{"id":1257,"date":"2023-04-17T11:00:00","date_gmt":"2023-04-17T03:00:00","guid":{"rendered":"https:\/\/sg-financialadvice.com\/UnderstandingCareshieldLife\/?p=1257"},"modified":"2023-04-01T22:05:13","modified_gmt":"2023-04-01T14:05:13","slug":"5-reasons-why-singaporeans-need-mortgage-insurance","status":"publish","type":"post","link":"https:\/\/sg-financialadvice.com\/UnderstandingCareshieldLife\/5-reasons-why-singaporeans-need-mortgage-insurance\/","title":{"rendered":"5 Reasons Why Singaporeans Need Mortgage Insurance"},"content":{"rendered":"\t\t
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Purchasing a home is an enormous financial commitment, and it’s also one of the biggest assets most of us will ever have.<\/span><\/p>

Our home loans are designed to last a lifetime. However, a\u00a0 lot of changes can occur in that time frame. Uncertainties, such as being unable to repay the mortgage loan owing to unforeseen circumstances, can be quite unsettling.<\/span><\/p>

Having mortgage insurance in place takes away that financial worry.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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How Does Mortgage Insurance Work?\n<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Conventionally, when people talk about mortgage insurance, they mean mortgage term assurance (MRTA).<\/span><\/p>

“Mortgage insurance” is the most commonly used term policy nowadays. Most MRTA policies will have a sum assured (coverage amount) equal to the loan amount on the property at the outset.<\/span><\/p>

This insured sum gradually decreases throughout the course of the policy at the policyholder’s chosen interest rate (e.g. 3%). This means that the value of the loan you may get might be different from the value of the policy during payout.<\/span><\/p>

After the policy’s term ends (which typically coincides with the tenure of a mortgage on the insured property), the insured has no further protection and the policy lapses.<\/span><\/p>

Note that even though your premiums won’t change even if your coverage does. This means that the cost per dollar of sum assured rises over time. Because of this, most MRTA policies have not required premium payments in the last two years.<\/span><\/p>

Insurance providers are putting less emphasis on MRTA due to the rise of level term policies.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Who Offers Mortgage Insurance in Singapore?<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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In Singapore, homeowners can choose between the CPF’s Home Protection Scheme (HPS) and private insurance plans for their mortgage protection needs.<\/span><\/p>

The CPF Home Protection Scheme (HPS) safeguards you and your family’s HDB flats from getting forced evicted in the event of death, terminal illness, or total and permanent disability.This protection ends either when you turn 65 or when your mortgage is paid in full.<\/span><\/p>

If you wish to use your CPF savings to make the monthly loan payments on your HDB flat, then\u00a0 HPS is compulsory. It makes no difference if you’ve gotten a HDB loan or a bank loan.<\/span><\/p>

To be clear, HPS does not apply to private residences like executive condominiums (ECs) and Housing and Urban Development Company (HUD) apartments (HUDCs).<\/span><\/p>

HPS is not required if you are making your monthly payments entirely out of pocket. Nonetheless, it is still strongly suggested that you obtain HPS or private mortgage insurance.<\/span><\/p>

To acquire a ballpark figure for your HPS premium, click on this link from the CPF website.<\/span><\/p>

While applying for any\u00a0 insurance, honesty about your health status is important. The application is still subject to approval, which may result in denial or exclusion.<\/span><\/p>

One advantage of HPS is that annual premiums can be paid with money from your CPF Ordinary Account (OA). If your OA funds are spent, you have the option of switching to cash payment instead.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Other options<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Insurance firms can also provide you an alternative in the form of private mortgage insurance.<\/span><\/p>

Under some circumstances, you may be excluded from HPS if you hold this or other qualifying life insurance products.<\/span><\/p>

One alternative is to look into purchasing level term insurance. This allows for a more comprehensive plan that takes into account more than just the home debt.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Here are the 5 Reasons Why Singaporeans Need Mortgage Insurance<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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It’s up to you to decide if you want to keep using HPS or just stick with what you already have.<\/span><\/p>

Having private mortgage insurance may make sense due to the following reasons:<\/span><\/p>

1) Protects your most valuable possession<\/b><\/h3>

Because of the scarcity of land, real estate in Singapore is guaranteed to cost at least six figures.<\/span><\/p>

Moreover, properties priced at $1 million or more are becoming\u00a0 increasingly prevalent.\u00a0<\/span><\/p>

Because of this, your property is likely to be one of the largest assets you’ll ever have.<\/span><\/p>

However, the large mortgage loan you’ve taken out in exchange for your property can turn this “asset” into a “liability.”<\/span><\/p>

Your home may be repossessed and sold by your lender if you are unable to keep up with the required monthly loan payments.<\/span><\/p>

For instance, in the event of your untimely demise, permanent disability, or serious illness, your family may be forced to find a new place to live since they may be unable to keep up with the mortgage payments.<\/span><\/p>

By purchasing mortgage insurance, you may rest assured that your family will be able to keep their house if something were to happen to you.<\/span><\/p>

2) Avoids the illiquidity problems with properties<\/b><\/h3>

Some people may believe that selling their houses would be easy in the event of a disaster, but this is not always the case.<\/span><\/p>

Time spent on marketing and viewings to potential purchasers might easily eat up several months before you see any proceeds from the sale.<\/span><\/p>

Meanwhile, your loved ones still have to pay the monthly bills and require access to stable sources of income flow.<\/span><\/p>

Although you find some buyer, you may still end up losing money in some circumstances like market downturns or when sales drop off.<\/span><\/p>

In most cases, the time it takes for a mortgage insurance claim to be settled is two weeks or less, assuming all required documentation is submitted. This will guarantee that your loved ones have access to the funds they need to cover basic expenses.<\/span><\/p>

3) Private mortgage insurance may be less expensive<\/b><\/h3>

Mortgage insurance is typically recommended by banks when you apply for a loan, however, they are usually partnered with only one insurance provider. This could mean that you miss out on a great deal.<\/span><\/p>

If you were to find it on your own, you might be able to find it at a lower price. But, not only will the price matter, but as well as the benefits the insurance has to offer.<\/span><\/p>

4) Can be transferred even if you decide to upgrade in the future<\/b><\/span><\/h3>

Most people upgrade to a larger home once their BTO’s required minimum occupancy period has passed.<\/span><\/p>

If you decide to upgrade or move in the future, you will be unable to use your current HPS because it is tied to your HDB unit.<\/span><\/p>

You’ll have to submit a new application or find a new insurance provider. Insurance costs would increase naturally with advancing years. Not to mention the exclusions or rejections that may occur as your health deteriorates. Minor health problems, such as hypertension or high cholesterol, can make it difficult to get insurance again.<\/span><\/p>

Having your own mortgage insurance means you may lock in lower premiums even if you decide to sell your home.<\/span><\/p>

5) More coverage flexibility<\/b><\/span><\/h3>

In most cases, a bank’s mortgage insurance will only provide you limited coverage of protection\u00a0 in the event of your death or permanent disability.<\/span><\/p>

The same thing goes with HPS, the coverage offers only the basics to situations like death, terminal sickness, or total and permanent disability.<\/span><\/p>

However, when you have your own mortgage insurance, you get to decide what coverage you want, how long you want it to last, how much coverage you want, etc., in the event of your untimely demise or should you become permanently disabled.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Make sure to get yourself protected!<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Getting the best mortgage insurance in Singapore is the first step toward protecting your biggest asset and ensuring that your family keeps it in the event of an unexpected event.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

Purchasing a home is an enormous financial commitment, and it’s also one of the biggest assets most of us will ever have. Our home loans are designed to last a lifetime. However, a\u00a0 lot of changes can occur in that time frame. Uncertainties, such as being unable to repay the mortgage loan owing to unforeseen […]<\/p>\n","protected":false},"author":1,"featured_media":1266,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[29,27],"tags":[32],"class_list":["post-1257","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-matters","category-insurance","tag-financial-matters"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/sg-financialadvice.com\/UnderstandingCareshieldLife\/wp-content\/uploads\/2023\/04\/Understanding-Careshield-Article-Feature-Image-2.png?fit=1507%2C969&ssl=1","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/sg-financialadvice.com\/UnderstandingCareshieldLife\/wp-json\/wp\/v2\/posts\/1257","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sg-financialadvice.com\/UnderstandingCareshieldLife\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sg-financialadvice.com\/UnderstandingCareshieldLife\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sg-financialadvice.com\/UnderstandingCareshieldLife\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sg-financialadvice.com\/UnderstandingCareshieldLife\/wp-json\/wp\/v2\/comments?post=1257"}],"version-history":[{"count":4,"href":"https:\/\/sg-financialadvice.com\/UnderstandingCareshieldLife\/wp-json\/wp\/v2\/posts\/1257\/revisions"}],"predecessor-version":[{"id":1270,"href":"https:\/\/sg-financialadvice.com\/UnderstandingCareshieldLife\/wp-json\/wp\/v2\/posts\/1257\/revisions\/1270"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sg-financialadvice.com\/UnderstandingCareshieldLife\/wp-json\/wp\/v2\/media\/1266"}],"wp:attachment":[{"href":"https:\/\/sg-financialadvice.com\/UnderstandingCareshieldLife\/wp-json\/wp\/v2\/media?parent=1257"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sg-financialadvice.com\/UnderstandingCareshieldLife\/wp-json\/wp\/v2\/categories?post=1257"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sg-financialadvice.com\/UnderstandingCareshieldLife\/wp-json\/wp\/v2\/tags?post=1257"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}