What is Mortgage Insurance in Singapore and Do I really Need It?

In Singapore, mortgage insurance is a type of insurance that protects the lender in the event that the borrower is unable to make their mortgage payments. This insurance is typically required by the lender when the borrower has a high loan-to-value (LTV) ratio, which means that they are borrowing a large amount relative to the value of the property. To put it simply, mortgage insurance in Singapore helps to reduce the risk for the lender by providing compensation for unpaid mortgage balances in the event of default. This allows lenders to offer mortgage financing to borrowers with high LTV ratios, which can be beneficial for those who may not otherwise qualify for a loan.

Why do you need a mortgage insurance in Singapore?

There are several reasons why you may want to consider getting mortgage insurance and how it can benefit you. One of the main reasons is that mortgage insurance can provide financial protection in the event that you are unable to make your mortgage payments due to death, disability, or other specified events. This way, you can help to ensure that your loved ones are not left with the burden of paying off your mortgage in the event of your death or disability.
Another great benefit is that mortgage insurance in Singapore can also provide peace of mind by giving you the confidence that your home and finances will be protected in the event of a financial crisis. This can help to alleviate some of the stress and uncertainty associated with owning a home and taking on a mortgage. Here are a few more reasons you should seriously consider acquiring a mortgage insurance in Singapore.

Mortgage insurance is mandatory for HDB flats

In Singapore, mortgage insurance is typically required for HDB (Housing and Development Board) mortgages. HDB is the public housing authority in Singapore, and it offers a range of mortgage financing options to help residents purchase HDB flats. Because HDB mortgages typically have a high loan-to-value (LTV) ratio, the lender typically requires the borrower to obtain mortgage insurance to protect against the risk of default. 

This insurance is typically provided by private insurance companies, and the premiums are usually paid by the borrower as part of the overall cost of the mortgage. However, it is important to note that a mortgage insurance in Singapore is optional for HDB flat owners who have private life insurance or mortgage-reducing insurance that can sufficiently cover the outstanding housing loan. 

Mortgage insurance takes care of your loans

Most mortgage insurance policies provide coverage in the event of death, but the specific details of this coverage can vary depending on the insurer and the policy. Whether or not your mortgage insurance will take care of your loans in the event of your death will depend on the specific terms of your policy. 

Some mortgage insurance policies may provide coverage for the outstanding balance of the mortgage in the event of the borrower’s death, while others may only provide a death benefit to the borrower’s designated beneficiary. 

When it comes to your house loan,, most mortgage insurance policies provide coverage for the outstanding balance of the mortgage in the event of the borrower’s death or other specified events, such as loss of income or disability. You won’t have to worry as much with good mortgage insurance in Singapore from a well-reputed company. 

It is essential to carefully review the terms of your mortgage insurance policy to understand what it covers and how it can provide protection in the event of your death. 

Additionally, it is always advisable to discuss your coverage with your insurer or a financial advisor to ensure that you have the protection you need.

Reduce ‘lenders risk’

Another fantastic perk of mortgage insurance in Singapore is that it can also help you to qualify for a mortgage by reducing the lender’s risk. Many lenders require borrowers to have mortgage insurance if they have a high loan-to-value (LTV) ratio, which means that they are borrowing a large amount relative to the value of the property. By providing this insurance, you can demonstrate to the lender that you are a responsible borrower and increase your chances of being approved for a mortgage.

You can add on riders to your mortgage insurance

A rider is an additional provision or feature that can be added to an insurance policy to provide additional coverage or benefits. Whether or not you can add riders to your mortgage insurance policy will depend on the specific policy and insurer. Some mortgage insurance policies may allow you to add riders, while others may not. But, in most cases when it comes to mortgage insurance in Singapore, you should be able to add a rider. 

Another key factor to note is that the specific riders that are available for this particular type of insurance may vary depending on the insurer and the policy. 

To determine if you can add riders to your mortgage insurance policy and what options are available, we advise you to contact your insurer and discuss your coverage with them. They will be able to provide you with more detailed information and help you determine if adding a rider is right for you.

To make the decision of where to obtain the most reliable and cheapest mortgage insurance in Singapore, Moneyline Singapore has compiled a list of insurance companies that offer this type of insurance – complete with their price points and why you should opt for them. Reach out today for assistance.