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Mortgage Insurance (Mortgage Reduced Term Insurance)

What is Mortgage Reduced Term Assurance?

A Mortgage Reduced Term Assurance (short for MRTA) is also called Decreasing Term Life Insurnace (short for DTLI), it is one kind of term life insurance.

A Mortgage Reduced Term Assurance provides life insurance coverage for a specific period of time. Presently, one year to thirty five years are the periods one can buy decreasing term life insurance over. If the insured dies during the period the insurance is in force, the insurance company pays off the face value of the policy. If the insured lives longer than the term of the policy, the policy is no longer in effect. Nothing is paid.

Mortgage Reduced Term Assurance, or mortgage protection life insurance, as it is commonly known, has a sum assured which reduces each year (or possibly each month) by a stated amount, decreasing to nil at the end of the term. It is normally used to cover a reducing debt, such as the capital outstanding on a house purchase mortgage, with the sum assured being linked to the reduction in the capital outstanding under the loan.

Cheap decreasing term life insurance

Although the cover decreases each year, the premium remains constant. Premiums are sometimes payable for a shorter period than the policy term itself, because otherwise there would be a temptation for the assured to lapse the policy in the last year or two, when the sum assured has reduced to a comparatively low level. Premiums for decreasing term life insurance are either slightly cheaper than for level term assurance for the same initial sum assured and term – or the same, but payable for a shorter period.

FOR HDB owners

1. How much must I be insured under Home Protection Scheme (HPS)?

2. How is the HPS premium calculated?

3.How much is the premium for my housing loan?

4.Where to Buy?

FOR PRIVATE PROPERTY OWNERS

5. Is this insurance compulsory for me?

6. How much protection should I insured?

7. Where to buy?

8. Get a quote from all major insurance companies


FOR HDB owners

If you purchase a HDB flat, either from HDB, or from resale market, you could purchase HPS (Home Protection Scheme) from CPF board by using your CPF. You could purchase from private insurance companies as well.

It is compulsory for HDB owners if you are planning to use any part of CPF

1. How much must I be insured under Home Protection Scheme (HPS)?
Your share of the HPS cover should at least match the proportion of the monthly housing instalment which is payable with your CPF savings and/or cash.

If you are the only person paying the monthly housing instalments, you should be insured for 100% of the loan.

If you are paying 80% of the monthly housing instalments, and your co-owner the remaining 20%, you should be insured for 80% of the loan and your co-owner, 20%.

Example:

Monthly housing instalment = $ 1,500. You are using $1,000 from your CPF and $200 cash, while your co-owner is paying $300 from her CPF to service the loan.

Your share of the cover should be at least:

$1,200 / $1,500 x 100% = 80%

Your co-owner's share of the cover should be at least:

$300 / $1,500 x 100% = 20%

Note: The total share of the cover per household should add up to at least 100%.

2. How is the HPS premium calculated?
The premium is calculated based on the following factors:

- Outstanding housing loan on the flat
- Loan repayment period
- Type of loan (concessionary or market rate)
- Sex and age of the member
Premiums are generally higher for loans of larger amounts or longer repayment periods. The premiums would be lower for younger persons and females.

3.How much is the premium for my housing loan?

To calculate your HPS premium, click HERE

4.Where to Buy?

If you are planning to buy from private insurnce companies, please refer to "for private property owners".

If you would like to purchase from CPF board, you could login into your CPF account online, under "My request", then fill up information needed.

See an HPS online demo, click HPS

If you like to know how to login your CPF account, Click How to Login CPF account

FOR PRIVATE PROPERTY OWNERS

5. Is this insurance compulsory for me?
No, it is not compulsory. However, we strongly recommend you to consider for your own benefits.

6. How much protection should I insured?
There are many ways you could consider when come to the amount insured.

First, you could consider to insure full amount for single life. Second, you could consider to insure as joint life. And Third you could buy 50%.

7. Where to buy?
Private insurance companies like AIA, Prudential, NTUC, Great Eastern, ManuLife and other general insurance companies provide mortgage reduced term insurance.

8. Get a quotation from all major insurance companies

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DAILY SIBOR RATES
September 06, 2012
SIBOR (S$):

1 mth 0.31375
2 mths 0.37083
3 mths 0.37917
6 mths 0.43625
9 mths 0.50000
12 mths 0.56750

SWAP - Offer rates (S$):
1 mth 0.27560
2 mths 0.35953
3 mths 0.40914
6 mths 0.62288
9 mths 0.77237
12 mths 0.87939