Buying a home is probably the biggest financial commitment you’ll ever make, so it makes sense to protect your financial security and ensure you’re always able to meet your home loan repayments. Read on to find out if mortgage protection insurance is the right option for you.
What is mortgage protection insurance?
Not being able to meet your home loan repayments is serious and could mean you lose your family home if the bank forecloses. Mortgage protection insurance – also called loan protection insurance – is an insurance policy that pays your mortgage when you’re unable to.
With a mortgage protection insurance policy, your mortgage is covered if you lose your job, suffer a serious illness, injury or even death. It means your home, family and lifestyle are protected no matter what happens.
When you consider just how much you’re investing in your family home, why wouldn’t you want to protect it?
How is it different to LMI?
LMI is different to mortgage protection insurance, in that it covers the lender and not you.
If you took out a home loan with a deposit smaller than 20 per cent recently, your lender probably required you to pay lenders’ mortgage insurance, either as a lump sum up front or added to your loan.
Lenders’ mortgage insurance (LMI) covers the lender in the event you’re unable to meet your loan repayments. Should you default on your home loan, lender’s mortgage insurance would pay the lender the difference between what your property can be sold for and the amount still owing on your home loan.
When things go wrong
It’s important you cover yourself for any eventuality. Just as you’ve insured your life, your home and your car, protecting your mortgage means you can continue to meet your home loan commitments when things go wrong.
It’s a good idea to undertake an annual financial health check; an opportunity to scrutinize your existing insurance policies and ensure you have enough cover to meet your loan repayments and your living expenses.
For any insurance advice on new or existing insurance policies, talk to one of our brokers today.
While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.
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