Mortgage Insurance

Mortgage Insurance is an insurance that is paid to protect the lender from a loss if the property has to be sold if the owner defaults on their mortgage repayments. It must be remembered that mortgage insurance does not protect the borrower for payments or loss if the property has to be sold.

The insurance is generally paid by the bank when the LVR is at or below 80% and by the borrower when the LVR is above 80%. The cost of mortgage insurance can generally be capitalised into the loan.

Mortgage insurance can be very expensive and this cost must be considered when setting up the loan.

Lenders generally have slightly different criteria as to when mortgage insurance will become payable. Make sure you ask your consultant to identify the lender that best suits your needs.

It is important that the lender gets an accurate valuation on your property, this will determine whether or not mortgage insurance is necessary and what it will cost.