Wednesday, December 7, 2022

First time home buyers, here’s what you need to be aware of your house insurance policies!

LifestyleFirst time home buyers, here's what you need to be aware of...

The excitement of buying a house can be overwhelming, especially for first-time homeowners. However, it also requires the homeowner to commit themselves to loans that span up to multiple decades and several other costs.

Recently, a netizen had went on a Facebook group to share on the Mortgage Reducing Term Takaful (MRTT) or Mortgage Reducing Term Assurance (MRTA), which are insurance products that buyers have to take when they purchase a house.

The post was originally written by user Azri Johan before it was reshared again recently.

According to Azri, he urges buyers to be aware of the tiny details of the information regarding their purchase including loan tenure and MRTT/MRTA coverage.

Source: Facebook

“Many think that when buying a house, the house is 100% theirs. I was like that before. But in fact, if we buy a house on a loan with a bank, we have to check back our loan agreement.”

“How long is a loan with a bank? How long is MRTT/MRTA coverage? This thing is the period the bank covers the loan in case of the death of a borrower during the period of still owing the bank. Please avoid being like the case below. Loan with a bank for 35 years, but MRTT coverage is up to 10 years. How long is a loan with a bank?”

He then explains what happens if the borrower dies within that 10-year period.

“If we die within the 10-year coverage period, the heirs can make a claim at the bank. But even this MRTT claim can’t cover the remaining loan, the heirs have to top up and use their own money.”

“Worst case scenario, if you die in the 11th year to the 35th year, the balance of your loan must be settled by your family members.”

Nonetheless, if the person is married, the burden will then fall on their surviving spouse or family members.

“It is sad to lose the head of the family, even sadder when you have to bear a debt of hundreds of thousands of ringgit,” Azri said.

Meanwhile, if the family members could not manage to pay back the loan, the house would have to be auctioned.

“As long as we do not settle the debt with the bank, the bank has the right to our house. After all, banks must not lose money, because they are not charities. Right?” he said.

Towards the end of the post, Azri reminded that home buyer to check the coverage of the insurance schemes they bought.

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