What is the difference between Freehold VS Leasehold properties?

With the ever growing population which resulted in the rampant property development, the number of freehold land are slowly diminishing in numbers hence opening more roads for leasehold properties. However, there is still a dilemma going around for many property buyers to incline more on freehold land as it offers better edge in terms of value, long term prospects and rental returns. Is this really the case? We will have a brief comparison in the next section for a more holistic outlook to understand and hopefully to be able to gauge better property investment decisions moving forward.

1. Freehold

“The property and the land is owned indefinitely by the buyer”

When a plot of land is set aside to an individual for an undefined amount of time, that plot of land is called a freehold land.

In this case, the land is solely owned by the individual for as long as the land is not sold to other parties – you can say that it is forever owned by those who bought freehold land.

1. Leasehold

“The property is owned by the buyer but not the land”

When a plot of land is set aside to an individual for a defined amount of time, on average maximum 99 years of tenure and possibly lower, that plot of land is called a leasehold land.

Below are the major differences in detail for ease of understanding:

	Freehold	Leasehold
Property value	On average, steady appreciation over the long run in years	There are leasehold properties that have higher capital growth in the first 30 years. However, going beyong 30 years the value might stagnate. The value increment might increase again after renewal of the leasehold was made
Ease of selling	Transaction is much simpler and would take up average 4 months. However, during COVID-19 the process might take longer	On average leasehold properties would take up of 6 months – 1 year
Ease of financing	Banks do not have preference on this factor. Banks will mainly refer to borrower’s financial health.	Banks do not have preference on this factor. Banks will mainly refer to borrower’s financial health.

*Source: CIMB Bank Malaysia and Astro Awani Malaysia

Have a brief read on 5 Traits of a good property to invest and get good rental for clearer picture of property investing.

Hope this help you guys to invest better in properties with more awareness and knowledge! 🙂

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5 Creative Ways To Save For A House Deposit!

We will talk about the concept of down payment before we dive deep into the tips to save on down payment so that you will be able to get a better outlook.

Down payment means a portion of the total sales price of your home, which you will need to pay upfront to buy a house. The rest of the payment to the seller comes from your mortgage which will be approved by the banks upon successful purchase by you (as a buyer). Down payments are normally expressed as percentages which in usual cases are 10% from total property sales price. Normally, 3% will act as booking price with estate agents and 7% which you will have to pay to your elected lawyers in a form of bank cheques in order to proceed with your purchase process.

However, be mindful that the 10% deposit usually applies to subsale properties (properties that you buy from an existing owner). These days there are various numbers of buying schemes that allows you to buy homes without the deposit payment of 10%.

And here comes the tips.

TIPS 1: SAVE MONEY FOR THE BETTER

A great stock investment coach once advised me that, “you are your own fund manager!” – and I feel that it’s downright true. Regardless which investment vehicle you are going to use to multiply your hard earned money, nothing is better than knowing what you are investing into.

As a rule of thumb, most financial advisors would suggest saving your money 10%-15%. In other cases, you might also be able to save up to $1,300 per month from a salary of $3,000 – it’s possible. However, if you want to speed things up then you might want to consider saving up to 25%-30% of your net income. The savings will be further boosted by cutting off unnecessary expenses such as cancelling dining out every night, taking public transport to work, collect your tax refunds, save your bonuses or even as simple as parking in a free zone – it makes a huge difference.

Looking for ways to boost your savings further? Invest your savings or better yet, invest in businesses where you might think would make huge returns!

TIPS 2: DO A SIDE HUSTLE

With the rapidly changing economic landscape of countries globally, the gig economy is getting even more popular these days. Developed countries would try as best as they could to find the cheapest yet highest quality set of skills to get their errands done.

With reliable gig economy funnel such as Fiverr and Upwork, you can earn up to USD $25 an hour. This includes simple tasks such as translations, data entries, and even app designing – try it out!

TIPS 3: REFINANCE YOUR PROPERTY

Let’s say you have a house and it seems that the value of your property has gone way up after years of staying. Well, maybe it is high time you should research how many margins of loans you can get out of your home refinancing. It is a good way to consolidate and/or eliminate various debts with various interest rates that you wish would go away and focus on only one stream of debt with one interest rate.

However, be aware that refinancing would also mean to incur a new loan. Do your researches and make sure that you only leverage on loans in order to make more assets and money for you in the foreseeable future. Rich people are rich because they know how to leverage on loans to make their life better financially.

TIPS 4: BUY A CHEAPER CAR OR DOWNGRADE YOUR CAR

It is undeniably hard to restraint yourself from buying that car you have always wanted now that you have the financial means to maintain the car. However, cars are depreciating assets and its values drop every now and then.

If you are able to at least restraint yourself from buying that high-spec Honda City, and instead opt for cheaper alternatives – you will be able to save or invest the monetary differences between the two cars.

Better yet, you would be paying lower installments and lower maintenance fees for a second hand car and have better credit scores in eligibility to own a house!

Have a read down below to know how you can work your way to better credit scores (CCRIS) so that you can get better chances of getting your loan approved by banks :

4 Secrets You Should Know To Get Your Loans Approved !

TIPS 5: CONSIDER HOME BUYING SCHEMES

With the aid of governments and other related bodies, various housing schemes are introduced to help easier purchase of properties for home buyers these days – better yet, without the 10% deposit.

These includes many major government aids for home buyers across the globe such the “Own Your Home” scheme in UK and many major countries.

In addition, these are the schemes outlined in Malaysia to encourage more home buyers:

1. PR1MA
2. Skim Rumah Pertamaku
3. Perumahan Penjawat Awam 1 Malaysia
4. MyDeposit
5. RUMAWIP
6. Rent to own
7. BSN MyHome (Program Perumahan Rakyat)

Now that you have reached the end of this article, you sure are serious on finding ways of becoming a home owner. Best of luck to whatever goals you want to achieve by owning a house. Hope this article helps you in your quest. I am excited for you, the reader – for you will be embarking on a journey that will truly be life changing.

“The man on top of the mountain didn’t fall there”

~Vince Lombardi

Top 7 Biggest Mistakes Property Investors Make

The beginning of any investors isn’t an easy one. You have to know what that business is about, how it generates money, and can the business expand in the foreseeable future.

This is applicable to being a property investor.

Being a property investor requires you to attend classes, get to know your mentors, and people who are successful in your respective investing fields. You would have to continually learn and apply the knowledge you obtained – constantly experiment and adapt your techniques around the market.

Why is this vital?

Certain people would think they are ready when they have attended one class but once is never enough. You must constantly learn (attend many classes) , talk to field experts, and mingle within your investing team members.

Hence, here are the top 8 biggest mistakes property investors make:

1. YOU BUY PROPERTIES ACCORDING TO QUALIFICATIONS AND NOT AFFORDABILITY

Well, many of us are happy when the bank loan officer approves our bank loan. Your salary plus side income seemed decent, your liabilities are pretty low – so he thinks, ehh why not…. But the monthly installment would take away more than half your salary?!

Is that a red flag? Should you worry? … The answer is – yes!

A safe principal to follow is 30% – 35% (where 1/3 of your total salary) of your total salary would go to payment of home installments. This is because 1/3 of our salary should go for savings, 1/3 to daily needs like foods and transportation, and another 1/3 for commitments and/or investments.

It is safer that way rather than having 2/3 of your salary dumped to pay your home. Well, some people can live under strict financial diets but what if emergencies happen? How would you survive? Worst off if you have kids! So buy properties that you can afford and not what you are qualified to buy.

2. YOU THINK YOU CAN FLIP (SELL) A PROPERTY RIGHT AFTER YOU BUY ONE

This is one of the dangerous tactics in the books of property investments. You think you can sell the house you just bought right off the bat. When you buy a property for the sake of flipping – that is not investing, it is called gambling.

Why?

Simply because you sell “in the hopes” somebody will buy that property. In investing, we rely on facts and numbers – not mere speculations without concrete reasons.

I understand that we always hear stories of people having able to sell their houses right after their purchase but sticking to the fundamentals would be a safer way to invest and make money. The risks associated with flipping a fresh property is too high to take. It would take years to recover from buying a wrong property.

Worst off – you may have a financial monster in your hands and would need to auction the property, which would not represent a good outlook on your financial backgrounds the next time you apply for loans.

This same advise is applicable to properties that YOU THINK can get high rentals and make good money!

Always go back to fundamentals and research well your markets and competitors. One key strategy to know if that area has good rental occupation rate is to make time and visit that area at night.  Observe how many lights are on in every units. If there are many units with lights on, that shows high occupancy – a plus point to buy a unit in that area! If it’s vice versa, you should consider other places.

3. YOU THINK GOING TO ONE CLASS IS ENOUGH

It is plausible that you make effort to attend property classes – that’s great. Then you will feel pumped up and highly motivated – and you feel highly driven to buy a property. You will think that you can make money with the current knowledge you have.

But little did you know that there are more aspects you need to know to buy the first house – which is the riskiest investment. That’s right, your first house is the most vital investment to make.

Read more:

5 things you should consider before buying your first house

Should I Buy Property For Investment First Or Should I First Buy To Stay? 

4. YOU DIDN’T MAKE SURE THAT ALL THE FACTS AND NUMBERS ARE PRECISED!

It will determine whether you can be on the fast lane or slow lane in property investments. Because you might get stuck with that property for at least 6 years or more as a result of bad judgement. But that’s alright, you will learn by experience.

Always ensure your knowledge checks are complete. Things to know or cover are mainly as below:

a) 3 Major Risks Of Renting Properties And How To Mitigate The Risks

b) 5 Traits of a good property to invest and get good rental

5. YOU DID NOT PERFORMED THE REAL ESTATE INVESTMENT CALCULATION

To be an investor, you must rely on facts and numbers – not hopes and rumours.

This applies the same with property investments. You have to know the basic calculations to know if your property can make money.

How do you make the calculation?

Ensure that the property you want to invest is below market value approximately 10% – 20%

You can do this by checking the price offered by sellers against the average price people offer around the area.

Better yet, in Malaysia, we have a website that discloses the transparency of actual price transacted on the sales and purchase agreement (S&P). It was a partnership between a company and the local government to improve the property market business.

So if the seller’s offered price < average market price?

That clearly shows the property price is below market value.

However, to easily know that you can get a property below market value, have a go at auctioned properties. These are properties that have problems mainly due to previous owners having trouble repaying their monthly installments.

Read more:

From Abandoned/Auctioned House (Lelong House) Into Cash Machine

6. APPLYING MULTIPLE LOANS FOR MANY PROPERTIES AT ONE TIME (MULTIPLE SUBMISSION)

If I would tell you one thing that is truly risky – the black magic in property investing; that is none other than multiple submissions.

Normally when you associate black magic with the practitioner, it would definitely harm the practitioner in return. The multiple submission technique applies the same consequences – it would do more harm than good if not applied carefully.

You might wonder why this is black magic?

Imagine you applied a loan for two properties because you think that you can flip (sell) the property right after purchase or rent it high – considering the fact that your income can’t sustain the installments for both units.

Remarkably, your loan gets approved probably because you combined loan applications with your wife/trusted partner. That’s great!

But……..

Things get scary when both the units can’t be sold immediately, or nobody would want to rent the units/ rented it at lower price!

What will you do when this happen?

Worse comes to worse you might have to auction the properties or you’ll go bankrupt. Would really hope this is the last resort.

There are times where you think that specific property promised a good deal, even if you know you can’t maintain it – it is recommendable to bolster your income or buy a property you can afford.

7. NOT BUYING PROPERTIES NEAR YOUR “COMMON AREAS”

Common areas are areas where you normally go everyday. It can be the area where you work, your neighbourhood areas, or the place you passed by everyday. The idea is to buy a property that you find easy to visit in case you need to be physically there!

What happens if you don’t buy a property near your common area?

One thing for sure…. you will find it hard to visit your property if you need to be there physically. Things like signing contracts with tenants or handing over of keys (if you are into Airbnb business) would be a challenge if you are not physically there.

However, the aforementioned challenges can be overcome by building contacts with the local janitors or neighbours  who can help you out – of course, with an additional pay. The key to implement this is to find people who you can trust to run your chores when you can’t be there physically.

With all that said, hope you will make wiser investment decisions! It makes a lot of financial differences between making the right decisions and a wrong one. 

3 Major Risks Of Renting Properties And How To Mitigate The Risks

So you have decided to invest in properties and are planning to rent it out. You have the capital, the knowledge, and a good sense of where you want to invest now. However, you must also prepare yourself mentally for the major risks that awaits you when the rental starts. Here are 3 major risks of renting properties I consider quite substantial during your journey ahead.

1. Tenant do not pay their rent

This is basically the major concerns of most landlords. Landlords screen out the right tenants – or so they thought, and maybe they get good rental payments on time for few months but things changed after a while. You don’t get back your rental income because the tenants keep on delaying their payments. Worse comes to worse, you don’t hear much from your tenants and their bills dued more than 2 months – you checked your house and found out your tenant is already gone. They stayed at your house for free which is being very irresponsible especially at your expense.

2. The house is damaged/ things stolen

Alright so maybe the tenant has left the house for good without making payments and you think – “well, that’s alright! I can always get me new tenants”. But things just got worse when you discovered that your TV is stolen! Or nothing else was left there unlike when you started the rental except for the built-in items which is really not moveable. These kinds of problems are landlords’ worst nightmares.

It happened to me once. We had a condo near KL and welcomed a new tenant. The tenants claimed that she’s married and will be living there with her husband and children. We screened through their background details and found no problems at all. The payments were going smooth sailing the first few months until we did not received it for a month and contacting her seems unreachable. We decided to go visit the condo and shockingly found that our tv and some of our furnitures went poof!! And the house was like a wrecked ship – not to mention the weird smell being left there. Since then we always opted for good property management companies and have seen better results in terms of home maintenance qualities due to good tenant filters. However, some property management companies are only in for the money ignoring their service quality, hence we always opt for well known companies. It is a bit pricey in their services but help reduce lots of unecessary stresses.

3. Rental income does not cover your monthly housing installments

Whenever you are renting out on properties, the best strategy would be to get rental incomes higher than the installments. This is how you make money out of your investments. This is also a reason why you need to consider your housing investments carefully, that is to buy a property that is not too expensive so that people on majority will be able to pay you rentals that they find affordable and in a way helps you generate extra income out of the rentals. One of my property coach who is also my father once advised me, “when you are investing in rental property – go for the people in majority”.

This simply means that you buy property which can cater to the affordability of most people around that area or country. If you think that area is of high income earners then you may consider buying a quality apartment/condominium because people around there have the financial means.

However, if you find that the people living in that area consists of middle to low income earners then you might as well consider the lower range properties which caters to the affordability of the surrounding society. This way, if you are not earning positive cash flows from the property – at least you can get half of the installments covered, even though that would be our last resort. That’s a way you can minimize your risks to this matter.

So how are you going to minimize your risks during rental period?

1. Hire a property management company to manage your property

2. Research your property in depth before you make the investment in order to get the most out of your returns

3. Get your property insured for rental business purposes (there is an insurance specially designed to protect your property provided by the banks)

All and all, provided with great insurance coverage and the right knowledge – any property investments will be a good investment and a worthy one for sure.

From Abandoned/Auctioned House (Lelong House) Into Cash Machine

Have you been walking passed that same house – that gloomy, window broken, cracked door house for countless times and has never been occupied? You might think there is no hope at all to restore that property into good function – you might have to think twice!

Why are abandoned properties considered an amazing investment opportunities?

Simple, normally an abandoned property is sold below the market value! This gets even better if it is auctioned by the bank because it will be auctioned by higher margins below market value. Even though you might need to incur some costs to repair – hey, you got the house way the market value, meaning you are buying it cheaper than most people bought the same unit in the same neighbourhood. On a side note, “Lelong” is a term called by Malaysians as auctioned house.

According to Leslie Low, an auctioned specialist from Malaysia stated that an auctioned property would offer 30% to 40% below the market price based on The Star newspaper. Who would give you a property offer of 40% below market value? A decent newly launched terrace home these days costs RM 500,000. That means you’ll get an offer of RM 300,000 for the same property type – or even better.

How would you know if that property can make money?

Then you might ask, how do you buy a property that will make good investments? It’s simple! So long as it’s below market value, returns positive cashflows during rent, potential capital appreciation, within your usual place of hanging out or work, good neighbourhood and…. that area have a 5 year upgrading/expansion plan (check with your local developer) – then you are all set!

All the good signs are there already giving you the positive signals. Sometimes only that particular house looked all scary and dark but the other houses looked neat and tidy, that’s a sign of a good neighbourhood. Especially if it’s nearby public transport, malls, offices or any kind of public attraction. All these characteristics will definitely drive high population into that area making it having high demands for basic needs and wants – in our case it’s a roof over our heads. People would definitely need a place to stay.

How much money can an abandoned property make?

That actually depends on many factors. One of it is the marginal percentage below market price you are purchasing it. Let’s say you are buying a RM 500,000 worth of property at RM 300,000 during auction, you already have a capital appreciation gap of RM 200,000 there! Even though that capital appreciation will slowly catch up to the market value once the function of the house is fully recovered – hey, that means you are investing at a lower capital.

Wouldn’t it be great to invest a lower capital and have a high return? Everybody else is investing at higher price but still have a return approximately close to yours. Whose the winner? You are! But you still have to do your homework. You must know how much Return on Investments (ROI) that property makes, the future developments that area will undertake, who will be your target customers, and your overall costs short term as well as long term.

Not all properties can make great returns, what is a good property for you may not be the best property for another friend – always keep the foundations in mind. Have a read on 5 Traits of a good property to invest and get good rental to get general ideas on what is a good property to invest.

What is the best way to take advantage of the capital appreciation and low purchase price?

The magic word is “refinance” your house. The gap between market value (bank’s value of the said property) vs property purchase price = extra cash! There are two ways that I know of which is available in Malaysian and international banks – you can use term loans or an overdraft. Take an example of the same RM 500,000 property bought for RM 300,000 and after some time your property value had a capital appreciation to RM 700,000 because there is a new train station built in front of your neighborhood.  Then you decided to settle your loans fast and you apply “refinancing”.

The banks will reimburse you loans at the current market value of RM 700,000 – this will give you extra money to settle your old loan of RM 300,000 and on top of that, getting extra RM 400,000 (RM 700,000 – RM 300,000) that you can use to settle other outstanding loans (education or car) and you even use the extra money to invest in another property or open a new business!

But always bear in mind that the banks will always win. The amount of loans you get will need to be repaid on top of bank interest. Have a backup plan on how you will repay the bank loans before and after you utilized your loans. A good way to utilize your loans is to use it for matters that will improve your life financially such as settling outstanding loans (to avoid long term interest incur), start a profitable business, or to buy assets that can give positive cash flows in the future which outruns the bank loan installments itself. Good luck fellas!!

3 Surprisingly Creative Ways To Make Money From Properties

Generating money from property rental is always what most people will think of when they see a house. These days property investors must stretch their imagination and challenge themselves beyond the common investing paths. Just few months ago I came across an amazing book titled “Propreneur” which was published by MasteryAsia Property Series – I find the book brilliant! The book shared many ways of utilizing your properties to make profitable businesses and it’s a collaboration of many property experts from their respective area of expertise. Here I will share 3 creative ways to make best use of your property and make good money out of it.

Group of people working in a home space

1.Virtual Office and Serviced Office Business     

When it comes to virtual office, this would mean that the business entity or individual subscribing are only interested to obtain the corporate address and call handling services. Normally, those who subscribe to this services is due to its very low cost. How much? It can cost to only RM 35! But having a virtual office would also mean not having a physical office space such as meeting rooms, office spaces or the pantry. The type of people subscribing to this service are freelancers (ie. photographers, graphic designers, etc.), branch representatives (people who open branches in other areas but have too little staffs in the new branch), and startups (ie. friends who just started their first business after graduating). These people generally would not need physical space but they need the office address which is from their subscription of services with virtual office providers. Why is this important? When they present their business cards to their clients, they need a corporate address to attract clients’ confidence which is an important aspect to grow their business.                                                                                                                                                                                                                                                                                               Service Office     

 With a service office, customers would be able to enjoy their personal physical space. This is surely better than virtual space and the advantage spans from readily available phone system, IT infrastructure, network coverage, and basic amenities such as water and electricity.  Renting a space will definitely have way better perks than just subscribing for a virtual office space. Normally such spaces are rented by multinational companies, branch or sales offices. However, buying such space to carry on this type of business would require an ideal location and have the right size of office depending which type of target customers you are aiming. Maybe you can start to have a look around for properties that can maximize your rental as a start – this is because running a service office would require similar booster indicators when you rent it out.

Dinosaur skeleton in a museum 

2. Tourist Attraction                                 

You may came across vacant properties when you were walking down the usual street to buy your daily groceries and you might think “who would stay or make even make use of this place?”. The windows are broken, holes in the ceiling, and high grasses all over the unit but truth is – you can turn it to better use! You just have to think outside the box.  We have a look at Steven Tan, a CEO of Inpromastery Sdn Bhd which he started at age 24 and has a vast portfolio of 158 properties within 7 years through group investment model – how did he do it? One of his project is turning a property into the first 3D art museum in Penang, Malaysia – a place that is famous with tourism. According to Steven, they receive approximately 1000 visitors on a normal day but the number boosts to 3000 visitors a day on festive seasons in addition to be able to achieve their ROI within a year.                                                                                                                                                                                                                                                                                                                                                  Now that we know about the idea, what about the costs? From my personal view, I believe the costs of setting up these kinds of business depends on how big you want to launch your business. However, Steven’s business costs RM 1 Million which took about 5 shop lots to be able to cater up to high traffic in Penang. You might wonder, “how about recurring costs?” – well, it will take up RM 35,000 to RM 40,000 which covers areas such as staff salaries, property
rental, maintenance, and others. Making this business a success would require a great deal of research, know your target market, have a unique business idea, and a great mindset. You may even have to liaise with local taxi or bus drivers as part of your marketing to get the word spread about your business. None the less, the fun is seeing you and your business grow and feeling satisfied through the process.

Vacation home on a forest hill

3. Airbnb

Started since 2007, Airbnb has topped their revenue up to 2.6 Billion USD! I remembered what my property coach taught me, “when you venture into Airbnb, you have to think tourism!” – and in tourism, the best location to have your property is at places with entertainment, business, tourism and/or hospitals. In terms of which type of property to invest in for airbnb services would be apartments or small houses – why? On general, people who opts for airbnb services would normally prefer cheap places to stay but also offer an experience of living in another person’s home. However, there is no right or wrong to this – I have even met successful airbnb hosts that makes great ROI from his property and its a landed unit. However, I noticed that successful landed unit airbnb hosts are able to obtain such great ROI because their homes offer unique perks such as near to the beach or university where parents or families from other countries or states can have an overnight stay before their children’s graduation at the university. But then again, demands for vacation has always been there – the question is whether you want to make a serious business out of airbnb or doing it for fun, it can be either way or both! 

 

What’s the difference between master title, strata title, and individual title?

Whenever you are purchasing a property or you went for a property purchase inspection, people always say things like, “don’t worry this unit has strata title issued already” or “this unit is great but it is still under master title” – why is this so important? It’s important to know as it affects your property purchase process especially in terms of time. In this article we will discuss on master title, strata title, and individual title.

Master Title

Having a master title means one thing, the property is under a major/parent grant which is usually the property developer themselves. The master title will eventually be released as an individual title (normally for landed properties) or strata title (normally for high rise buildings). However, the title release will depend on the property developers in terms of how fast they settle their land purchased from the government through self finance or banks using bridging finance. In Malaysia, it may take 3 – 10 years on normal circumstances.

Strata Title

Unlike master title, strata title is issued for high rise properties. Having a strata title means you are now the rightful owner of that small unit up the apartment – finally! This implies that the land lot has been split evenly to all respective owners. This also means that it will be easier for you to purchase or sell the property without consent from the property developers.

Individual Title

Similar to strata title, individual title is normally issued for landed properties. Having an individual title means that the property is under the ownership of the individual who purchase the property. The issuance of individual title is normally much faster compared to strata title. Sometimes, even though it is a landed property but in a gated housing areas with guards and facilities – the property can be considered as strata title (as it is in a shared areas, similar to the concept of a serviced apartment) and not an individual title. Hence, do ask your developers whether your property is under which title as each title has its impact on your whole purchase process.

The links below might interest you~

https://hustlerinvestor.wordpress.com/2018/11/18/3-surprisingly-creative-ways-to-make-money-from-properties/

MRTT vs MLTT? Get yourself insured before buying a property

Any other people should be aware and act to include themselves with an insurance coverage once they are able to afford one. You can consider yourself lucky if you start paying at a young age because the younger you are – the smaller the insurance premium you have to settle. I have heard many stories where people buy a house then suddenly – wham!! They got into a major accident and unable to work again. What happens next? He couldn’t pay the loan installments, banks put his house on auction (lelong), and the poor fellow lost his home – all because he didn’t get himself insured. Maybe you are thinking it’s too early to get insured or maybe you are concerned that it would take huge financial impact on you. My advice is get yourself insured while you are still healthy because insurance company would have high chances of turning you down if you apply when you are critically ill. Believe it or not, you can get yourself covered for RM300,000 by only paying RM 100 a month, small sum for a big life changer. Here are two types of insurance for starters:

Mortgage Reducing Term Takaful (MRTT)

MRTT basically will only get you covered on a single property and it acts as a safety mechanism for the banks in the event that the borrower (us) gets a total permanent disability (TPD) and could not work anymore to make the bank loan settlements. However, with MRTT – the banks will still be paid in full by the insurance company on the whole property price if the borrower faced TPD.

These days MRTT are made mandatory by banks in Malaysia because there have been many cases years back where borrowers make MRTT as an optional matter and in the end faced TPD. Resulting their properties to be auctioned and banks consequentially have to sell the property at lower price. MRTT will normally be included as part of your bank loans during your loan application process. Have a read on “4 Great Tips For Getting your Loan Approved” for better insights to have a successful loan application. For MRTT, you may get covered for only one property and that the monthly payments reduce over time (which is good, maybe?) – but so does your coverage (covered only in specific period) gets reduced and the coverage will no longer be available to you after the contract period ends. MRTT is especially beneficial for people with less dependents/ family members.

Mortgage Long Term Takaful (MLTT)

Unlike MRTT, MLTT covers you forever but you will have to pay forever until you pass away. Well it does cover you forever but it also requires you to pay forever? how do you take advantage of this? The answer is to start as early as possible! The earlier you start paying your insurance, the cheaper the premium you will pay. Also, the amount you pay monthly will be fixed forever – unless you are willing to increase the amount of  insurance coverage when your salary increased. You can decide whether or not to top up your coverage anytime in futures to come.

Finally, the best thing about MLTT is that if you are faced with TPD – your house will be fully settled completely. Let’s say your property loan is RM 200,000, your insurance stands at RM 300,000 – your house will be fully paid and the balance of RM 100,000 will be distributed to your family members 🙂 This way your family won’t suffer too much of a harsh time in your death and you  can rest easy knowing your family members are in good hands.

Key Notes:

• You may fall critically ill anytime and when you do, you may not able to work, when this happens – you can’t pay your bank loans
• In the end, you will lose your property to lelong (auction) – you may have no place to stay anymore, family members will be in hard times.
• The younger you start paying the premiums the better, because the premium paid is determine by your age, the younger you are, the lower your premiums will be.
• In event you can’t pay your loan due to critical sickness, the insurance will help settle all your loans, provided you take an insurance that covers the property price your purchased. Start young and get protected fellow hustlers!”