Is it compulsory to pay for MRTA (mortgage insurance) when loaning from bank?

[Frodo]

I think MRTA is good for buyers as it gives protection in case of unfortunate accident. Singapore's insurance is much more costly for properties.

But what is really needed is not a property insurance, but any term insurance can do the job. If your property is RM1 million and your term insurance is SDG1 million, it's good enough in my view. If you die (just saying only lah), part of that money already can go towards paying off the bank loan. Or else just top up your existing term insurance if really kiasi. It is still cheaper than buying MRTA.

 

[FHBH12]

But what is really needed is not a property insurance, but any term insurance can do the job. If your property is RM1 million and your term insurance is SDG1 million, it's good enough in my view. If you die (just saying only lah), part of that money already can go towards paying off the bank loan. Or else just top up your existing term insurance if really kiasi. I think it is cheaper than buying MRTA.

Thanks for the idea. I will definitely take up your suggestion to get a better term insurance for my properties in Singapore rather than a property insurance.

Why I took up MRTA was it was such as a hassle going through the property purchase and loan agreement. I just grabbed any convenient means to smoothen the process, which was why I just signed up with the bank and get the bank to package it together with the loan.

 

[Frodo]

Thanks for the idea. I will definitely take up your suggestion to get a better term insurance for my properties in Singapore rather than a property insurance.

Why I took up MRTA was it was such as a hassle going through the property purchase and loan agreement. I just grabbed any convenient means to smoothen the process, which was why I just signed up with the bank and get the bank to package it together with the loan.

At the end of the day the same question is asked, "If you die, how to pay off the mortgage?" How to pay off ANYTHING for that matter. So in that sense, any term insurance should be able to address the above concern since it is payable when you die within the term insurance tenure. You die, you get paid. OK not you but your beneficiaries. So if a bank tells me must buy MRTA separately it is really dishonest, unless it can be proven that money paid out from your normal term insurance not recognised by bank who gave you property loan. Cannot be right?

 

[FHBH12]

Overall I still feel that the MRTA in Malaysia is not that expensive compared to the insurance in Singapore. So I closed one eye at that time and wanted to get over with it :p I'm going to do a bit more homework in the next few weeks to look for a term insurance.

 

[Frodo]

Overall I still feel that the MRTA in Malaysia is not that expensive compared to the insurance in Singapore. So I closed one eye at that time and wanted to get over with it :p I'm going to do a bit more homework in the next few weeks to look for a term insurance.

Try SAFRA insurance, it's what I am looking into.

 

[FHBH12]

Try SAFRA insurance, it's what I am looking into.

Thanks for the recommendation

 

[RedsYNWA]

MRTA no gd for flippers though. That's why some buyers would reject it. Another thing to consider is that it is applicable for the entire term of the loan. ie if you sell off your house/upgrade in 5-10 years time, its money down the drain liao (though admittedly not much).

 

[sgcount]

From what I understand, the banker earns commission if he manages to get you to buy MRTA, so maybe that's why he say compulsory. It is compulsory for his own pay! But the good and honest banker will say not compulsory and loses his commission on that. But he wins my trust.

I thought so. But the reply was it's the bank's latest policy! I don't know why. Is it possibly because many Malaysians in the past bought their properties without such an insurance. And when the buyers couldn't pay, their family members protested or they were left homeless?

Still, it should not be compulsory right? I dunno man... guess it's just Malaysia.

Some of you mentioned buying term insurance. This is for your own benefit, in case *touch wood* anything happens.

But for the Malaysian bank where you take the loan from, you still can't avoid it even if you prove you have term insurance in Singapore?

Maybe it was possible in the past. I did ask and was told there's no exception. Must buy now. Haiz....

 

[sgcount]

MRTA no gd for flippers though. That's why some buyers would reject it. Another thing to consider is that it is applicable for the entire term of the loan. ie if you sell off your house/upgrade in 5-10 years time, its money down the drain liao (though admittedly not much).

That's true. But what to do?! They made it compulsory now. Craps....

 

[FHBH12]

MRTA no gd for flippers though. That's why some buyers would reject it. Another thing to consider is that it is applicable for the entire term of the loan. ie if you sell off your house/upgrade in 5-10 years time, its money down the drain liao (though admittedly not much).

Mine can adjust the years of coverage leh.

 

[Frodo]

I thought so. But the reply was it's the bank's latest policy! I don't know why. Is it possibly because many Malaysians in the past bought their properties without such an insurance. And when the buyers couldn't pay, their family members protested or they were left homeless?

Still, it should not be compulsory right? I dunno man... guess it's just Malaysia.

Some of you mentioned buying term insurance. This is for your own benefit, in case *touch wood* anything happens.

But for the Malaysian bank where you take the loan from, you still can't avoid it even if you prove you have term insurance in Singapore?

Maybe it was possible in the past. I did ask and was told there's no exception. Must buy now. Haiz....

The logic does not hold at all. Because if bank wants to be protected, then it can seize the property which is already within its legal right. Of course you would be made homeless but that's the hard truth. So the bank loses nothing at all, really. It's backside already covered because your property is the collateral, right? It's just extra revenue to milk.

Yes, term insurance you or family is beneficiary, but that's just where the money first goes to. Your family members are still obligated to pay off mortgage loan, and they will have to use the payout to settle the loan. I just don't see why any adequate term insurance cannot address the "you die then loan how?" question.

 

[sgcount]

I know.... but bank policy. malaysia. what to do?

 

[Frodo]

I know.... but bank policy. malaysia. what to do?

Ask to see bank loan agreement and where it states as bank policy? Terms and conditions should be there. Cannot just say "Bank policy" but no one can provide black and white for that, right?

 

[kopikong99]

That's why some buyers would reject it. Another thing to consider is that it is applicable for the entire term of the loan. ie if you sell off your house/upgrade in 5-10 years time, its money down the drain liao (though admittedly not much).

What you have said is very important. The bank would not highlight this to you and really is money down the drain. With b
Maybank I got no choice as then this is the only bank willing to finance.

It is not like we are first time home owner with no standby fund for early settlement.

subsequently my other loans all the bank never insists so don't buy as the premium is expensive.

 

[RedsYNWA]

That's true. But what to do?! They made it compulsory now. Craps....

Std Chart also compulsory? We just did a loan with them in Mar 13 w/o MRTA... Just tell them (verbally, not in email) you are buying to flip lah, so you dun wan MRTA...

 

[Frodo]

Std Chart also compulsory? We just did a loan with them in Mar 13 w/o MRTA... Just tell them (verbally, not in email) you are buying to flip lah, so you dun wan MRTA...

The MRTA is a bank product, which means that it is offered to customer, not imposed on customer what. Make sure it is bank policy, not bankER policy!

 

[borom]

It really depends.
If you have no dependents, you don't really need MRTA as the bank can repossess the property for all you care.

However if you have vulnerable dependents esp young kids and wife not working or unable to work, better have MRTA.
They can at least have a roof over their head should the breadwinner be not around.

Some say buy term insurance as substitute.
Its OK provided you are 100% sure there is no problem in the processing of the claim.
Sometimes the insurance monies is divided amongst many beneficiaries and there may be dispute as to who will pay how much to the house.

The term insurance monies may be needed for other things like kids education ect2.
The banks should allow customers to select their own insurers as long as its recognised by MAS.

.

 

[malpaso]

MRTA no gd for flippers though. That's why some buyers would reject it. Another thing to consider is that it is applicable for the entire term of the loan. ie if you sell off your house/upgrade in 5-10 years time, its money down the drain liao (though admittedly not much).

nope.. my singapore MRTA stays with me even if i were to offload the apartment.

 

[RedsYNWA]

nope.. my singapore MRTA stays with me even if i were to offload the apartment.

My SG one stays with me too, but not for MY leh......

 

[sgcount]

I have confirmed with the bank. It is compulsory to get the MRTA.

Really dumb rule. Clearly to make money.