Mortgage insurance: What options are available?

When acquiring a property, you have to plan several tangents that will help you in case of emergencies and problems. This is why there are several types of mortgage insurance to which individuals can subscribe in order to ensure themselves well under several spheres in the process of buying and paying for the house. In short, within the category of mortgage insurance there are a variety of them, namely private mortgage insurance (PMI), mortgage insurance paid by the borrower, mortgage insurance with a single premium, mortgage insurance paid by the lender and split-premium mortgage insurance, find out what they are all about in this post.

A lower rate in private

A mortgage insurance private gives you a better chance of getting the lowest rates and better coverage. Individuals will mainly use private mortgage insurance when the down payment on the house is less than the usual 20%.

Its purpose is to provide protection against possible losses to the lender and not to the borrower. This type of mortgage insurance can be granted by financial security advisors who hold a license in individual insurance, this license is issued by the Financial Markets Authority.

Borrower Paid Mortgage Insurance (BPH)

This, under its acronym APH, is the most common form of mortgage insurance on the market. By using APH, you will simultaneously pay monthly fees and your basic mortgage payment.

When the mortgage loan paid by the borrower is paid off, you will continue to pay an amount monthly until you have 22% equity in your residence. Once this 22% is reached, the mortgage insurance is then terminated.

Single Premium Mortgage Insurance (IMU)

Otherwise known as single-payment mortgage insurance, single-premium mortgage insurance is paid upfront in a lump sum. Payment is generally made before the conclusion of the purchase contract for the property. The monthly payment with an IMU will therefore be less than with mortgage insurance paid by the borrower. This is therefore an advantage for this type of mortgage insurance.

Lender Paid Mortgage Insurance (LPMI)

This type of insurance is paid for by the lender, which means that the lender technically pays the insurance premium. The word technically is important to emphasize here because, ultimately, you are funding the insurance over the life of the mortgage. It should be noted that this financing of the mortgage under the LPMI is done with higher interest rates. It is also impossible to cancel the insurance. On the other hand, it is possible to refinance in order to reduce the monthly payment.

The LPMI is more attractive for a short-term loan once again because of its rates which happen to be higher. It is therefore a more advantageous option for individuals with stable and high incomes.

Split Premium Mortgage Insurance

This insurance is intended to be a hybrid of the BPMI and the SPMI, it is also one of the least coveted options on the real estate market. With this type of insurance for your mortgage, part of it is financed as a lump sum at closing, the remaining part is paid on a monthly basis. No money is paid up front, unlike BPMI, the monthly payment for split premium mortgage insurance does not increase as much.

In conclusion, the options are there now with a little information, you may have a better idea of ​​where to go in terms of mortgage loan insurance.

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