MORTGAGE INSURANCE
As I understand it at the moment any borrower with less than 20 per cent equity in, or deposit on, their home loan is required by their lender to take out a mortgage insurance policy. This policy insures the lender (ie the bank ) against the situation of you defaulting on your loan, it in no way offers you protection against your not being able to pay your loan.
So, this is my first question – how come the banks and other lending institutions are the ones in the business of taking the risk on lending money and the one making huge profits by doing so and yet does not insure itself against the risky business it is in ?????? Do you know of any other business that gets the customer to pay their risk insurance ????? Just a question……..!!!!!!
When you take out this mortgage insurance policy it is taken out for the full 25 year term of the loan and you are charged accordingly – this amount in paid in a lump sum in advance – so if you have a 25 year loan the bank is covered against you defaulting for twenty five years and what you are buying is twenty five years worth of service – however, if you decide to sell the property after only 10 years – you will get no refund on the amount you paid. If the bank or borrow does refund part of the premium paid (some do if you sell within two years as I understand it) the refund then goes to the bank not to you ??? That’s funny!! do you know of any other refund you may get for something you have paid for which then goes to someone else ????
Now , if you sell up and move house and you still only have less than 20% equity or deposit for the new house the cycle starts all over again – a new mortgage insurance policy paid in advance and non refundable
This insurance cost is not a couple of hundred dollars but many thousands of dollars……
So, this is my next question – do you know of any other business which is able to charge you in advance for years of service and then if it does not provide the service for the amount of years specified when charging you in the first place but gets to keep the money?????? Well I sure as hell don’t but is sounds like a pretty good get rich and rip people off scheme to me ………what do you think???
Perhaps I am not up to scratch on my knowledge of this subject but it seems to me neither are the politicians – aren’t they supposed to be representing and protecting us the public ???????
If what I have said is not correct in any way I would welcome some input from those you are educated in this issue so that we can all understand if we are being ripped off or not.
So, at the end of the day how many of your out there are slowing down the housing market simply because you cannot afford another mortgage insurance lump sum payment and so are staying put instead of selling up and buying a new place – I bet there are thousands ……????
Would love to hear all about your opinion and circumstances on this issue….Please …..
My solution to this rip off problem would be two things:
- Let the banks and lenders insure themselves against the risk and potential profit they are making, they are the ones taking the risk (it is the very nature of their business) – why should we pay for that ??
- If we are forced to pay for their risk then if we take out a policy for 25 years initially and move house at some stage – the mortgage insurance should then be transportable to the next home with an adjustment on the premium up or down if necessary depending on the equity and deposit in the terms of the next loan.
POLITICIANS CAN YOU PLEASE LOOK INTO THIS ? URGENTLY !!!!!