Real Estate Tips #14: Mortgage Reducing Term Assurance (MRTA), have you bought it?

MRTA is designed exclusively to protect against the outstanding balance of housing mortgage in the event of the loan holder’s unexpected death or TPD (Total Permanent Disability). In other words, it will pay off the mortgage thereby securing the repayment of the housing loan.

Over my 8 years involvement in the real estate industry, I've come across two typical true cases related to the issue of MRTA.

Case one:
Mr. A lost his eye-sights due to work injury, and he still has to carry a household consist of his wife and a 2 years old daughther. He previously bought a single storey terrace house at Bukit Jaya, and now fully paid off by the banks' MRTA. At least, he still can provide shelter for his family.

Case two:
Mr. B got me to sell off his double storey terrace house at Taman Puteri Wangsa, because he simply couldn't afford to continue serve the bank installment on his own anymore due to a car accident which caused him paralized.He is the only income earner to his family. He didn't subscribe to MRTA, as a result, he's not only losing his livinghood, he also lost his house.

The above are 2 real cases where i've met so far with regards to MRTA, therefore, i strongly urge all house owners subsribe to MRTA.

Get your bank's officer/insurers to explain to you in detail on how MRTA covers you and how you should be covered. That is to say, there are actually many options available when you want to subscribe to it.

Example:
A newly wed couple bought a house at RM150,000. If the husband is the only income earner to the family, then the husband should subcribe fully to the MRTA. If both couple are major income earners to the family, then they can opt to either subcribe to RM75,000 each, or RM150,000 each. In the case of subcription to half of the property value by each of the couple, in the event of death of TPD, the insurer will only pay off half the mortgage. The remaining ones will still have to pay off the balance. The younger the subscriber is, the cheaper the previum is.

The best part of the MRTA is that it can be made to become a portion of the loan margin you are getting from your bank.

Many people out there don't even know how they initially subscribed their MRTA, please refer back to your bank document on that matter, and please ensure you have made the right options (pleaser refer to example above) when buying it.