tag:blogger.com,1999:blog-36739260.post1296467431503058432..comments2023-10-10T15:44:38.677+08:00Comments on KnowThyMoney: MythBusters : Must Buy MRTA When Buying A House?Krishttp://www.blogger.com/profile/01618400061723721064noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-36739260.post-31052942883946713862013-09-02T20:45:13.184+08:002013-09-02T20:45:13.184+08:00Thanks for sharing Adrian. I hope your negotiation...Thanks for sharing Adrian. I hope your negotiation turn out in your favor.<br /><br />Cheers,<br />KrisKrishttps://www.blogger.com/profile/01618400061723721064noreply@blogger.comtag:blogger.com,1999:blog-36739260.post-27726551285655060162013-09-02T19:12:19.789+08:002013-09-02T19:12:19.789+08:00I was forced to buy an MRTA and MLTA when my inten...I was forced to buy an MRTA and MLTA when my intention is to sell my property within 5 years. It doesn't make sense at all to pay that lumpsum MRTA premium or to buy a very high premium MLTA via an Investment Linked policy. The banks that refused my loan currently are Maybank, Public Bank and Ambank due to my refusal to buy MRTA. Still negotiating with them now today as I'm writing this.Adriannoreply@blogger.comtag:blogger.com,1999:blog-36739260.post-45665681442720415082011-12-27T07:11:47.290+08:002011-12-27T07:11:47.290+08:00If the original house owner has passed away, you c...If the original house owner has passed away, you can't apply another loan until you settle the estate issues. The joint name property had to be transfered to surviving party. In order to do that, you must settle the outstanding loan in one lump sum.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-36739260.post-88210628004905791922011-12-27T07:06:26.956+08:002011-12-27T07:06:26.956+08:00Last but not least, I must say that it is importan...Last but not least, I must say that it is important to understand one important fact. All business entities are there to make profits. Only with sustainable profits, a good business entity can continue to serve its customers' needs now and into the future. We also do not want to see a business entity that does not make a sustainable profit, because no matter how good the product offerings was, if the business entity no longer exist due to unsustainable low profit margin, then it will be a lose-lose situation for consumers, employees and business stock holders. So next time before we hit on any business entity, let us remember that we need them to survive to continue serving our needs. If we are employees for a business entity, dont't we also hope that our own company are making good profit so that our company can continue to hire us to provide our services to our company customers?<br /><br />I hope my sharing does provide some insight to your readers.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-36739260.post-53289267857695618352011-12-27T07:05:17.578+08:002011-12-27T07:05:17.578+08:00To answer the question by another reader about why...To answer the question by another reader about why a bank is after the family of a decease loan owner, we have to look at it from the legal point. Legally, the property ownership has become the estate of the decease owner. The estate is legally liable to settle the outstanding debts that were owed by the decease. The estate beneficiaries, usually the family members, are liable to pay back all the out standing debts before they can distribute the estate to the beneficiaries. That is why the bank is coming after the family members to settle the outstanding loan of the property. You may wonder why the MRTA doesn't offset the outstanding loan. There are a few possibilities. <br /><br />I) Under insured, in a few possible ways.<br /> a) Joint ownership, with each owner took an amount of sum assured equivalent to half the initial loan amount. Most joint home owner usually do that to save MRTA premium. <br /> b) MRTA coverage term is shorter than the loan term. Hence the latest sum assured had reduced faster than the outstanding loan amount. Home owners may do that to save premium too, at the expense of under insured if the home owner does not pay up the loan in less than the MRTA term. <br /> c) BLR has increase a lot more than the rate of MRTA reducing rate (this rate is defined when purchasing an MRTA policy, but usually the banker default to a fixed value that the bank think will be higher than the average BLR).<br /> d) A combination of both (a), (b) and (c). <br /><br />II) Home owner might have refinanced the house without increasing the MRTA sum assured and extending the MRTA term. (Pratically, this is not possible for MRTA as the policy is a single premium policy which does not have the flexibility).<br /><br />III) A combination of (I) and (II).<br /><br />Hence, all these reasons show that how important it is to review the insurance coverage regularly. We may think that our original MRTA should settle everything but if we did not follow the original installment payments or refinance or market condition had change, we may have surprises like one of the reader here.<br /><br />The reasons mentioned above also shows that why we cannot rule out MLTA or normal life insurance as a complement or substitute of MRTA. Each product is designed with product features that are unique, and serve different needs. We must be careful not to generalize knowledge that we obtain from the web forum, including my comments here, without looking into individual situation. This is what I meant in the beginning when I said Kris is giving his views only from his perspective but may not be necessary applicable to others. One size doesn't fit all. That is why there are so many financial products being designed.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-36739260.post-5032674534646030442011-12-27T07:03:34.999+08:002011-12-27T07:03:34.999+08:00Champdog, there are a lot of banks offer no-MRTA p...Champdog, there are a lot of banks offer no-MRTA packages. What Kris did not mention is the costing are different. When you choose a non-MRTA packages, usually you will get an average-market interest rate, I.e. BLR-2.0%. However, the same bank may offer a better rate package, i.e. BLR-2.4% but with the condition of compulsory MRTA being purchased from the bank's own banker assurance business unit. Why? Because keeping everything constant, these two packages should produce similar profit margin to the bank, if not the same level of profit. It is all about profit margin. When a financial product is being designed, a loan package in this case, they need to include a profit margin that provide sufficient income to have a profitable business. Hence the inclusion of MRTA is one way to "balance" out the lost of margin with lower interest rate package. Do you expect a bank to remove this requirement but still give you a special rate package? Of course not! But as a home owner, you can still enjoy the lower interest rate package by fulfilling the minimum requirement by getting the minimum term MRTA, i.e. a 5-year term MRTA. Having said that, this so call "saving" in interest may cost you or your family more if anything unfortunate were to happen to you (the borrower). Your loan will be under insured. You are saving only in one aspect, but exposing yourself with "self-insured" the remaining loan that is under insured. If you know what you are doing and what the negative impact and ready to accept the risk yourself, by all mean go ahead and enjoy the lower interest package. That is a calculated risk that you can take if you understand well the implication of it. There is no "right" or "wrong" decision when taking up an MRTA. It is only whether MRTA can serve your needs at one particular point in time. There are some shortfalls of MRTA which I will explain using another question from another anonymous reader.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-36739260.post-5474738660023377062011-12-27T07:01:35.938+08:002011-12-27T07:01:35.938+08:00Kris, there is always a danger to take advices by ...Kris, there is always a danger to take advices by googling and reading forum. I also read some misleading articles by bloggers who may not be trained in the field or "see" things from one side only, i.e. Either the supply side or demand side. Both may have their points but if taken alone, it becomes bias.<br /><br />What you mentioned here are not entirely accurate. Risk management involve not only the product itself but should take a holistic view. Without understanding each individual home owner situation, we should not rule out the suitability of a financial instrument. That is my 2cent. An MRTA may be suitable for home owners who are looking for short to medium term protection with one time commitment, or home buyers who have limited budget and would like to finance the premium into the loan. There is also an important part that is missing in your article. The TERM of an MRTA is very important too. It is a term policy, hence the protection will last as long as the term only. Regardless of the initial coverage, transferability among properties, etc, one will be under insured if he uses a shorter term MRTA to cover a loan that has longer loan term. That may explain why banks do not usually accept other remaining housing loan MRTA policies as a substitute to fulfill the MRTA requirement by a loan package. Another reason will be costing which I shall reply Champdog as below.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-36739260.post-38581957040551082202011-06-24T06:32:10.818+08:002011-06-24T06:32:10.818+08:00Anonymous,
That is pretty weird scenario. They sh...Anonymous,<br /><br />That is pretty weird scenario. They should not ask for lump sum as the MRTA should kick in. Nevertheless, the MRTA payback is usually not enough to cover the entire remaining loans. <br /><br />For example, lets say a house is RM100K. The MRTA protection maybe around 90K only and will be reducing year by year as your total loan also reduces (since you do loan repayment every month).<br /><br />You might need to check your MRTA policy whether you will get half of the money. If so, it cannot cover the entire remaining loan. I guess that is the reason they are chasing you.<br /><br />I think you might to apply another loan since one of the principal owners of the loan has passed away, to cover the "remaining existing loan - 1/2MRTA".<br /><br />Above is just my guess, you need to talk to the bank management.<br /><br />Rgds,<br />KrisKrishttps://www.blogger.com/profile/01618400061723721064noreply@blogger.comtag:blogger.com,1999:blog-36739260.post-89178900596420267382011-06-22T17:05:12.512+08:002011-06-22T17:05:12.512+08:00hey Kris i hope u would see this. i wanted to unde...hey Kris i hope u would see this. i wanted to understand mre bt MRTA even tho i know now it's too late. the house which my family and i are stayin now is haunted by housing loan agents ova nd ova again.i thought once the person died (my late dad), the house is fully insured by MRTA.the house was previously in my mom and dad's names.so i supposed the amount insured is only half?if not, the bank won't be botherin us to pay evry mth (now they are askin for a lump sum). thx, have a nice day!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-36739260.post-64749057603294054162011-03-08T09:42:03.202+08:002011-03-08T09:42:03.202+08:00Thanks Kesh. Your name is wonderful..sound like CA...Thanks Kesh. Your name is wonderful..sound like CASH $$$$ :PKrishttps://www.blogger.com/profile/01618400061723721064noreply@blogger.comtag:blogger.com,1999:blog-36739260.post-24680424992153373662011-03-06T22:55:05.481+08:002011-03-06T22:55:05.481+08:00nice article~nice article~Keshhttps://www.blogger.com/profile/11926920880699838719noreply@blogger.comtag:blogger.com,1999:blog-36739260.post-40864250493107058882011-03-05T22:08:27.213+08:002011-03-05T22:08:27.213+08:00Thanks ChampDog. I just would like to share my tho...Thanks ChampDog. I just would like to share my thoughts and idea. "Ignorance is not bliss" if you plan to be financially free.<br /><br />There are certain banks that allow you take up loan without MRTA. You just need to ask around. I am not sure whether i can post this in my blog..haha<br /><br />Most banks have now their own sister general assurance arm firm. (insurance is lucrative cash generating business) Thus, buying MRTA is considered good side business for them.Krishttps://www.blogger.com/profile/01618400061723721064noreply@blogger.comtag:blogger.com,1999:blog-36739260.post-85119542043352093062011-03-05T21:46:46.973+08:002011-03-05T21:46:46.973+08:00Wow! Nice write up on MRTA. :) Btw, I wonder which...Wow! Nice write up on MRTA. :) Btw, I wonder which bank doesn't require the MRTA requirement?ChampDoghttps://www.blogger.com/profile/15551303930099640011noreply@blogger.com