What is MLTA and MLTT?
MLTA stands for Mortgage Level Term Assurance and MLTT stands for Mortgage Level Term Takaful.
These 2 plans are similar except the latter is an Islamic/ Shariah compliant plan.
When we buy a property or house and we obtained a loan from the bank to purchase it, normally the bank will offer us to take a protection plan for your loan should you befall with incidents such as death or total and permanent disability (TPD). This offer from the bank is called Mortgage Reducing Term Assurance (MRTA) or Mortgage Reducing Term Takaful (MRTT) for Islamic based plan.
This plan's purpose is, if you have met an untimely death or became disabled and not able to provide an income to service your loan, the MRTA will be used to offset whatever balance remaining of your loan. As a result, the borrower or his/her next of kin will not loose the property or the house back to the bank.
Another alternative is Mortgage Level Term Assurance (MLTA) or Morgage Level Term Takaful (MLTT) which are offered by Insurance companies or Takaful Operator. It's purpose is the same as MRTA but this time, not only the borrower gets his/her property, but will be guaranteed the sum assured (which is basically the total amount of the loan) shall death/TPD happened anytime during the tenure, plus some gains. Below are the list of benefits of MLTA/MLTT compared to MRTA.
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