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House Loan! MRTA VS MLTA

Updated: Nov 30, 2021

So maybe some of you out there have heard of this term before. But what does it really mean?? MRTA or MLTA. MRTT or MLTT. All of them are Mortgage coverage that will ensure your housing loan in the event of your death.

So let take this as an example: You take a 35 year housing loan, and by the 10th year, misfortune happens to you, you die. So MRTA or MLTA will settle the remaining loan amount for you. So your family will be able to continue staying in the house without worrying about continuing to pay the home loans.

MRTA stands for Mortgage Reducing Term Assurance. So how does it work? Where can a person get it from? It only happens when someone is taking a housing loan from a bank and the bank will ask the client whether they want to take MRTA coverage. As the name suggests, MRTA is a reducing term, meaning over time, the coverage will reduce as you continue to pay the housing loan amount. Loan decrease, Coverage decrease. Simple as that.

How about MLTA? MLTA stands for Mortgage Level Term Assurance. MLTA will maintain a constant coverage amount over the years. Even after you finished paying the housing loan. So the coverage stays the same over a period of 35 years. And in the event of your death, the coverage amount will be paid to your family to take care of your home loan.

So basically,

Coverage amount - RM 500,000 Loan remaining - RM 300,000 = RM 200,000 extra

So the RM 200k will be paid to your family and can be used for their daily needs. To simplify, MRTA will be paid to the bank.

MLTA can be paid to the family member. MRTA premiums need to be paid one-time payment. The premium depends on the loan amount. MLTA premium can be paid from monthly to Annual. The premium depends on the coverage amount and the age of the insured.

Oh yes! I mentioned MRTT and MLTT. It is a Takaful version for the home loan. The concepts are basically the same. MRTT stands for Mortgage Reducing Term Takaful. And MLTT stands for Mortgage Level Term Takaful. BUT based on the understandings of Islamic finance principles that avoid interest-based transactions.

Thank you for watching the video. Hope this video helps you understand better regarding MRTA and MLTA. Contact me if you are interested in getting MLTA or MLTT Bye and Stay Safe everyone!

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