What QMI covers and who uses it
Mortgage insurance is specialist commercial insurance that a lender (such as a bank) buys to insure itself against the risk of not recovering the full home loan balance. So if a residential borrower defaults on their home loan payments and the proceeds from the sale of the property are not sufficient to repay the outstanding debt, the lender is protected. Mortgage insurance protects the lender rather than the borrower.
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Mortgage insurance helps lenders achieve many goals, including transferring risk, providing operational efficiency and expanding their customer base.
It protects the lender in the unfortunate event of the borrower failing to repay their home loan. When lenders agree to lend a customer money, there is a risk that they won't get the money back if the customer is not able to complete their repayments. For example, although they have the house as security, if property values decline there may not be enough money from the property’s sale to repay the outstanding loan balance.
Mortgage insurance helps lenders offer home loans to more people and increase the amount they are prepared to lend by taking some of the risk out of lending the money. It means that more people are likely to get a loan and the home they want sooner.
This insurance should not be confused with mortgage protection insurance. Mortgage protection insurance covers borrowers for the payment of their mortgage instalments in the event of unforeseen circumstances including unemployment, illness or death.
QMI tailors mortgage insurance and risk transference options for clients.