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Mortgage Insurance: Why it is important?

We all know that buying a home in a place like Singapore is a big-ticket investment. Sometimes you have to shell out lifetime savings along with debt, which you have taken in the form of home loan. It is your most prized possession where you want to live with your family for a lifetime…but if something unfortunate happens to you like death or permanent disability, and your spouse is unable to repay the loan, then your family will become homeless. As you have a loan from the bank or HFC, the bank will mortgage the house to repay your balance loan. To save your family from such a situation, it is recommended that you go for a mortgage loan which repays the loan in case of any eventuality. As a home loan is a long – term debt, anything can happen during this long tenure. You must think in advance of doing your financial planning.

When mortgage insurance comes into force?

Mortgage insurance protects you and your family when you are unable to make your home loan repayments. In case you are unable to service your mortgage repayments for the entirety of your home loan tenure, you can claim the insurer and get them to pay off your home loan.

But the event has to be a life-altering like total disability and not when you spend a fortune on a luxurious holiday abroad. If that happens, you or your family will receive a lump sum pay out which you can utilize to repay your loan and save the roof on your head.

A study reveals that Singaporeans have about 45.8 per cent of their assets in residential property, and this is hardly surprising given that more than 90 per cent of citizens own a home. This also means mortgage loans make up a large percentage of household liabilities, or 74.6 per cent to be precise.

As a large percentage of the population lives in HBD flats, and if they are using their CPF savings to make their monthly mortgage payments, they are covered by Home Protection scheme (HPS), to which they are automatically signed up.

So, if anything happens to you, like you pass away or become permanently disabled before the age of 65, the outstanding amount on your home loan will be paid by the CPF Board, ensuring that you (if you’re still alive) and your family don’t lose your home.

For HDB buyers who aren’t using CPF savings to repay your home loans, joining the HPS is not compulsory, but you can still apply to join it.

Alternately you can also opt for a mortgage insurance policy from any good private insurer.


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