Why should you insure your housing loans

A person may have to shell out few extra dollars, but it makes a lot of sense to insure housing loans.
There are cases, when the borrower meets with an untimely death, and the entire family encumbers with that amount.

The family has no other option but find the sum and pay back to the bank.

Insuring housing loans will certainly save a family from harassment and pressure of repaying loan back to the bank.


To find a home loan is a lot easier these days. Banks try their best to facilitate the loan process. Bank tie up with insurance companies to provide mortgage indemnity to the loan borrower.

Once a person gets a housing loan and buys a property, he is still not the owner of the property, as long as he does not repay the full loan amount.

 In case of unfortunate circumstances, such as death or disability of a loan borrower, his family is bound to repay the loan, or else they stand to lose the property. A mortgage cover, here, is perfect. A mortgage cover for the property will ensure that the ownership of the property remains with the borrower.
Mortgage insurance typically signifies that the outstanding loan amount is always equal to the sum assured.

Though, one has to pay little more as premium for mortgage insurance, the property is relatively safer. A loan borrower stands to gain a lot especially at a time where unfortunate accidents can take place within a moment. The mortgage protection is gaining popularity as people now a day realize the significance it has over a normal housing loan.

Disadvantages of Mortgage insurance

Mortgage insurance is not without its share of disadvantages. The first drawback crops up when the loan rates go up.

One has a choice, either, to pay a higher monthly instalment, or extend the housing loan period.

As soon as the loan tenure increases, a problem crops up. Any increase in housing loan tenure will not extend the insurance cover period. A borrower may face a situation where he ends up having no insurance cover for his property at the end of the loan tenure.

Secondly, as a borrower, he has to pay added interest both on the housing loan amount and the insurance premium, as well.

In spite of the disadvantages, mortgage insurance cover is a better choice for home loans borrower.