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What is Mortgage Loan Insurance?

In Singapore, mortgage insurance is called a Mortgage Reducing Term Assurance (MRTA) and is not mandatory if you are buying a private property. MRTA are suitable for those who are financing 50% or more of their mortgage.

Most Housing and Development Board (HDB) homeowners have Home Protection Scheme (HPS) as it is mandatory for those using their CPF-OA balances for monthly loan repayments either fully or partially to have protection against the outstanding loan amount. However, it is good to have a private MRTA for private property. Find out more about which MRTA is suited for you here.

An MRTA provides coverage for the outstanding home loan amount in the unfortunate situation where the borrower dies or becomes total and permanently disabled, thus unable to work and service the mortgage. The borrower and his family can potentially lose their home if they become unable to service the home loan. So to provide peace of mind, especially if the borrower is shouldering the main loan burden, it could be a smart move to take up mortgage insurance.

A mortgage loan insurance plan is decreasing term, meaning that the sum assured will be lower as time goes by. You only have to pay a single premium for mortgage loan insurance as the policy will not lapse to settle the housing loan with the bank.

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