Most investors prefer to sell properties on mortgages instead of taking cash. Mortgage-backed securities, better long-term returns, and interests make investors opt to sell properties on the mortgage. What will happen if a borrower defaults or cannot pay the mortgage installments? Who will pay the investor, or how will the investor get back the remaining payment? The answer lies in the insurable mortgage. The insurable mortgage ensures an investor will get the remaining payment no matter the situation. If you, as an investor confused between an insured mortgage and an uninsured mortgage, this article is meant for you. Read this article to learn why you need an insurable mortgage.
- It protects your remaining payment.
There are a lot of things in the air regarding the future. Neither the borrower nor the investor knows where they will be in the future. How will the remaining mortgage payments be processed in case something terrible happens to the borrower or investor? Therefore to counter this situation insurable mortgage comes into play. The insurable mortgage ensures the investor gets their remaining payments in case of any emergency. It works the same way the mortgage protection plan works for the borrower.
- Lower down payment
Generally, the minimum down payment for an uninsured property mortgage is 20%. On the other hand, an insurable mortgage allows the borrower to pay the down payment to as low as 5%. A down payment of 20% is greater than 5%, but if analyzed thoroughly, a 5% down payment is better for investors than a down payment of 20%. When borrowers pay the down payment of less than 20%, they can prolong the mortgage duration up to 25 years. Therefore the investor will keep getting the installments as of loan mortgage with a better return rate for up to 25 years and increasing interest every year.
- High Premium
The insurance for a mortgage or an insurable mortgage allows the investor to get higher premiums than an uninsured mortgage. The borrowers can pay a lower down payment of up to 5%. However, the lower the down payment, the higher the premium. Therefore the insured mortgage helps both the borrower and the investor simultaneously. The borrower will get the ease of paying the lower down payment but a higher premium. At the same time, the investor gets the lower down payment but secures the remaining payment with a high premium rate, greater interest and increased mortgage back securities. Suppose a property is worth $400000 with a down payment of 5%. The borrower will have to pay back the amount of $395200 ($380000 remaining payment+ $15200 premium at a rate of 4% of the remaining amount) in the name of a mortgage loan. If the borrower pays a down payment of 10%, then they will have to pay back $374400 only, and on a down payment of 20%, the payback amount will be a meagre $332800.
- Shorter time duration
If the investors sell their properties on the uninsured mortgage, the mortgage payback can take as long as 30 years. On the other hand, the maximum payback time under an insured mortgage is 25 years. Therefore this life insurance for mortgage protection not only protects your mortgage payback but also reduces the payback time so you can get your entire payment before the investors who opt for uninsured mortgage plans.
- Less investment
An insurable mortgage is a good option for small investors or investors who want a passive income on their investments. Investors owning a property of less than $1M can sell their properties via a mortgage insurance loan and then get the mortgage insured to enjoy an interruptable payback with interest for years. Therefore the insurance for mortgage loan releases the tension of payback. The insurance company becomes liable for getting the payment back rather than the investor himself.
Mortgage insurance, especially home mortgage insurance, helps both investors and buyers. From the buyers’ perspective, it helps them get house ownership at lower prices. From investors’ perspective, It helps them secure their remaining amount and gives them a sense of satisfaction. Besides this, the insurable mortgage has many benefits. However, most investors need to learn about insurable mortgage benefits or clarification on insured and uninsured mortgages. Yet an insurable mortgage is a better choice to get the secure recovery of your investment with profit on that investment. Anyway, if you are an investor or a buyer and want to buy or sell properties on an insurable mortgage but need to know which insurance agency to consult, then to ease your confusion, we suggest and recommend MBE insurance. However, continue reading to get an overview of the services of MBE insurance.
- Also Read:
- How to Invest In a Registered Education Savings Plan – RESP
- 3 Reasons Why You Need Life insurance
MBE Insurance
MBE insurance, as an insurance company, has been serving the people of Canada for over 25 years. Whether life insurance, term life insurance, educational loan, mortgage, vehicle loan or home loan, MBE insurance deals in all kinds of loans. Suppose you are an investor who wants to sell your property on a mortgage, whether mortgage protect or uninsured, or you are a buyer and want to buy some property on the mortgage. No matter what your requirement is regarding insurance, MBE insurance would love to serve you. Therefore, without further do, visit the MBE Insurance website or call MBE and get suitable policies for your insurance needs.
Conclusion
Many investors need clarification on insured and uninsured mortgages; they are still deciding which mortgage is better. Therefore to help such investors, we explain why an insurable mortgage is better than an uninsured mortgage. If you are an investor with the same queries, this article will help you quickly.