Mortgage insurance
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What is mortgage insurance?
| Mortgage insurance enables you to get a home loan with a lower deposit. It protects the lender in the event you are unable to meet your mortgage repayments and the property needs to be sold to cover the debt owing. It works by ensuring that if the lender is unable to recover all money owed from the sale of the property, they can claim the difference through insurance.
| When is mortgage insurance payable?
| At Easy Street, mortgage insurance is payable when you are borrowing more than 80% of the property value. You can borrow up to 95% of the property value with Lender's Mortgage Insurance which means you may only need a 5% deposit.
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How much is mortgage insurance?
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The cost of mortgage insurance depends on a number of factors including the loan amount, how much of the property value you are borrowing, your deposit and the product type. Mortgage insurance can typically cost anywhere from 2% to 3.5% of the loan amount. Note that this does not include the cost of any stamp duty payable.
In some cases, the lender may allow you to add the cost of mortgage insurance to your loan amount, provided the amount you borrow does not exceed 95% of the property value.
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Buy now or save?
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When it comes to paying mortgage insurance, your two options are:
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- Continue saving until you are able to come up with 20% deposit. This will enable you to avoid paying mortgage insurance and would save you thousands. You should also take in to account the pace of the market and how long it could take you to save the extra money.
- Buy now and get your foot in to the property market before any property market increases occur. You can then concentrate on paying off your loan.
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Things you might like to know
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