What is mortgage insurance?
When you sign up for a mortgage, there are hidden costs you should be aware of, like mortgage insurance. Technically, mortgage insurance only protects the lender, but it comes with a few benefits for borrowers, especially when prices are increasing faster than savings. Mortgage insurance allows a lender to borrow above 80% of the value of their home.
Everyone has a different repayment for mortgage insurance, speak directly with your lender for more information. They sometimes have their own mortgage insurance companies or will redirect you to a third party with great rates. You pay the lender’s mortgage insurance to ensure that the lender still receives the money from the home, but this helps you qualify for a low-deposit mortgage loan.
Trying to save a minimum of 20% of the value of a home can take decades. For example, a home that is valued at $400,000 would need a deposit of at least $80,000 for no additional fees and mortgage insurance. The annual average income in Australia for homebuyers is $80,000, leaving little space to save large amounts for a deposit.
If you are still confused about the mortgage lending process, speak to a Mortgage House expert today! They are just a call away and can help you get started with low deposit loans.
Mortgage Insurance Conclusion
Mortgage Insurance can feel like a pain since it is an additional cost, but it is what will allow you to take out a low-deposit mortgage loan. Contact a Mortgage House representative for more details on the lending process.