Mortgage Insurance is a type of insurance that protects lenders in the event that a borrower defaults on their mortgage loan. It is typically required by lenders when the borrower makes a down payment of less than 20% of the home's purchase price.

The Purpose Of Mortgage Insurance is to reduce the risk for lenders who provide loans to borrowers with less-than-perfect credit or who are unable to make a large down payment. If the borrower defaults on the loan, the insurance company pays the lender a portion of the outstanding balance. This reduces the lender's losses in the event of default.

What Is Private Mortgage Insurance?

PMI is provided by Private Insurance Companies, rather than the government. The cost of PMI can vary, but it is typically between 0.3% and 1.5% of the original loan amount per year. This cost is usually added to the borrower's monthly mortgage payments.

PMI is usually required until the borrower's loan-to-value (LTV) ratio reaches 80%, meaning that the borrower has paid off 20% of the original loan amount. At that point, the borrower can request that the PMI be cancelled. The lender is required by law to automatically cancel PMI once the LTV ratio reaches 78%.

How Does Private Mortgage Insurance Work

Private Mortgage Insurance (PMI) is a type of insurance that is required by lenders when a borrower makes a down payment of less than 20% of the home's purchase price. The purpose of PMI is to protect the lender in the event that the borrower defaults on the loan.

When a borrower takes out a mortgage that requires PMI, they will typically pay a monthly PMI premium as part of their monthly mortgage payment. The amount of the PMI premium is based on a percentage of the loan amount, and it can vary depending on factors such as the borrower's credit score and the loan-to-value ratio (LTV).

The PMI premium is paid to the Private Mortgage Insurance Company that provides the insurance coverage. If the borrower defaults on the loan, the lender can file a claim with the PMI company to recoup a portion of their losses. The PMI company will then pay the lender a portion of the outstanding balance of the loan.

It's important to note that PMI does not provide any protection for the borrower. It only protects the lender. If the borrower defaults on the loan and the lender forecloses on the property, the borrower could still be responsible for any remaining balance on the loan, as well as any other costs associated with the foreclosure.

Top Mortgage Insurance companies in India

- India Mortgage Guarantee Corporation (IMGC).
- Housing Development Finance Corporation (HDFC).
- Life Insurance Corporation of India (LIC).
- SBI General Insurance Company Limited.
- ICICI Lombard General Insurance Company Limited.
- Kotak Mahindra General Insurance Company Limited.
- National Insurance Company Limited (NICL).
- United India Insurance Company Limited.
- The New India Assurance Company Limited.
- Tata AIG General Insurance Company Limited.

It's important to note that Mortgage Insurance In India is not mandatory for all Home Loans and the availability of products may vary depending on the lender and specific requirements of the borrower. Borrowers should always consult with their lender and insurance provider to determine if mortgage insurance is necessary for their home loan.