Aug 18, 2017 9:07:30 AM

Safeguard your home with mortgage protection insurance

Topics: Buying, Mortgage, new zealand real estate, First Home Buyer, Second Home 0

Buying a home is probably the biggest financial commitment you’ll ever make, so it makes sense to protect your financial security and ensure you’re always able to meet your home loan repayments. Read on to find out if mortgage protection insurance is the right option for you.

What is mortgage protection insurance?

Not being able to meet your home loan repayments is serious and could mean you lose your family home if the bank forecloses. Mortgage protection insurance – also called loan protection insurance – is an insurance policy that pays your mortgage when you’re unable to.

With a mortgage protection insurance policy, your mortgage is covered if you lose your job, suffer a serious illness, injury or even death. It means your home, family and lifestyle are protected no matter what happens.

When you consider just how much you’re investing in your family home, why wouldn’t you want to protect it?

How is it different to LMI?

LMI is different to mortgage protection insurance, in that it covers the lender and not you.

If you took out a home loan with a deposit smaller than 20 per cent recently, your lender probably required you to pay lenders’ mortgage insurance, either as a lump sum up front or added to your loan.

Lenders’ mortgage insurance (LMI) covers the lender in the event you’re unable to meet your loan repayments. Should you default on your home loan, lender’s mortgage insurance would pay the lender the difference between what your property can be sold for and the amount still owing on your home loan.

When things go wrong

It’s important you cover yourself for any eventuality. Just as you’ve insured your life, your home and your car, protecting your mortgage means you can continue to meet your home loan commitments when things go wrong.

It’s a good idea to undertake an annual financial health check; an opportunity to scrutinize your existing insurance policies and ensure you have enough cover to meet your loan repayments and your living expenses.

For any insurance advice on new or existing insurance policies, talk to one of our advisers today.

References:

https://www.finder.com.au/income-protection/mortgage-protection

http://ask4finance.com.au/loan-protection-insurance/

https://www.commbank.com.au/guidance/property/what-s-the-difference-between-lmi-and-lpi--201605.html

Disclaimer:

While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Mortgage Express Limited for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication.

A Disclosure Statement is available on request and free of charge.

Related posts

How to Win at Auctions

How to Win at Auctions

While auctions can be an incredibly stressful and intensive – even intimidating - way to buy property, they are also one of the fastest and simplest means of selling property. As a prospective buyer, it’s important you’re familiar with the highly unpredictable and often fast-paced process of an auction in order to be successful. Here are some tips.


Buying and selling at auction

Buying and selling at auction

Across New Zealand, auctions are a popular method for both buying and selling property. But an auction can seem daunting, particularly if you’re a first home buyer or new to the auction process. Don’t be put off though as there are many advantages for both buyer and seller. In this month’s property article, we’re sharing some of Harcourts New Zealand’s tips to buying and selling at auction to ensure you’re successful.


Helping your kids buy a home

Helping your kids buy a home

With the rising cost of property across New Zealand, it’s not surprising that so many parents are having to help their grown-up children buy property. In fact, it’s estimated that the “Bank of Mum and Dad” is the sixth largest lender when it comes to mortgage lending in New Zealand. While bank lending requirements have made it harder for first-home buyers to use their parent’s help to get onto the property ladder, there are still a few ways you as a parent can help.


Buying a home with a new baby on the way

Buying a home with a new baby on the way

A new arrival in the family means some big changes ahead for your finances. In fact, a growing family is one of the top reasons people choose to buy a new home. During this challenging and often stressful time, it’s easy to forget some of the important things you should be considering when buying a home with a new baby on the way. Take a look at 3 things you should be thinking about.


3 Tips for buying your first home

3 Tips for buying your first home

Buying a home is for many New Zealanders a rite of passage and a significant milestone. But it can also be an overwhelming process and incredibly challenging if you don’t know where to start. So that you can navigate the home buying process from start to finish, and make informed decisions along the way, we’ve compiled 3 useful tips for first home buyers.