Mortgage Indemnity Insurance protects the mortgage lender against loss in the event of default by the borrower subject to the provisions in the Mortgage Insurance Act.An ‘Approved Lender’ is a lending institution that is approved by the Minister of Housing for the purpose of making loans which may be insured under the Mortgage Insurance Law. An ‘Approved Lender’ may be a(n):
- Building Society
- Bank, Loan Company
- Insurance Company
- Trust Company
- Trustee of Trust Funds
- Cooperative Credit Society
- Cooperative Housing Society or other societies authorized to lend money on the security of real or immovable property.
What are the benefits of Mortgage Indemnity Insurance to the Borrower (Mortgagor)?
- The basic security for the Mortgage is your property. The Mortgage Insurance acts as a form of additional security for your Lender.
- Lenders are normally prepared to lend approximately 67-70% of the selling price or the value of the property (whichever is less). If you need to borrow more than this, most Lenders may consider a loan of up to 97% with Mortgage insurance.
- The down-payment on a house can be kept to a minimum.
- Lending terms (e.g. rate of interest and repayment period) pertaining to loans is made more affordable.
- Acceptable standards with respect to the construction of houses are maintained.
What types of loans are eligible for Mortgage Insurance coverage?
- Loans that are granted for purchasing a dwelling house.
- Loans that are granted to purchase land to build a house for owner occupancy and secured by a first mortgage.
- Loans bearing a maximum interest rate of 19% per annum.
- Loans repayable over a period of 15-35 years.
- Loans to a maximum of 97% of the selling price or value of the dwelling unit.
- Loans relating to a maximum selling price per dwelling unit of $20,000,000.
- Loans where the total monthly repayment by the borrower does not exceed 40% of his/her monthly income.