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Mortgage Insurance UK

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Mortgage Insurance UK

A type of life insurance policy that is widely acknowledged as one of the most important types of cover; Mortgage Insurance basically acts as a backbone to homeowners, who due to any circumstance fail to repay their home loan.

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This policy helps in paying loan on behalf of the lender or the investor for a specific period of time, while the lender pays its premium every month to Mortgage Insurance.

What is Mortgage Insurance in the UK?

Mortgage insurance or a mortgage guarantee is an insurance policy that makes a satisfactory payment on behalf of the investors or lenders due to their failure of paying so. The failure occurs due to default created by the borrower. This default may occur either by the borrower not intending to pay the debt or his inability to repay the loan as promised to the lender. Mortgage Insurance can be particularly private or public in accordance with the policy insurer’s choice. The policy is also acknowledged as mortgage indemnity guarantee (MIG), regarded mainly in UK.

How will this work?

For instance consider a borrower named Mr. Kevin Jones, who purchases a house of cost price 150,000 £. Being a normal working individual he is unable to afford an asset worth 150,000 £ hence, he pays a down payment of 15,000 £ or 10% of the total asset and loan out 135,000 £ or 90% of the total amount. In order to pay back the loan Mr. Jones acquires help from a lender or an investor. Here policy plays a pivotal role, having a limited capital the investor acquires an insurance coverage from the policy for about 25% or 33,750 £ and faces only 101,250 £. The policy will not lend the money as it is but will charge a premium, which could be paid by either the lender or the borrower. If for any reason the borrower is not able to pay back the amount or in case he/she create defaults then the policy takes the sole responsibility of covering that 25%. Mortgage Insurance policy provides coverage’s to its lenders which varies from 20 to 50 %.

Advantages of Mortgage Insurance UK

Yeah… it’s not always about the consumer getting all the benefits sometimes the one who helps you in your trial times is the bearer of those benefits. The policy provides you with the best and innovative options so that you can get your own home ownership. It even provides flexibility en-route to your owning your home. This policy r plan is seen as a savior for those who gets fixed in such turbid times.

Disadvantages of Mortgage Insurance UK

Cost may bring a little bit feeling of disappointment, owing to it getting higher than others. If you posses a Mortgage Insurance policy on a 100,000 £ then a premium charged on you will range between50–100 £ per month and that too not for you but for the lender. So if you have this policy immediately get rid of it if you have already paid about 20% of the total amount taken as loan.

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