MRTA vs Term Insurance: Best Mortgage Protection Guide | Homejourney
The definitive Singapore guide to choosing between MRTA, term insurance, and HPS for securing your home loan—protect your family and finances with confidence.
Executive Summary
When buying a property in Singapore, protecting your mortgage is essential to safeguard your loved ones from financial burden if the unthinkable happens. This comprehensive pillar guide compares MRTA vs term insurance for mortgage protection, explaining mortgage reducing term plans, term life mortgage options, and insurance for home loan needs. We break down Singapore-specific rules from HDB and MAS, real cost examples, and why best mortgage protection often means level term over MRTA.
Homejourney prioritizes your safety by verifying all data and offering tools like our bank rates page to compare DBS, OCBC, UOB, and more. Whether you're an HDB upgrader or condo investor, this 2026 guide equips you to decide wisely.[1][2]
Table of Contents
- What is Mortgage Protection Insurance?
- Home Protection Scheme (HPS) Explained
- What is MRTA (Mortgage Reducing Term Assurance)?
- Term Life Insurance for Mortgage Protection
- MRTA vs Term Insurance: Side-by-Side Comparison
- Pros and Cons of Each Option
- Real Cost Examples and Calculations
- Singapore-Specific Rules and Eligibility
- Decision Framework: Which is Best for You?
- How Homejourney Simplifies Your Choice
- Frequently Asked Questions (FAQ)
What is Mortgage Protection Insurance?
Mortgage protection insurance ensures your home loan is repaid if you die, become totally and permanently disabled (TPD), or suffer terminal illness (TI). In Singapore, it's crucial due to high property prices—average HDB resale flats hit S$600,000 in 2026, with bank loans up to 75-90% LTV.[1]
Unlike general home insurance (fire/theft), this focuses on loan repayment. HDB mandates HPS for CPF-financed flats; private properties use MRTA or term plans. Homejourney verifies these details to build trust, helping you avoid pitfalls.[2]
Key types: HPS (decreasing, CPF-paid), MRTA (decreasing for privates), and level term (fixed coverage, flexible).[1][4]
Home Protection Scheme (HPS) Explained
HPS is mandatory for HDB/Executive Condo owners using CPF for loans (unless exempted). It covers death, TPD before 65, or TI, paying the outstanding loan balance directly to HDB.[1]
Premiums (0.195%-0.55% of loan) deduct from CPF Ordinary Account for 90% of coverage term, up to age 65 or loan end. For a S$500,000 loan, expect S$50-100/month initially.[1]
Not portable—if you sell/refinance, coverage ends. Ideal for stable HDB owners; exempt if over 55+ with low loan or private financing.[1]
What is MRTA (Mortgage Reducing Term Assurance)?
MRTA, or mortgage reducing term, is for private properties (condos/landed). Coverage starts at full loan amount, decreasing with principal repayment—pays bank/HDB directly on claim.[1][3]
Premiums fixed upfront (often bundled with loan at DBS/OCBC), e.g., 0.2-0.4% annually on initial loan. For S$1M condo loan (25 years, 3% interest), MRTA might cost S$1,200/year fixed.[2][4]
Covers death/TPD/TI (some to age 70). Non-portable: ends on refinance/sale, requiring new policy at higher age-based rates.[1][3]
Term Life Insurance for Mortgage Protection
Term life mortgage or level term provides fixed sum assured (e.g., S$1M) throughout tenure, not tied to loan balance. Payout goes to beneficiaries for mortgage or other needs.[2][6]
Cheaper long-term: 30-year-old male, S$1M cover (30 years) at S$38/month vs MRTA's higher fixed premium.[2] Portable—continues on refinance/upgrade.[1]
Flexible for multiple properties/investors. Buy young to lock low rates; excess payout covers living costs beyond loan.[2][8]
MRTA vs Term Insurance: Side-by-Side Comparison
The table below compares key features for a S$800,000 loan (25 years).[1][2]
| Feature | MRTA | Level Term Insurance |
|---|---|---|
| Coverage Amount | Decreases with loan balance | Fixed (e.g., full S$800k+) |
| Premiums | Fixed, higher initially | Fixed, often lower |
| Portability | No—ends on refinance | Yes—independent of loan |
| Payout Flexibility | To lender only | To family (mortgage + more) |
| Best For | Single property, cost-focus | Flexibility, families |
Level term wins on value/portability; MRTA for simplicity.[1][2][4]
Pros and Cons of Each Option
MRTA Pros & Cons
- Pro: Matches loan exactly; easy bank bundling (e.g., UOB/HSBC).
- Pro: Fixed premiums, no medical underwriting sometimes.[3]
- Con: Non-portable; premiums don't decrease despite falling coverage.[1]
- Con: No excess payout for family needs.[2]
Term Insurance Pros & Cons
- Pro: Portable across loans/properties; lower lifetime cost.[2]
- Pro: Fixed high coverage for broader protection.[6]
- Con: Requires separate purchase/management.
- Con: Medical checks for best rates.[2]
Real Cost Examples and Calculations
For a 35-year-old non-smoker male, S$1M loan (25 years):
- MRTA: S$1,500-2,000/year fixed (total ~S$37,500).[2][4]
- Level Term (S$1M cover): S$50-80/month (total ~S$18,000).[2]
After 10 years, MRTA covers ~S$700k but premium unchanged; term pays full S$1M. Savings: Term ~50% cheaper.[2] Use Homejourney's mortgage calculator for personalized math.
| Year | MRTA Coverage | Term Coverage | Annual Premium (Est.) |
|---|---|---|---|
| 1 | S$1M | S$1M | MRTA: S$1,800 | Term: S$900 |
| 10 | S$700k | S$1M | Same as Year 1 |
| 25 | S$0 | S$1M | Term ends |
Singapore-Specific Rules and Eligibility
MAS regulates insurers; HDB requires HPS for CPF loans >S$20k (exemptions for seniors/low loan). TDSR (60% debt-to-income) and MSR (30%) apply—insurance doesn't count against.[1]
Bank loans (DBS/OCBC) often bundle MRTA at SORA +1.5-2%. CPF for principal/interest up to retirement. For privates, no HPS—choose MRTA/term.[1][5]
Homejourney's bank rates shows live SORA for partners like Standard Chartered, Maybank.
SORA trends impact costs: Rates stable at ~3% in 2026. The chart below shows recent interest rate trends in Singapore:
As seen, SORA fluctuated 2.8-3.2%—factor into long-term premiums.[4]
Decision Framework: Which is Best for You?
- Stable HDB, CPF loan: Stick with HPS (cheapest).[1]
- Private property, no plans to move: MRTA for simplicity.[3]
- Young family, upgrades likely: Level term—portable, excess cover.[2]
- Investor/multiple loans: Term for flexibility.[6]
Insider tip: Buy term young (under 40) via Singpass on Homejourney—lock rates before health changes. Check property search for budget fits.[2]
Related: Learn more on coverage needs in How Much Mortgage Insurance Coverage Do You Need: Homejourney Benefits ">How Much Mortgage Insurance Coverage Do You Need.
How Homejourney Simplifies Your Choice
Homejourney builds trust with verified tools:
- Compare rates from DBS, OCBC, UOB, HSBC, etc., on bank-rates.
- Instant eligibility calculator: here.
- One-click multi-bank apps via Singpass—auto-fill CPF/income.
- Refinance guide with brokers for best mortgage protection.
Post-purchase, explore Aircon Services ">aircon services for maintenance. We're with you every step.Mortgage Insurance Singapore: Do You Need It? Homejourney Benefits
Frequently Asked Questions (FAQ)
Is MRTA compulsory in Singapore?
No, optional for bank loans/private properties. HPS mandatory for CPF HDB loans unless exempt.[1]
MRTA vs term insurance: Which is cheaper long-term?
Term insurance often 30-50% cheaper with better coverage. E.g., S$816/month term vs higher MRTA for similar loan.[2]
Can I cancel MRTA and switch to term?
Yes, but check surrender value (low). Portable term avoids this.[1]
Does mortgage insurance affect TDSR?
No, premiums outside TDSR/MSR calculations.[1]
Best age to buy term life for mortgage?
Under 35—lowest premiums, lifelong lock-in.[2]
HPS vs MRTA for resale HDB?
HPS if CPF; MRTA if bank loan. Term for flexibility.[1][8]
How much coverage for S$600k condo loan?
At least S$600k reducing (MRTA) or S$1M fixed (term) for family buffer. See How Much Mortgage Insurance Coverage Do You Need in Singapore | Homejourney ">our guide.[2]
Ready to protect your home? Start with Homejourney's bank rates comparison and calculator. Our verified platform ensures safe, transparent decisions—your trusted partner in Singapore property.
Disclaimer: This is general info; consult advisors for personal advice. Rates as of 2026; subject to change.
References
- Singapore Property Market Analysis 1 (2026)
- Singapore Property Market Analysis 2 (2026)
- Singapore Property Market Analysis 4 (2026)
- Singapore Property Market Analysis 3 (2026)
- Singapore Property Market Analysis 6 (2026)
- Singapore Property Market Analysis 8 (2026)
- Singapore Property Market Analysis 5 (2026)
