Buying a home or investing ina property is one of the greatest joys of life. It is also one of, if not the biggest, investments you are ever likely to make. It therefore requires considerable thought and planning before you embark down this path. With the magnitude of this investment, unless you have won the top prize on the lotto, is next to impossible to be able to cover the total cost of buying a home yourself. That is where a home loan comes in. It is not just handy but a wise choice. It will give you the benefit of a home, while giving you the ability to watch your property grow in the market. With the size of flexible home loan options from Newcastle Permanent, however, reasonable as they are, comes considerable pressure. In addition, as it is also sensible to protect yourself against life's unpredictability, you should also consider protection in the form of taking out mortgage protection insurance (MPI).
Reasons to take out mortgage protection insurance
Any type of event has the possibility of occurring and preventing you from making your mortgage payments. This could prove detrimental to you and your dependents. Some of the calamities that could befall you could be loss of work, illness or disability, or even the finality of death. Depending on the protection cover you take, the insurance policy would be able to make your payments for you upon any or all of these scenarios - thus giving security to you or to the ones you leave behind.
The main benefit of getting this policy is that it is affordable and valuable to those in jobs with a high risk and those with volatile health situations. It gives you the needed leverage to acquire a mortgage hassle free, as it is deemed a guaranteed way of meeting payments once it is issued.
It is important to note though that the insurers may take some time to start making the payments for you. Also, in some cases, the payments will only be made for a certain predetermined period of time, which could be between 1-2 years. Such cases include loss of work and when disability occurs. This is apart from the case of death, where the remainder of your mortgage is settled once you have passed away. This is a clearly beneficial and wise scheme to get involved in, as it offers you security. It is also important to note that premiums will vary depending on the size of your loan, the state of your health, age and any related areas, like current disabilities.
Private mortgage insurance
Private Mortgage Insurance is a cover that you are instructed to make if and when your initial down payment is less than 20 percent of the initial cost. Since this is a high-risk zone for any lender, the law dictates you take this cover to protect your lender against any defaulting that may occur. If by chance you do default, the premiums you have been paying will be paid out to your lender. When it comes to this particular cover, you need to keep an eye on your premium amount, as you are supposed to discontinue making the payments when you hit 80 percent of your loan to total value ratio. Your lender is supposed to give you a time frame of how long it will take you to hit that mark. They are also supposed to automatically stop the payments once the balance gets to 78 percent. Seek adequate advice from high quality insurers before you commit yourself to a flexible home loans option.