Is your home is fully protected?

Buying a dream house is the biggest financial commitment, as there are many things to consider – downpayment, margin of financing, rates, tenure, instalments, mortgage and etc.

Owning a dream home is most likely being the most important and biggest investment in your life. That is where your extra efforts in thoughts come in; identifying the preferred location, viewing the design of the dream house and ultimately purchasing it. Concurrently, you will also need to shop around on the available financing for your dream house that fits your financial ability and compare the features of the similar products offered in the market. Not to forget, you need to pay extra-attention to the fees and charges imposed before making your final decision.

Whether you’re buying your first home or not, unexpected events may lead to a loss of income or a decreased ability to fulfill your financing obligations. That is where a good protection plan will be able to help you in ensuring your financing is paid off and your family won’t have the responsibility to bear your financial obligations.

Takaful plan or insurance plan is crucial to protect your home, whether it’s MRTT / MRTA, takaful keluarga plan / life policy, or even householder or Houseowner plan.

However, do you really have the idea of of how do we protect our biggest investment in life? It means, protecting your financial against any calamities might comes to you, while you still have your financing with the banks.

Property Financing or Housing Loan Protection Plan

When you have enter into the agreement with the bank pertaining to your house financing, there are options of how you can find a financial backup plan to protect your dream house.

1.       Mortgage Reducing Term Takaful (MRTT)

A term takaful plan is designed with the sole purpose of providing financial backup against death or total permanent disability against the buyer. It is offered by the bank to fully settle the outstanding balance in the event of the buyer/borrower dies or strike with the disability. Failing to service the financing, it will end up of loosing the dream house.

On normal occasion, the bank will encourage the buyer to take-up this plan to protect the bank’s interest in the property during the financing tenure. It does not provide any savings or any payout after it matures. In other words, this plan is solely to serve the property financing.

The total sum covered (total sum insured) is reduce progressively in accordance with the reduction in the total financing over the tenure. Total sum contribution (total premium) is calculated based on the age of the person covered (or the buyer) and the total sum covered (or total financing). The final amount, i.e total sum contribution will be adding to your total financing before arrive of calculating the monthly installment that you have to service over the tenure.

This product offers a one lump payment. That is why some buyers may opt with this option as it a hassle free procedures. Buyers may be able to continue life without having to worry about the financial burden that may comes in the future. Some other buyers would prefer other available options like Mortgage Level Term Takaful to protect the property financing.

2.       Mortgage Level Term Takaful (MLTT)

Most banks accept normal takaful keluarga plan (or life insurance plan), provided the total sum coverage is adequate enough to cover the total property financing.

Using this plan againt the financing, offers a more flexibility in terms of payment, as you have options either to pay on monthly, quarterly, half-yearly or on annual basis. Moreover,  the total sum coverage is never reduce unlike MRTT, but stays the same throughout the tenure. You can either choose an endowment plan or term plan, depending on your financial needs and objective. For endowment plan, the best thing about choosing it as it also provide savings and even returns upon maturity.

Some banks do require this policy as a collateral to protect your financing with the bank. Arrangement need to be done by way of giving the bank an absolute right to pay off your financing before the proceeds went to your beneficiaries.

Your MRTT or MLTT plan will only cover the outstanding total financing with the bank. But what will happen to your dream house building when is it burnt down by fire or is damaged by flood or is crushed by the landslide? As a homeowner, you are still liable to serve your installment, and at the same time you will need to incur the necessary expenses to re-build or repairs your home.

Is there any other plan that can serve this purpose?

Differences MRTT vs MLTT

Mortgage Reducing Term Takaful (MRTT)	Mortgage Level Term Takaful (MLTT)
Coverage reduces	Coverage never reduces
No savings at maturity	Savings in return (increase throughout the year)
Proceeds go directly to the bank	Proceeds go to the beneficiaries (family)
Non-transferable	Policy is transferable to other financing / loans
Single payment  (one lump sum)	Various payment frequency (monthly, quarterly, half-yearly or annual basis)
Bank make profit (if MRTT attached to the financing)	You will enjoy the dividend yearly
Cash or top-up to your total financing only	Various methods of payment allowed (credit card, cash, cheque, SI, autodebit)

Contact us at info.teguhbistariservies@gmail.com or 017-2379676 for more information.