What is mortgage indemnity insurance?
This is one of those sneaky mortgage fees that goes by a whole raft of names. You may hear it referred to as a mortgage indemnity guarantee (MIG), higher-lending fee or charge (HLC), additional security fee or mortgage advance premium. In a nutshell, it’s a form of insurance that you pay for but that actually benefits your lender. It is designed to reimburse the lender if you borrow a high proportion of your property’s value typically 90 per cent or more and can’t keep up the repayments. Roughly two-thirds of mortgage lenders will charge a mortgage indemnity premium for borrowing at this level. How it works If you fall badly behind with your repayments, your lender is perfectly entitled to evict you from your home and sell it. Depending on the condition of the property or the prevailing market, it may end up selling for less than you owe on your mortgage. It will then use the mortgage indemnity policy to make up the difference. But that doesn’t mean you’re off the hook. Chances are you
