Mortgage Insurance in Singapore

Do you have to buy mortgage insurance in Singapore when you buy a property

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By Property Buyer Singapore Mortgage Consultants and Broker

Not Simply Cheap, but what Fits. We Research, You Save!

Tel:    6100 – 0608

SMS:  9782 – 8606

Email: loans@propertyBUYER.com.sg

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Elsewhere in the world, Insurance Industry  is over-saturated, insurance companies are getting too innovative in creating products.  Some are borderline betting houses in our opinion , such as buying insurance to insure against the person having the cash flow to continue to service the home loan.

There are other mortgages that can even insure against the price of the property staying above a certain valuation. These are part of the reason how AIG got into trouble previously. The world needs a stronger governing body to have the over-sight of Insurance companies so that none will become too big to fail and none will be allowed to take BETS. Mind you, their role is insurance, not that of Betting house .

Luckily in Singapore, it is simpler . Some Singapore banks may give you some cheaper Singapore SIBOR-SOR-fixed bank loan rates, but try to cross sell their insurance package to you.

Mortgage Reducing Term Assurance (MRTA)

Mortgage insurance is an insurance to insure against the death of a co-owner in which the beneficiary is the other person (usually someone who is an owner under the joint-tenancy ownership structure in which the assets as well as liabilities are transferred to the other person).

For example , if the loan is $1,000,000 in which each person shares half the repayment burden. In this case, each person buys $500,000 of insurance. So that when a partner dies, the other partner gets $500,000 towards payment of the house. There is also what is called Mortgage Reducing Term Assurance (MRTA) .

As the home loan  is being paid down while at the same time, the owners are getting older. Hence the  Mortgage insurance premium may decrease only a little.

Bank’s actuary department will be happy with this arrangement as this risk is now hedged via mortgage insurance   . This reduces the Singapore bank’s   exposure to this housing   loan against possible default.

If you already have many insurance policies, buying such an insurance may mean you are over-insured.

Why do Banks sometimes force you to  insure with their partner insurance company?

Banks are progressively cross selling products, so this helps to attain their profits  targets.

Housing Assurance   : Home valuables  Insurance

Home content insurance pays you if your contents are lost, stolen or destroyed. There may be  additional premium to pay for additional cover   which covers many different conditions leading to the loss or damage.

Home Insurance : Property Insurance

Banks see no value in owning a collateral which may come in the form of shares of a strata titled land in case a building is destroyed by whatever reasons. The bank cannot easily buy or sell such stake and hence their collateral is illiquid .

For example your condominium is $1,000,000. If the evaluated construction   cost is $400,000, this implies   that $600,000 is attributed to land and  $400,000 is the building cost .

Just to side-track, you can use read your own Insurance insured amount to estimate fairly accurately the Building cost of your condominium . (We use this method at PropertyBUYER.com.sg as a proxy for estimating building cost)

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About Property Buyer Contact Property Buyer

www.PropertyBUYER.com.sg

We are a Research-focused Singapore Mortgage Consultant which helps you compare Singapore Home loans either for new home loans or Singapore Mortgage refinance home loans, we balance risks versus rewards for each home loan to match your risk profile and financing needs.

Buying property is a serious affair, we do NOT advocate a Greed or fear based buying approach, we emphasize that you need to check your finances and property home loan affordability. Check out the mortgage calculators or call us so as to do your sums right.

Not Simply Cheap, but what Fits. We Research, You Save!

Tel:    6100 – 0608

SMS:  9782 – 8606

Email: loans@propertyBUYER.com.sg

All articles are the intellectual property of www.PropertyBuyer.com.sg. You are welcome to reproduce our articles provided that you include an active and working link back to http://www.propertyBuyer.com.sg

http://www.propertybuyer.com.sg/mortgage

Related posts:

1. Yet another Singapore bank withdraws SOR SIBOR Promo rates
2. Singapore Property Buyers: Do you prefer Sibor or SOR rates
3. WHY SINGAPORE PROPERTY PRICES GO CRAZY
4. Singapore banks raise SIBOR Margins on housing loan rates

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About Property BuyerContact Property Buyer
www.PropertyBuyer.com.sg
We are a Research-focused Singapore Mortgage Consultant which helps you compare Singapore Home loans either for new home loans or Singapore Mortgage refinance home loans, we balance risks versus rewards for each home loan to match your risk profile and financing needs.
Not Simply Cheap, but what Fits. We Research, You Save!
TEL:   +65 - 6100-0608
SMS:  +65 - 9782-8606
Email: Loans@propertyBUYER.com.sg
Business Registration: 200618162C
All articles are the intellectual property of www.PropertyBuyer.com.sg. You are welcome to reproduce our articles provided that you include an active and working link back to http://www.PropertyBuyer.com.sg
Career at Property Buyer