The Differences Between MRTA/MDTA and MLTA/MLTT

 

Credit to Hartamas Group
30th April 2021

Buying a property is more than just getting the mortgage loan agreement and Sales & Purchase Agreement signed. There are more decisions to be made, especially if you are a first-time homebuyer. For instance, have you thought about which mortgage life insurance works best for you?

Like personal life insurance, the main purpose of a mortgage life insurance is to help pay off the outstanding loan balance if the mortgage borrower dies or suffers from a total and permanent disability before the loan is fully paid off.

There are several mortgage life insurance products available in Malaysia but the common few are Mortgage Reducing / Decreasing Term Assurance (MRTA / MDTA) and Mortgage Level Term Assurance / Takaful (MLTA / MLTT).

Already losing your patience because the terms MRTA / MDTA and MLTA / MLTT are confusing? Please read on because we have simplified them to help you understand the differences between MRTA and MLTA in a few minutes so that you can make the right choices for your home.

Features of Mortgage Reducing / Decreasing Term Assurance (MRTA / MDTA)

1) The decreasing sum assured over time.

2) Only covers home loan owed to the bank.

3) Often offered by the bank as it is more favourable to the bank.

4) Premium is paid upfront at a one-off amount.

5) The policy follows the property loan rather than the owner.

6) Usually packaged as an option together with the loan, hence it is cheaper than MLTA / MLTT.

Features of Mortgage Level Term Assurance / Takaful (MLTA / MLTT)

1) Closer in nature to traditional life insurance policies is a personal plan that offers home loan protection, savings, and some policies that offer returns on the premium.

2) The sum assured does not decrease with time.

3) Your dependents are financially protected in case of any unfortunate events happening to you.

4) Premiums are usually higher than MRTAs.

5) Premiums are paid on a monthly, quarterly, half-yearly or yearly basis.

6) The policy is transferable to another property as it follows the owner.

Now you have learned the major differences between MRTA / MDTA and MLTA / MLTT, the question is – is this mortgage life insurance compulsory and how much does it cost?

Like any other life insurance market, MRTA / MDTA or MLTA / MLTT IS NOT mandatory. However, some banks will make it one of the must-have conditions to offer you a mortgage loan.

While the premium of MRTA / MDTA or MLTA / MLTT is subject to your age, loan amount and loan tenure, the range for every RM500,000 protection required under MRTA and MLTA is approximately RM17,500 (lump sum) and RM2,000 (yearly), respectively.

So, MRTA / MDTA or MLTA / MLTT?

The humble advice from Hartamas Real Estate is that MLTA / MLTT is a better option as it provides extensive protection from home to life, with some even providing returns on the premium. However, please be mindful that your cash flow needs to be sufficient to handle the higher ongoing premiums.

Meanwhile, MRTA / MDTA is a better choice when all you need is just the short coverage instead of the full duration of the home loan. Also, MRTA / MDTA can be bundled together with your home loan thus it can reduce your financial burden.

Does A Tenant Has A Right To Occupy His/Her Rented Property Despite The Property Being Auctioned Off? 16th April 2021

When a tenant signs a tenancy agreement with the owner of the property, the tenancy agreement usually states the tenure of the tenancy. If the rental period is for 1 year, the tenant will be entitled to occupy the property up to full tenure of the property, provided there is he pays his rent on time and the agreement is not terminated earlier by the owner.

What if the property was charged to the bank by the owner who then defaults in his loan payment and the property was auctioned off by the bank? What happens when the tenant who occupies the property was not notified of the auction?

The tenancy agreement does not automatically terminate upon the property being auctioned off. Where the tenant was not notified of the auction by the owner, the tenancy agreement still stands despite the auction.

Section 7 of the Specific Relief Act 1950 states that where a person entitled to possession of the property is not at liberty to evict the tenant who continues to occupy the property otherwise than by an eviction proceeding in court. This means, the new owner who bought the property through auction, cannot simply resort to self-help such as change the lock or simply throw out the tenant’s belongings.

In circumstances like this, it is best that both the new owner and the tenant can sit down and negotiate for solutions before going for court proceedings. The new owner may opt to let the tenant finish his tenure under the tenancy agreement provided the rental is now paid to the new owner or terminate the tenancy amicably.

Contents in this article are intended to provide a summary or review of the subject matter and are not intended to be nor should it be relied upon as a substitution for legal or any professional advice. For more information, contact us at hhqkl@hhq.com.my or +60327103818.


Written by:
Tan Poh Yee
LL.B (Hons) University of East England, CLP
Team Lead
Learning & Development
pohyee.tan@hhq.com.my

Casa Mutiara 17146 @ Bukit Bintang (To Let)

Property: Serviced Residence
Type: Intermediate
Tenure: Freehold
Built-up: 301 sq ft
Bedroom: Studio
Bathroom: 1
Occupancy: Vacant
Furnishing: Fully
Parking: ± RM200 per lot per month
Facilities: Yes
Remarks: Balcony, High floor
GPS/Location: 3.142556, 101.704086 / Jalan Sin Chew Kee
Rental: RM 1,100 

Malaysia Is The 5th

 

Top 10 Favorite Countries for Asian Buyers in 2021

April 2 · By Ahmad Zaki

2020 has been a tough year for everyone. Unlike the other sectors, the real estate departments of Asian countries have also seen ups and downs last year. During this phase, although the priorities have changed, the buyers' interest has not been diminished. The top 10 countries include The United States, Australia, Thailand, Canada, Malaysia, Japan, Singapore, United Kingdom, New Zealand, and France.

Therefore, let's see the recent data of Juwai IQI about the top ten favorite countries for Asian buyers in 2021. 

Top 10 countries for Asian buyers

1. United States

According to this research, the United States is the most popular country for Asian buyers globally. The traditional American gateway cities like New York, Los Angeles, Miami, San Francisco, and more are the main places for these buyers who invest in the properties here.

Additionally, the number of high net worth searching to buy residences in the US has increased drastically from the last ten years.

Strengths:

• 23.8 percent of high-net-worth secondary homeowners are from Asia’s greater China in New York alone. The other cities have such records as well.
• The domestic Asian buyers who are not eligible for high net worth look for less expensive and smaller cities in the USA.
• Likewise, home prices are expected to increase by 10.3 percent from November 2020 to November 2021.

 

2. Australia

The second most favorite country on this list for Asian property buyers is Australia. During this pandemic, buyers from Malaysia, South Korea, the Philippines, and Japan seemed more interested in Australia's buying properties.

Strengths:

• Australia accounts for 13.7 percent of buyer activity.
• The housing values in Australia have gone up 2.8 percent in the three months to January 2020.
• Developers have started to approve new unit starts down by 8.6 percent.

 

3. Thailand

The next destination is Thailand in this list as it promises to recover and stand out this year. The property investors bargain-hunting will get many opportunities in Thailand's Bangkok, Phuket, and Chiang Mai.

Strengths:

• In 2021, their GDP is expected to regain some lost ground with a 4.5 percent growth projected.
• It continues to attract Chinese manufacturers.

 

4. Canada

Canada is the other popular destination for Asian buyers who want to purchase their second home out of their country. Buyers from China, Singapore, Japan, the Philippines, and South Korea are mostly attracted to it.

Strengths:

• Canada accounts for 8.4 percent of all Asian buyer interest.
• Its domestic market is strong enough to grab buyers' attention.
• Prices of the properties increased 13.5 percent nationwide.

 

5. Malaysia

Malaysia is in the fifth position on this list. The cross-border buyers, especially from greater China, are most active in this country. Hence, it has gained upper ranks in the past year as well.

Strengths:

• Malaysia accounts for 6.9 percent of all Asian buyer interest.
• Gradual growth is expected to happen in 2021 and 2022.
• Malaysia's predicted GDP growth of 6.5 percent in 2021 is one of the highest growths in ASEAN, and it is also above Southeast Asia's overall rate of 5.5 percent.

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6. Japan

Then, Japan is also a trendy destination amongst Asian cross-border buyers. The main attractions for investors are the properties that are supposed to be operated as short-term rentals in urban areas.

Strengths:

• Japan accounts for 6.5 percent of all Asian buyer activity.
• In 2020, there was an increase in interest in Japanese ski property, particularly the properties that will be delivered later in 2021.

 

7. Singapore

Singapore is seventh in the most desired country for Asian buyers. Hence, it has successfully gained Malaysian buyers' interest and placed itself as a top ten destination for buyers from many countries.

Strengths:

• Singapore accounts for 5.7 percent of the Asian buyer interest.
• It gained market share in 2020 because of its accessibility to the largest Asian sources of residential property buyers.

 

8. United Kingdom

Then, The United Kingdom in the eighth position for the most popular countries for Asian buyers. Besides, its historical presence and reputation for quality education have paved its way for Asian buyers to develop interest.

Strengths:

• The UK accounts for 3 percent of all Asian buyer activity.
• The largest group of Asian buyers made 91 percent more purchasing inquiries on the UK's residential property in the second half of 2020, which can predict a good transaction rate in the upcoming years.

 

9. New Zealand

Although New Zealand's ranking has fallen in past years, it still has held the ninth position being one of the most favorite hubs for Asian buyers.

Strengths:

• New Zealand owns 1.6 percent of all foreign buyer interest.
• Their offshore and onshore noncitizens together completed more than 10 percent of home transfers in the country in 2020 than in 2019.
• The share of the market of non-citizens has also increased from 8.5 percent in 2019 to 8.9 percent in 2020.

 

10. France

Finally, the tenth position in this list is France. Although it is one of the popular countries in 2020 with buyers from Asia, it receives a relatively small share of total Asian buyers' interest compared to other favorite destinations as per data.

Strengths:

• France accounts for 1.4 percent of global Asian buyer activity.
• Investors from Mainland China, Thailand, Japan, Vietnam, and Laos are developing interest in this country.

Casa Mutiara 1783 @ Bukit Bintang (To Let)

Property: Serviced Residence
Type: Intermediate
Tenure: Freehold
Built-up: 484 sq ft
Bedroom: Studio
Bathroom: 1
Occupancy: Vacant
Furnishing: Fully
Parking: ± RM200 per lot per month
Facilities: Yes
Remarks: Middle floor
GPS/Location: 3.142556, 101.704086 / Jalan Sin Chew Kee
Rental: RM 1,400