A specialized kind of insurance policy that has recently made its advent into the mortgage industry, mortgage insurance promises that your loan will be repaid when you are faced with disability or death.
As a borrower of a mortgage, you are given a tenure of about 12 months or higher depending on your situation. The lender has the liberty to seek protection for the capital that he loans out with the help of insurance instruments of this type.
Two types of this specialized insurance exist. And a number of popular banks and financial institutions provide this insurance. Now, let’s get straight into the details, so you’re well prepared to make your choice.
- Private Mortgage Insurance
Private mortgage insurance products are provided by insurance companies, in order to be able to provide a certain degree of security to the lender when giving out large sums on credit. When an event of default occurs, the insurance will take care of a significant part of the capital that has been lent out. This type of insurance is provided by private insurance companies.
- Mortgage Insurance Premium
Premium insurance for mortgages comprises products of mortgage life insurance that seek protection for the lender in the case of nonpayment because of genuine reasons such as unfortunate events. These are unique products because they are facilitated by government insurance bodies.
- Fixed Mortgage Rate
A fixed mortgage rate is an insurance product that provides a fixed rate of interest during the entire term of the loan. Market conditions don’t affect the rates of mortgage in this service, and the product features a pre-fixed rate of interest. The rate of interest fixed beforehand ranges from 12.5% to 25% and is decided upon at the time of borrowing.
- Flexible Mortgage Rate
A flexible mortgage service consists of an interest rate that differs in correspondence to the change in market movements. Also referred to as floating or adjusting rates, flexible mortgage rates involve a high risk factor.
- Your Options for Mortgage Insurance
Housing finance companies that are the forerunners of the organized mortgage industry include LIC Housing Finance, ICICI Home Finance, and HDFC, among others. Being the biggest catalysts of mortgage insurance products in the country, these companies are known for providing the most well-known form of mortgage loans.
Also catching up with the industry are cooperative, national, foreign, and commercial banks, as well as other financial companies from the non-banking sector.