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.


Insufficient coverage if BLR increase

to a certain point


Non-transferable on

new purchase or refinance

-Policy terminates automatically once

refinance/ loan settled


-Reducing cash value

– Drop to RM0 at the end

of loan tenure


-Beneficiary is bank


-Higher initial premium

-Premium increase while age


for new application on new purchase

-Health proves for new application

on new purchase

-Serve more premium when

finance by bank

-Interest tied up with BLR

-Premium Burn


-Lump sum

-Financed into mortgage loan


-Lump sum RM9,891 (Around Rm20,000 if

financed into mortgage loan)



-No cash return

-Insurance company will settle the bank loan

(if coverage more than the loan balances

-Beneficiary will receive the property


CoverageReducing coverage
Cash Value
Example:Mr Ahmad aged 30 Loan for

RM300,000 for 30 years

Total premium
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.

Any inquiries, do drop down in the commend below 🙂

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