MPI, or mortgage protection insurance. Is it a necessity or just an additional burden for you? Before we move forward, what is MPI? Mortgage protection insurance is a safeguard for the homeowner. If something unfortunate happens and the homeowner can’t pay his mortgage anymore, then the MPI comes to the rescue and pays off the mortgage balance at the time of death of the borrower.
You may see this as another burden, especially if you are cash-strapped already, but view this as something that you can fall back on, especially if your health is not in its optimal state. If you can afford it and do not want to burden your family if something unexpected happens to you and you cannot repay your mortgage anymore, then go for it.
Do not interchange MPI with PMI, or private mortgage insurance, as these are two totally different things. MPI is for your protection as a borrower, and PMI is for the lender. The latter is a requirement, especially if you cannot afford to put in at least a 20% down payment for your loan.
If you think that taking out a mortgage protection insurance is for you, make sure that you shop around first. It is always wise to take a quote from different insurance companies to know what they can offer you and what the details of the insurance are. If there is something that you can’t understand, don’t hesitate to question them, especially if there are aspects of the policy that you want to be included or removed. One thing that you have to be very sure of is the company’s financial health that is offering you the MPI.
MPI is insurance, but this kind of insurance does not protect your loved one when you die. The only “protection” this offers them is that they don’t need to pay off the mortgage anymore. The money will not be given to your beneficiaries but directly to the mortgage company holding your mortgage. If you need to know more, ask us and we will gladly explain it to you.
