some 25+ yrs ago, you either pay cash or max like 10 years only.

of course the good thing is IF your property is for investment purpose, you can claim the interest portion inclusive of yr mrta portion as tax deductibles

This post has been edited by BEANCOUNTER: Oct 23 2019, 10:15 AM

How to calculate the interest portion for tax deductibles? Appreciate the sharing

Not necessary to calculate.

Refer to your yearly loan statement. The interest portion charged is shown every month.

just like MO said, end of the year, your loan financer will provide you with a yearly statement clearly stated how much interest you paid for such property from Jan to dec.

you just take the interest portion and deduct against your rental income. there are other incidental cost that you can deduct as well...….to derive your net rental income/loss.

i thought progressive interest won't reduce the monthly installment too?
i mean the progressive interest during undercon property is not counted into house loan?

Correct me if I am wrong, even if MRTA is bundled into your loan, during construction time, the interest you are paying is only the interest on the amount where the developer has drawn down.

So, if that's the case, you have not even started paying the MRTA portion of the loan, let alone the interest?

The interest you are paying is merely whatever amount that has been drawn down by the developer as per the construction stage? Correct me if I'm wrong.

Sorry, what I mean is only monthly installment will help in reduce principal.

Adrian,

good point.

by your ratio, the bank will never be able to cover the interest and principle sum of 30k (example here) bcos the developer will never bill the bank the 30k mrta…..

so how will bank or when will bank pick up the 30k mrta loan???????

like I said earlier, MRTA I doubt that they will follow your housing loan tenure. max is 10 years...….it started when 1st drawn down bcos this is where yr insurance for the loan started.....and you need to start paying.....perhaps you need to look at the agreement again.....

I stand corrected. I will not buy MRTA if I have a choice (so far I don't need to except my 1st property).

You might be right in terms of when MRTA payment starts, which is the moment the loan started. But I can only speak from my current situation which maybe unique to me.

1) I was required to take up the MRTA for full term, 35 years as part of the home loan offer.

2) As the MRTA amount is huge, I was required to do medical check up. From the onset, I never wanted the MRTA but the bank manager told me if due to the MRTA amount more than RM10K, the underwriter requires me to undergo check up and the bank is obligated to get my consent to release the MRTA amount to the underwriter. Hence, the bank manager advised me to skip the medical check until it lapsed and the underwriter will officially decline the MRTA. The bank will then have to remove the MRTA from my existing loan.

3) True enough, 6 months passed, I received countless letters to do my check up but I avoided it, the underwriter declined the MRTA and the bank is currently processing the cancellation, which I hope will be done soon without any issue.

4) now going back to the interest on MRTA, in my situation, the unique part is that the MRTA was never released by the bank to the underwriter, hence, I am only charged for the interest on the 10% drawdown by the developer.

5) by this logic, I will assume that if MRTA is paid to the underwriter, the borrower would have been charged the interest as well.

Hope this clears the issue.

This post has been edited by adrianteo: Oct 25 2019, 08:25 PM

When I purchased my 2nd property many years ago, I did an assignment of my life policy to MBB instead of buying MRTA. When I sold off later, I did a cancellation of the assignment.

My current loan from HLIB where MRTA is optional. As for fire policy. I am allowed to purchase from my own insurance co but have to do an endorsement to state that HLIB is the financier.

Thanks for inputs