Mortgage Reducing Term Assurance (MRTA)

If you're seeking a home loan to purchase a property, it's likely that the bank will require you to obtain Mortgage Reducing Term Assurance (MRTA) as part of your loan arrangement.

As a first-time home buyer, you may be wondering why you need to pay for this insurance. Allow us to explain what MRTA is and how it can benefit your home loan deal.

MRTA is an insurance policy that provides financial protection for home loan borrowers and their families. It helps settle outstanding home loan amounts in the event of the borrower's death or total disablement.

MRTA is particularly useful for households with sole bread earners, as the surviving family members may face difficulty paying off the remaining home loan if the main income earner passes away or becomes disabled. MRTA covers part or all of the unpaid portion of the home loan, ensuring that the surviving family members are not burdened with this responsibility.

MRTA is usually included as part of the home loan application process in Malaysia. You'll only need to pay a single premium, which will cover the entire policy duration.

It's important to note that MRTA has a specific insured amount and policy duration. It only pays off the amount that is covered within the time dictated by the policy, not everything that the insured owes to the bank. Therefore, it's advisable to purchase MRTA based on your specific requirements and not just the cheapest policies available. Sole bread earners should consider buying maximum coverage despite the heftier premium, while households with multiple income earners may opt for a policy with lower coverage.

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