Australian mortgage protection insurance is essential, here's two tips

Australian mortgage protection insurance is essential, here's two tips 

 

 

Mortgage protection insurance

 

Mortgage protection insurance is aimed at protecting a borrower's ability to pay out a loan or to meet repayments, mortgage protection insurance needs to be taken out by the borrower, and is independent of lenders' mortgage insurance.

 

 

While lenders' mortgage insurance is aimed at protecting the lender, mortgage protection insurance offers protection for people working towards paying off a home loan.  

 

 

As well as covering a mortgage in the case of a person's death, such products also offer ''living benefits'' that cover the mortgage while a policyholder deals with a serious illness.

 

 

The product can covers everything from the death of the policyholder to major traumas and the loss of jobs with benefits ranging from complete payouts of the policy in the case of the death of the policyholder to part-payment of benefits for specified events such as illness.

 

Loan repayment protection insurance, on the other hand, is aimed at protecting the borrower's ability to make repayments if the borrower is unable to meet them for a specified period as a result of an accident or illness.

 

 

Lenders' mortgage insurance

 

This is required by lending institutions for people with low deposits, this insurance protects the lender against the risk of borrowers defaulting on their mortgage repayments.

 

 

These days it is paid by a range of borrowers everyone from first-home buyers who don't have a large deposit, to investors who have their equity tied up, and self-employed people - who may otherwise not be able to get a loan, or have to pay higher interest rates.

 

 

Lenders require people to take out mortgage insurance to ensure that should they default on repayments for any reason whether it be for a marriage breakdown, unemployment or credit issues any shortfall in the loan amount is covered.

 

 

It's usually charged as a one-off fee, which can be paid at settlement by the person buying a property, or capitalised on to the loan so payment simply becomes part of the monthly or fortnightly loan repayment.

 

 

Mortgage insurance is essential so get professional advise from an accredited insurance broker, it's definitely worth it…