What is Mortgage-Reducing Term Assurance (MRTA)?
Individuals who own private properties such as condominiums or landed properties will not qualify for Home Protection Scheme (HPS) and will not automatically be enrolled in any mortgage insurance program.
As such, if they wish to obtain insurance coverage they must do so through a private insurance company. The private mortgage insurance policy is commonly referred to as Mortgage Reducing Term Assurance (MRTA).
Like HPS, MRTA provides coverage for the remaining mortgage payments of the policyholder for the duration of the policy. This safeguards you and your family from the risk of losing your home if you cannot make your home loan payments.
What is covered under the Mortgage-Reducing Term Assurance (MRTA)?
In the event of your death, total or permanent disability, or terminal illness, an MRTA policy will cover your mortgage payments.
Note that this may be dependent on the insurance policy you purchase.
Do I need the Mortgage-Reducing Term Assurance (MRTA)?
If you own an HDB flat and utilise your CPF OA funds to service the mortgage, you are automatically enrolled in the HPS for mortgage insurance and can continue to be covered under it. However, it might be worth obtaining mortgage insurance from a private insurance company if you don’t fall under this category.
Here are some considerations to help you make an informed decision about whether or not to purchase mortgage insurance:
- If you are the sole provider for your family and do not have sufficient life insurance coverage, you may need to consider purchasing a mortgage insurance plan.
This will ensure your mortgage is fully insured, and your family will not risk losing their home or experiencing financial difficulties if you can no longer pay the bills.
- Your home loan could be covered if you have enough coverage under whole life or term life insurance, including your mortgage and living expenses. In this scenario, you may not require additional mortgage insurance.
You should also check your spouse’s insurance coverage if you jointly own your home.
- If you are planning to move anytime soon, it’s important to keep in mind that your existing mortgage insurance policy will not transfer over to a new home.
This means you must terminate it and apply for a new one once you relocate. As such, you might want to hold off on purchasing an MRTA policy until you settle in the new place.
