What is Mortgage Insurance?

Mortgage insurance helps lenders achieve many goals, including transferring risk, providing operational efficiency and expanding their customer base.

Mortgage insurance protects the lender in the unfortunate event of the borrower failing to repay their home loan. When lenders agree to lend a customer money, there is a risk that they won't get the money back if the customer is not able to complete their repayments. Although they have the house as security, if for example, property values decline there may not be enough money from the property’s sale to repay the outstanding loan balance.

Mortgage insurance helps lenders offer home loans to more people and increase the amount they are prepared to lend by taking some of the risk out of lending the money. It means that more people are likely to get a loan and the home they want sooner.

Mortgage insurance should not be confused with mortgage protection insurance. Mortgage protection insurance covers borrowers for the payment of their mortgage instalments in the event of unforseen circumstances including unemployment, illness or death.

QBE MI Asia tailors mortgage insurance and risk transference options for clients.

What does QBE MI Asia insure?

QBE MI Asia insures mortgage loans for residential property in Hong Kong. Each individual property and the proposed loan are reviewed against specific criteria to determine if mortgage insurance will be offered for a particular loan.

Who does mortgage insurance insure?

Mortgage insurance is obtained by lenders to protect them against losing money on a home loan. Mortgage insurance does not protect the borrower. Mortgage insurance providers are heavily regulated by government authorities to make sure the insurers hold enough money in reserve to pay all likely claims. These reserves, together with government regulation, give lenders the confidence to offer competitive loan terms to prospective homebuyers. In this way QBE MI Asia plays an important role in the home loan lending market.

Who pays the mortgage insurance premium?

The mortgage insurance provider's policy is with the lending institution. The premium is usually paid by the borrower as a cost of providing the loan.

How is the fee for mortgage insurance calculated and paid?

The mortgage insurance premium will vary depending on the type of home loan, how much money is being borrowed and the size of the deposit. Mortgage insurance is paid either as a single upfront payment or annual premium.

Depending on the lender, the type of loan and the mortgage insurance product, it is possible to add the premium to the borrower's total loan amount. This avoids having an upfront payment and spreads the cost of the insurance over the entire loan. Borrowers should ask their lender about this option.