Wednesday, September 1, 2010

Protect the roof over your head, buying cover early can save costs

A family’s biggest ticket item is the house they own but only 3 out of 10 home loan customers in Singapore buy mortgage insurance.

We need to realize that home loans need to be insured too on top of all of our needs, from children’s education to hospitalisation.

Mortgage insurance can be extended to cover permanent disability, critical illness and unemployment by offering decreasing coverage over your outstanding mortgage loan duration.

Family stands to lose the roof over their heads should the bank reposes the house if the breadwinner who is paying the mortgage dies prematurely.

Mortgage insurance is compulsory for HDB flat owners who use his CPF savings but it is not a bank requirement for private home owners. However, some banks do bundle mortgage insurance into their home loan packages.

Mortgage insurance is an important part of an overall financial plan as your home is probably the biggest purchase and financial commitment in a lifetime. Family must ensure they will not be burdened with outstanding home loans, or possibility of selling the house in the event of unforeseen circumstances.

There are a few considerations when shopping for mortgage cover.
  1. The amount of cover
  2. Buy on a joint life basis
  3. Buy early
  4. Interest rate assumption
  5. Guaranteed premiums
  6. Check the supplementary benefits

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