Ms. A: My husband passed away, he bought a house and took a loan with your bank. He also bought MRTA.
Bank: Oh okay, let me check. (clicking the computer).
Bank: Yes, he took a loan with us. Let me check the MRTA. (After a while…) Ms. A, the MRTA is not enough to cover the loan outstanding. After MRTA settling the loan still, have a shortage of RMxxxxx.
Ms. A: Why? I thought MRTA should cover all the oustanding balance.
Bank: Actually, MRTA has a fixed table on how much they cover each year. Sometimes, it will not be sufficient due to a few factors.
One factor is the interest rates use to calculate the MRTA. If the interest rates are too low when calculating MRTA, and the bank interest rate increased over the year, the outstanding balance might be higher than the projected outstanding balance.
Ms A: We’re not informed of this. Why your officer does not tell us this. ( continue scolding…)
* MRTA : Mortgage Reducing Term Assurance
Tip: MRTA is cover borrower not the property. Fire insurance is covering the property.
Moral of the story:
Know what you’re buying, and do some research on the product.
MRTA is a cheaper insurance if you want to get protection. However, MLTA ( Mortgage Level Term Assurance) will be ideal if you have extra cash to spend. The coverage will be much better.
If you want to know more about MRTA and MLTA, please call/ Whatsapp us at +6012-6946746
or visit our website www.malaysiahousingloan.com
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