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What’s mortgage insurance? How much does mortgage insurance cost?

By Krista Sharp

Craig Sharp:                           Mortgage insurance. Tell me about that. Why am I paying mortgage insurance?

Terry Christo:                        Mortgage insurance is incurred if you borrow more than 80% of the value of the property, so there’s no real way around that. There are some exceptions for certain fields of work, like medical practitioners and other people, but predominantly, if you borrow more than 80%, you’re going to buy mortgage insurance.

Craig Sharp:                           And are we talking about a lot of money here? So, if I’m buying my first home or a house to live in?

Terry Christo:                        It’s substantial. If you were buying a property of $500,000 and borrowing 90%, so $450,000, the mortgage insurance would be in the [inaudible 00:00:41] of ten to twelve thousand dollars as a once-off cost. It’s not a recurring cost and it’s a protection for the bank. So in the event that you don’t pay your mortgage, the bank can sell the property and then know they’ve got their debt covered.

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