There’s always this question, does MRTA Compulsory when I sign letter offer?
Always heard about housing loan protection, when you get housing loan, bank will require you to purchase MRTA together. Before that, let me explain what is MRTA?
MRTA is mortgage reducing term assurance.
|Example:||Mr Ahmad aged 30 Loan for|
RM300,000 for 30 years
|If no claim on Death|
/TPD after 30 years
|If claimed on Death/|
TPD after 15 years
So the question here, is MRTA compulsory when I apply for housing loan? Answer is Yes and No. Most of the bank doesn’t required you to get MRTA for your loan to be approved. However, there’s few banks ( PB* bank )to start off, that are compulsory.
MRTA act as an insurance for the bank, if anything happen to the borrower. There’s insurance to pay off the outstanding debt the borrower having with the bank. This mitigates bank risk.
Bank will provide better interest rate if include MRTA into the loan. Rate reduction around 0.05%. Effective lending rate 4.55%, after MRTA 4.5%. But the compounding interest from the MRTA offset the cash saved from the rate reduction. HOW? (Read here)
Bank’s MRTA isn’t compulsory, but the bank’s branch BRANCH MANAGER made it compulsory for borrower obtaining loan from their branch. Branch Manager have to hit their KPI, hence sometimes they will force sell it. Do know your rights.
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