Mortgage Insurance | Mortgage Insurance Premium in Singapore

Insurance | Mortgage Insurance

How premium amount is determined for Mortgage Insurance?

This is an important question you need to ask yourself while signing on the dotted line for Mortgage Insurance. In these times when everything is so expensive and on top of it you are saddled with EMIs, Insurance premiums like health and life, another premium looks like a financial burden. But mortgage insurance is important to safeguard the interest of your loved ones in case you are unable to honour EMI or repay the debt in case of death or loss of income.

Though this doesn’t take away the importance of knowing what for you are going to pay as premiums.

Monthly Premiums

Mortgage insurance premiums are calculated on a case-to -case basis using the insurer’s internal underwriting process. Many factors will affect your mortgage insurance premium, such as if you are borrowing a relatively low fraction of your home’s total value or borrowing a small amount relative to your income, you are less of a risk. Thus, your premiums are likely to be lower.

Loan Tenure

Another one is loan tenure – the longer the term of your loan is, the more likely it is that you will die or become disabled before it is paid off. This might affect your premiums. The older you are, the more likely you are to die before your loan is fully paid up. While most insurers impose an age limit (usually about 60) beyond which you are not eligible to sign up, being older will affect your premiums, too.

Credit Score

Besides above, your credit score will also be taken into account as a good credit score indicates that you are a reliable and less risky borrower, otherwise your premiums will rise.

Other Factors

But a most important consideration is your income, if it is higher in relation to your home loan amount, you are a less risky borrower for the insurer, hence lower premiums. Last but not the least, (co-borrower), if you’re purchasing the property with someone else, they will be assessed according to all of the above factors, too, which could have an impact on your premiums.

There are certain other considerations also like your health if you have any pre-existing disease which could lead to some critical illness later.

All the above factors govern the under-writing process of the insurer hence the amount of your premiums.

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