Everything You Need To Know About Mortgage Redemption Insurance (MRI)
- by admin
- September 10, 2020
- Home Buying Tips | Investment | Real Estate
We need to protect the things that are important to us. It can be our life, our family, and our assets. And one way to do that is to have insurance.
Insurance comes in many forms. You can actually insure not only your life but also your properties and assets.
And one of the most uncommon insurance that we rarely hear, is the mortgage redemption insurance (MRI).
If you are getting a home loan from a bank to buy a property, you are required to secure an MRI.
Buying a house and lot is already expensive. And so this additional expense can really be a burden, especially if you are a first time home buyer.
So if you are wondering what it is about. Is it really needed? How much you need to pay? Here are the things that you need to know everything about MRI.
What is MRI?
MRI is an insurance policy that provides financial protection if the home loan borrower dies or had a disability that prevents him to pay the property. In short, MRI helps to settle the outstanding balance of the property in case of death or total disability.
Why Do You Need MRI?
MRI can be expensive and if home loan borrowers have a choice, most of them would rather skip it since for them it is an added expense that is not really important.
But in reality, MRI does not only protect the bank, but also the home loan borrower’s family.
Imagine this, you applied for an 8 million worth of home loan to a bank. Your loan got approved but you choose to skip and not get an MRI. During your second year of the loan payment, you encountered an accident which rendered you unable to work for life. And since you don’t have an MRI, your family will be forced to continue paying for the home loan. If not, your property will be taken by the bank. Worst, your family needs to sell off the property at a less-than competitive price just to pay off the outstanding amount.
On the other hand, if you have a Pag-IBIG home loan without MRI, and you died on the last year you are about to complete the loan, Pag-IBIG can foreclose your property regardless of how much is your remaining loan.
In short, without MRI, you’ll lose everything you’ve invested at the beginning, more so, it will leave your family in a very difficult financial situation and a lot of stress
So even though it is an added expense, it is still worth investing to since it will give you and your family financial protection if something bad happens to you.
How do you apply for an MRI?
You don’t need to apply for an MRI. It is part of the loan application process by the bank or PagIBIG.
You will only be required to pay additional if you choose to go for MRI premium. This is usually a one time or single payment and no need to pay again throughout the entire duration of the policy.
Thus, if you die, your insurance will pay off the remaining balance of your home loan. And if there is an excess on your insurance, it will be given to your dependent(s).
Take note that MRI is usually included in the monthly amortization of your home loan.
Things to Consider
Like any other insurance policies, MRI has specific insured amount and duration. Meaning, in the event of death or disability, the amount and duration indicated in the policy will only be covered. Which means that it will not pay for everything unless it is stated in your policy.
This is the reason why home loan applicants are advised to purchase MRI based on what they need and not because it is the cheapest.
For example, sole breadwinners are advised to buy maximum coverage since their family is more at risk.
On the other hand, for households with multiple incomes, buying MRI with lower coverage is okay since there are other members of the family who can pay the loan in the event the loan borrower dies.
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All Hausland and Fiesta Communities properties have MRI.
