f you are planning to buy a home and open a mortgage, you should know that you will need to take out home loan insurance.
Let’s find out in this guide what the home mortgage policy is and how it works.
Home mortgage insurance: what is it?
The home mortgage insurance policy is a contract entered into between the bank (lender) and the borrower that protects both parties.
What does mortgage insurance protect?
This type of insurance policy protects the property from any damage and small and large risks, but also the borrower / underwriter of the loan agreement from events that may affect his ability to repay.
Covered events include job loss, natural disasters, permanent or temporary disability.
Home mortgage insurance policy: what are the benefits?
It is easy to understand from the events covered that the home mortgage insurance policy protects against the risk of insolvency or the inability of the borrower not to be able to fulfill the mortgage payments.
This policy is indicated above all for those who have dependent children, for single-income families and for those who want to protect their family from any unexpected event.
What happens in the event of the borrower’s death?
In the event of premature death of the borrower, who has taken out a home mortgage policy, the insurance company provides a capital necessary to pay off the loan, while still retaining ownership of the property.
Home mortgage insurance policy: how to pay the premium?
The insurance premium can be paid by the borrower in a single solution (advance payment) or you can pay the premium through convenient monthly, six-monthly or annual installments according to your needs.
How long does the home mortgage policy last?
As regards the duration of the home mortgage policy, it varies from a minimum of 5 to a maximum of 30 years and, usually, coincides with the timing provided for in the amortization plan.