Bank MRTA Vs Personal MLTA

Why you may loss your house if you opt for Bank MRTA?

MRTA is the abbreviation of Mortgage Reducing Term Assurance.

After you buy a house, your bank officer will ask you to buy a hassle-free bank MRTA, single premium, financed into the loan, you only pay a little bit extra per month, what a fantastic plan!

But are you aware that buying MRTA may not be able to protect your asset and your family?

If you purchase MRTA, the beneficiary is the bank, if any misfortune should happen, the bank gets the mortgage outstanding balance from insurance company (and now the bank is safe)

What happen to your house by now? Your house will be frozen under the estate, your assets will be utilized to pay for other liabilities, clearing income taxes (including outstanding and uncleared taxes for the past many years) and settle legal and accounting expenses. Your family is the LAST party to receive your assets. And in this process, your beloved family will only receive the asset if your asset value is greater than liability, otherwise your estate will be declared bankrupt, your family is forced to leave the house even though the insurance proceed from MRTA has already been paid out. Isn’t it unfair?

In short, bank MRTA is meant to protect the bank, you and your family are only being protected Conditionally.

Then what is the solution? Buying personal MLTA. It means Mortgage Level Term Assurance.

If you purchase personal MLTA, the beneficiary is your family. In case of any misfortune happens, your family will get insurance proceed equal to the value of the house, and the most importantly, this insurance proceed is creditor proof and will not be frozen.

What about the house? The house will still be frozen and subject to the same estate execution process.

If your asset is less than your liability, your family at least has already got the cash from insurance, they can buy a new house now.

If your asset is more than your liability, your family gets both house and cash.

And the other wonderful thing is that if you finish your mortgage installment earlier and wanted to change to a bigger house. Your personal MLTA is portable to your new loan.

What is your choice?

Leave A Reply (3 comments so far)


  1. William Chin
    5 years ago

    In the scenario that personal MLTA is purchased, after the estate execution process, does the beneficiary have to use the insurance process to settle the full amount of the loan , or can the beneficiary hold on to the insurance proceed and continue the monthly payment?

    I was once approached by the agent selling this. It seems like the premium for the personal MLTA is much more expensive that bank MLTA. Is that true?


    • chong kok chen
      5 years ago

      Hi William,

      So sorry that I missed out your message. I just “discover” this message when I do housekeeping today.

      1) The MLTA is your (or your family’s) own money, the beneficiary has the right to decide how to use the money. They can hold on the proceed and continue monthly payment
      2) Premium is higher for personal MLTA, it is understandable because personal MLTA is your family’s asset whereby bank MRTA/MRTA protects bank more than your family.
      3) Yes, you can top-up for the personal MLTA for second house provided you are still healthy (insurable)

      Feel free to contact me should you would like to know more about this. My email address is cbhiew@sac.com.my

      Mandy


  2. William Chin
    5 years ago

    In the scenario that personal MLTA is purchased, after the estate execution process, does the beneficiary have to use the insurance process to settle the full amount of the loan , or can the beneficiary hold on to the insurance proceed and continue the monthly payment?

    I was once approached by the agent selling this. It seems like the premium for the personal MLTA is much more expensive that bank MLTA. Is that true?

    In the event that I purchase a second house before settling the loan for first one, is it possible to “top up” for the personal MLTA?