Mortgage protection insurance, on the other hand, provides protection to the borrower in the event of a default on the loan. In unforeseen circumstances, such as unemployment, illness or death, this insurance will provide the borrower with the means to continue paying monthly installments. However, if you take out life insurance, the lump sum your beneficiary receives after your death may be enough to cover the loan. Perhaps the most common thing, but not always, is for the bank to allow the beneficiary to take charge of the mortgage.
Your spouse or partner won't have to sell the house when you die, as long as they can afford the mortgage payments. Mortgage debts and inheritance issues are complex, so you may want to consider obtaining financial advice applicable to your circumstances. For most healthy people, especially young people who buy their first home, the best mortgage protection insurance policy is often included as an extra in their life insurance policy. See the relevant product disclosure statement and target market determination on the supplier's website for more information before making any decision on an insurance product.
For each new loan, the lender will analyze the relationship between the loan and the value and will generally be required to pay the LMI if your LVR is considered to be high-risk. Like mortgage protection insurance, the cost of lenders' mortgage insurance is determined by a number of factors. In a nutshell, you buy a policy for a set period of time, make monthly payments and, in the worst case scenario, while the policy is active, your designated beneficiary receives funds to pay your mortgage. If you die, unless someone else is responsible for paying the mortgage, the bank will ask the guarantor of your loan to pay the mortgage.
You can choose to get professional advice or to carefully consider your own needs and circumstances and deal directly with a life insurer like NobleOak, who can provide you with general advice and product information. It is designed to provide funds to meet your mortgage payments for a period of time up to a predetermined value, until you improve, or until your benefit period expires. While mortgage insurance covers the lender, not you, it can be a way for first-time homebuyers to enter the housing market without having to deposit the required 20%. If you have named a beneficiary in your will for the property, that beneficiary will be responsible for the mortgage on the property.
Compare prices: As you would with your mortgage loan, check what lenders and insurance companies offer and compare the benefits and costs of the policy. Terms, conditions, exclusions, limits and sub-limits may apply to any of the insurance products shown on the Mozo website.