Security. It’s one of the main reasons people cite for buying their own home.
It’s not just the psychological meaning of security that carries weight with people, but also its financial implications. Owning a home for most of us means that we’ve invested in something that will increase in value over the years.
This is also why getting mortgage redemption insurance (MRI) is so important.
What is it?
An MRI is a form of life insurance that covers part or all of the insured’s mortgage balance in case of death or total disability. It’s become standard for banks to offer this to customers applying for a housing loan.
Before you balk at the thought of spending even more hard-earned cash on something that you might not necessarily need (or worry that you’re being scammed), think of an MRI as an essential aspect of home ownership — one that underscores the idea of safety and security. Not just for you, but for the people you’ll leave behind.
How do you get it?
In the Philippines, MRIs are usually conveniently incorporated as part of the home loan application process — this means you typically won’t need to go anywhere else and start a separate application process. Applicants are usually only required to pay the MRI premium once, in a lump-sum payment.
If your existing life insurance policy equals or exceeds the loaned amount, you also have the option of using it as your MRI.
How does it work?
Whichever option is better for you, make sure you check MRI’s specific terms. Like any form of insurance, the policy covers a specific amount and duration. These will dictate how much you’ll be covered, and for how long. The higher your premium, the better your coverage.
This means that getting an MRI isn’t automatically equal to erasing your mortgage balance in case of death or total disability. It will still depend on the kind of coverage you avail.
For instance, you can’t avail of the cheapest option and expect it to pay off all your mortgage in case it kicks in. Your MRI will only pay off the amount covered, for the duration dictated in the policy.
This is why, for maximum peace of mind, it’s recommended that you go for the maximum coverage available. The premium may be higher, but it also guarantees greater protection for the future.
It isn’t inexpensive, finding and buying a home in the Philippines. Doing your due diligence is crucial in order to avoid regrets down the line. Find a trusted developer and consider things such as location, accessibility, and proximity to work, medical facilities, schools, and things you deem necessary to the kind of life you want to lead.
Working on buying your first home? Check out more first-time home-buyer tips to learn more.