Mortgage Protection vs Mortgage Insurance
Even though the two terms sound similar and have similarities in the name, there is a big difference between lenders’ mortgage insurance and mortgage protection insurance. While lender’s mortgage insurance is designed to protect the bank, mortgage protection insurance protects the borrower and the home.
Mortgage Protection Insurance
Borrower (you) need to find and insure mortgage protection insurance in your own.
Mortgage Protection Insurance usually offered in relationship with life insurance, total and permanent disability and income protection insurance.
Normally mortgage protection insurance is expensive but offers more flexibility in critical or in unexpected situations.
Lender’s Mortgage Insurance
Borrower (you) will generally be required to take out the lender’s mortgage insurance as a condition of your loan if the bank thinks you as a greater than usual risk.
Lender’s mortgage insurance is a separate product. It protects mortgage provider in case the borrower (you) default on your loan and lender is unable to recover the full amount.
Mostly lender mortgage insurance would be calculated not for the whole loan amount but for a portion of the loan amount and which differs from one lender to another.
Lender’s mortgage insurance amount sometimes would be added on top of the loan amount so borrower could pay that in repayments.