Recently, a prerequisite of mortgage lending was his insurance. It is important to note that the property does not need insurance, and direct credit amount if the recipient of money suffer "default".
In broad terms the risk of losing the bank lending the money is big enough. Mortgage insurance has become especially popular because of the unstable situation in the labor market. Risks are associated with banks and personal motives of man.
Importantly, the borrower as the payment of insurance can offer money, but not real estate, which the bank has no significant value. mortgaging real estate - is not the mission of the bank, given that it is sold at a price much lower than the one on which I possess. As a result of the creditor bank incurs losses.
All this led to the popularization of mortgage insurance. Mortgage insurance in this case, allows the bank to secure the deal considerably. The insurance contract is concluded for the entire period of the mortgage lending up to making the last payment of the debt amount. Despite the fact that over time, such as 3-5 years after the loan payments, the risks are reduced considerably, to abandon the mortgage insurance is not possible.
Current mortgage insurance programs include:
• insurance of life and health of the borrower (Co-borrower). This insurance is carried out on cases of death of the borrower for any reason, as well as in case of total or partial disability caused by an accident that led to the disability.
• Insurance of real estate. Insurance is carried out in case of fire, explosion, water damage of property, natural disasters, illegal actions of third parties, including terrorism;
• Insurance risk possible loss of your ownership of real estate (title insurance). Insurance is carried out in the event of loss of borrower ownership of real estate.
Bids mortgage insurance is different, depending on the region and the loan conditions. The standard insurance amount is not less than 110% of the loan amount, it varies every year, as debt repayment. On request, the insured amount can be increased up to the value of real estate in the housing market. Calculation of mortgage insurance is made by the insurance company in each individual case.
In the case of an insured event damages the bank takes place exclusively in the amount of damage and no more than the sum insured.
Moreover, if the insurance premium payment amount substantially exceeds the amount outstanding at the time of payment of the borrower's obligations to the bank under the loan agreement, the remaining part shall be paid to the borrower.
Today rates for comprehensive insurance of mortgages are set individually in each case. The extent of the insurance risk, as well as contributions and other nuances will depend on:
- The age and condition of the borrower
- The general condition of the property (ohm or flat)
- "Legal purity" of the apartment or house
Borrower upon the occurrence of an insured event should contact the insurance company immediately and put in a lender's reputation. Clarify procedure in a given situation can be an insurance company.
In drawing up the contract of mortgage insurance should pay attention to the list of insurance cases for which losses will be reimbursed. Let's look at the most private insurance cases.
Death or disability of the borrower.
With the death of the borrower or the receipt of a disability, the insurance company is obliged to fulfill all obligations for it to repay the mortgage loan and pay interest. Planted apartment in such a case goes to rightful ownership of the borrower or his heirs.
Damage to insured property
In case of damage to the insured property insurance company pays the insurance premium to the borrower. It is worth noting that if the damaged dwelling was insured only for the amount of the mortgage, rather than the full cost, it received the insurance money may not be enough to complete the restoration of housing.
The loss of property or loss of property rights
When there is a physical loss of property or loss of property rights to it, the insurance payment will be the recipient of the bank granted a loan. He will receive from the insurance company the remainder of the debt of the borrower increased by 10 percent. If the borrower is insured housing in its full ownership of it can get between the cost of housing and mortgage.
In practice, it often happens that the mortgage loan is paid off early. In this case, the borrower may prematurely terminate the contract of mortgage insurance, and recover the amount of insurance payments for the unused time.