The mortgage insurance is a special type of insurance policy and is gaining huge popularity in the Indian mortgage industry. The mortgage insurance is a special type of insurance policy that guarantees repayment of a mortgage loan in the event of death or disability of the person who borrowed the mortgage. The tenure of payment of such mortgage insurance is usually of 12 months and in some cases it goes higher up. Furthermore, the lender can also protect his loaned capital through these special type of insurance instrument. This type of specialized mortgage life insurance products are of two types, viz
Private Mortgage Insurance
Mortgage Insurance Premium
Private Mortgage Insurance are mortgage life insurance products that protects the borrower from the lender in the event of default which generally, covers a substantial portion of the capital borrowed. They are insurance products of private insurance companies.
Mortgage Insurance Premium - are mortgage life insurance products that also protects the lender in the event of non-payment due to some unfortunate event. These life insurance products are generally government insurance products.
The following types of rates are prevalent in the Indian mortgage insurance market -
Fixed Mortgage Rate in this case the rate of interest remains fixed throughout the loan term. The mortgage rates does not varies according to market conditions. In other words, the rate of interest is pre-fixed during the process of borrowing and it generally varies between between 12.5 % to 25 %.
Flexible Mortgage Rate - is one in which the interest rate varies according to market movements. This type of interest rate is called 'adjusting' or 'floating' rates. The risk factor is high in this type of interest rate
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