Mortgage Insurance scenario in Singapore

Mortgage Insurance scenario in Singapore

It is awesome the types of insurance packages available in the US and elsewhere. Some are borderline betting houses in our opinion and they undertake too much risks, 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. Taking easy money but naked exposed risks such as such “Book-making” deals are what made some BIG insurance giants to fall. 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 book maker.

Thankfully in Singapore, it is simpler . Some Singapore banks may give you some preferential Singapore SIBOR-SOR-fixed bank loan rates , but forces you to buy their mortgage insurance.

Mortgage Reducing Term Assurance

Mortgage insurance is designed to ease partially the pain of a partner who has lost a loved one and still have to end up taking over the liabilities of the home loan repayment.

In the case where the loan is $2,000,000 and both couples are employed and each is accountable for 50% of the repayment . So Singapore’s bank will want each person to buy an insurance for $1,000,000. So in case one dies , the other will receive $1,000,000 towards partial prepayment of the home loans. If one is the borrower and both are owners , the bank will require the borrower to insure himself/herself for $2,000,000.

When the loan is being repaid , the principle amount reduces, hence the insured amount is reduced and hence also the premiums.

This reassures the bank that the home loan can be serviced and serves to defray default risks of singapore home loans borrowers as this insured amount may be tied to this liability .

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

Why do Banks force you to work with their insurer ?

Banks are progressively cross selling products, so this helps to pull in their revenues targets.

Sometimes, such bundling may or may not be the best option for the Singapore property Buyer or the Singapore home owners refinancing their properties. Please SMS (text) your Singapore Mortgage Consultant at +65 – 9782 8606, they will be able to assess the benefits and risks of each Singapore housing loan package choice.

Home Assurance : Home valuables Insurance

Home Content insurance pays you in case the Condominium is destroyed and as a consequence your contents are lost or destroyed.

Some variations of content insurance also cover theft as well lost of content due to fire.

Housing Assurance : Condo Insurance

Banks see little value in owning a collateral which may come in the form of shares of a strata titled land in case a building is demolished by whatever reasons. The collateral is illiquid, there is not much value as it is hard to buy and sell it in case the borrower is either dead or goes into default. .

In case if your property is $1,000,000. If the estimated construction cost is $400,000, this means that $600,000 is the land cost and $400,000 building replacement 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)

The bank can then use this money to pool it into the common funds for the building to be re-built , at minimum or no loss to the bank .

With www.PropertyBuyer.com.sg our Singapore Home loans and mortgage consultants (www.propertybuyer.com.sg/contactus.php) can advise you through your property buying process.

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