Mortgage insurance
mandatory mortgage policies: property, life, title — costs and how to save
Mortgage insurance
What's mandatory:
For a mortgage the bank requires: property insurance (collateral), often borrower's life insurance.
Property:
The building/apartment is insured for the collateral amount — fire, flood, explosion, natural disaster.
Life & health:
Protects the family: on borrower's death/disability the insurer repays the loan.
Title:
Title insurance — protection from losing property rights (transaction challenge risk).
Cost:
Together 0.5–1.5% of the loan amount yearly — factor into total mortgage cost.
Beneficiary is the bank:
Payout goes to the bank; if the home is destroyed insurance repays the debt, not the home.
You can switch insurer:
You are not obliged to insure only with the bank's insurer — compare, the bank must accept an accredited insurer.
Annual renewal:
The policy renews yearly for the whole mortgage term — a lapse = loan agreement breach.