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

[Frodo]

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

Really dumb rule. Clearly to make money.

Sorry to hear that. The MRTA actually reduces your loan amount if I am not wrong.

 

[sgcount]

Sorry to hear that. The MRTA actually reduces your loan amount if I am not wrong.

Thanks. But how does it reduce the loan amount? I thought it's a separate payment?

 

[Frodo]

Thanks. But how does it reduce the loan amount? I thought it's a separate payment?

When I tried RHB, they said the MRTA around RM40000 will be deducted from the loan amount. So if your loan amount is RM700000, RM40000 of that would be MRTA. So loan amount reduced.

 

[Ash007]

Your loan amount is still RM700000 though. You are servicing loan of RM700000. Wait, why is MRTA so high? 40K for a 660K loan? Basically the banks are lending you money to pay for their own insurance that they benefit from. How smart.

When I tried RHB, they said the MRTA around RM40000 will be deducted from the loan amount. So if your loan amount is RM700000, RM40000 of that would be MRTA. So loan amount reduced.

 

[Frodo]

Your loan amount is still RM700000 though. You are servicing loan of RM700000. Wait, why is MRTA so high? 40K for a 660K loan? Basically the banks are lending you money to pay for their own insurance that they benefit from. How smart.

The MRTA amount is dependent on some factors, anyway that was the offer. Yes, the overall loan is still RM700K but the home loan portion is reduced by the MRTA which is mere insurance.

 

[sgcount]

Oh I think it again varies from bank to bank. The MRTA I was told about is an additional amount that has to be paid, above the actual loan amount.

Anyway, just check with you all. Do you take a long term/maximum loan tenure like 25 or 30 years? Or you cut it short like 15 or 20 years?

I suppose if you intend to pay off the property in the short term, it doesn't matter how long? But if you want to pay by installment all the way till the end, the longer term loan will incur much higher interest in the end?

 

[FHBH12]

Oh I think it again varies from bank to bank. The MRTA I was told about is an additional amount that has to be paid, above the actual loan amount.

Anyway, just check with you all. Do you take a long term/maximum loan tenure like 25 or 30 years? Or you cut it short like 15 or 20 years?

I suppose if you intend to pay off the property in the short term, it doesn't matter how long? But if you want to pay by installment all the way till the end, the longer term loan will incur much higher interest in the end?

Take 30 years, but aim to pay within shorter period say 15 years. This gives you leeway in managing your finances.

 

[Frodo]

Oh I think it again varies from bank to bank. The MRTA I was told about is an additional amount that has to be paid, above the actual loan amount.

Anyway, just check with you all. Do you take a long term/maximum loan tenure like 25 or 30 years? Or you cut it short like 15 or 20 years?

I suppose if you intend to pay off the property in the short term, it doesn't matter how long? But if you want to pay by installment all the way till the end, the longer term loan will incur much higher interest in the end?

I old man so can only take 25 yrs loan.:(

But will try to deposit more money into current account to offset principal and save on daily interest.

 

[sgcount]

Thanks guys, you've all been very helpful with your kind advice and pointers! Sorry if I sometimes ask basic questions as I'm a newbie to this.

Take 30 years, but aim to pay within shorter period say 15 years. This gives you leeway in managing your finances.

So is taking 30 years loan but paying by 15th year the same as taking 15 years loan upfront? Cos here's the scenario I thought of:

1. 30 years loan but try to pay fully in 15th year
Each month pay less on installment. But total interest paid will be more at the end of the 15 years.

2. 15 years loan upfront
Each month pay more on installment. Total interest paid at the end of 15 years will be lesser than above.

Is my perception correct or am I miscalculating something here?

Of course if we can put in a large enough sum in the bank account and no interest is incurred, then the above does not matter. But assuming one does not have enough cash to completely offset the interest, will taking a shorter loan tenure upfront be more worth it?

Thank u!

 

[Frodo]

Thanks guys, you've all been very helpful with your kind advice and pointers! Sorry if I sometimes ask basic questions as I'm a newbie to this.



So is taking 30 years loan but paying by 15th year the same as taking 15 years loan upfront? Cos here's the scenario I thought of:

1. 30 years loan but try to pay fully in 15th year
Each month pay less on installment. But total interest paid will be more at the end of the 15 years.

2. 15 years loan upfront
Each month pay more on installment. Total interest paid at the end of 15 years will be lesser than above.

Is my perception correct or am I miscalculating something here?

Of course if we can put in a large enough sum in the bank account and no interest is incurred, then the above does not matter. But assuming one does not have enough cash to completely offset the interest, will taking a shorter loan tenure upfront be more worth it?

Thank u!

Actually I am also a newbie, just bought first landed in JB because kena priced out of HDB here. But my thought is that you should make sure you can afford the monthly instalment. Whichever arrangement the goal should be to pay it off early. Sometimes if you take short loan high instalment then unemployment struck (as they say shit happens!) you won't worry that much compared to lower instalment which can still meet for a while.

 

[FHBH12]

Thanks guys, you've all been very helpful with your kind advice and pointers! Sorry if I sometimes ask basic questions as I'm a newbie to this.



So is taking 30 years loan but paying by 15th year the same as taking 15 years loan upfront? Cos here's the scenario I thought of:

1. 30 years loan but try to pay fully in 15th year
Each month pay less on installment. But total interest paid will be more at the end of the 15 years.

2. 15 years loan upfront
Each month pay more on installment. Total interest paid at the end of 15 years will be lesser than above.

Is my perception correct or am I miscalculating something here?

Of course if we can put in a large enough sum in the bank account and no interest is incurred, then the above does not matter. But assuming one does not have enough cash to completely offset the interest, will taking a shorter loan tenure upfront be more worth it?

Thank u!

Yes, pay a bit more for the buffer and flexibility. Cash flow is important.

 

[Polaris]

Can Singapore insurance cover the property in MY or do we need to get from MY insurance companies ?

 

[1nottiboy]

at first bank said if I bought insurance from them, they will lend me 85%. then when approval came in at 80%, they didn't need me to buy.

my loan philosophy is always to borrow to the max and for the longest period of time. this gives you the flexibility to plan your cash flow and of cos, for emergency. since there is no penalty for early repayment BUT it will be difficult to extend tenure once approved, it makes sense to borrow to the max.

personally, I will pay off a huge amount after the MOP cos, if I am correct, interest charges can offset against RPGT. I will likely leave only 40% to service over 30 years.

 

[Rocker]

Can Singapore insurance cover the property in MY or do we need to get from MY insurance companies ?

I was having that question in mind too. After checking, I realise if I buy insurance in Singapore, I need to make a will to state this insurance policy is to payout for houses in Malaysia and I need to bring this will to the lawyer in Malaysia to get it certified and stamping...can't remember the term called. Anyway, to save all this trouble, I bought insurance in Malaysia. After much comparison, I found that the insurance premium that I need to pay is cheaper in Malaysia then in Singapore primarily due to my age.

 

[Frodo]

I was having that question in mind too. After checking, I realise if I buy insurance in Singapore, I need to make a will to state this insurance policy is to payout for houses in Malaysia and I need to bring this will to the lawyer in Malaysia to get it certified and stamping...can't remember the term called. Anyway, to save all this trouble, I bought insurance in Malaysia. After much comparison, I found that the insurance premium that I need to pay is cheaper in Malaysia then in Singapore primarily due to my age.

Why do you even need to make a will? Wouldn't the payout be given to your beneficiaries who would then use that money to pay off the loan? Why the need to earmark payout for specific purpose?

 

[Rocker]

Why do you even need to make a will? Wouldn't the payout be given to your beneficiaries who would then use that money to pay off the loan? Why the need to earmark payout for specific purpose?

Lol! We think alike! I asked the same questions, end up I heard long story..... in conclusion : Will make things easier.