When taking out a housing loan in the Philippines, Lancaster New City reviews on sites like Property Survey would advise you to get MRI—not magnetic resonance imaging, but mortgage redemption insurance. Despite its undisputed advantages, many borrowers still don’t fully appreciate its value.
To understand why you need MRI when applying for a mortgage, and how it can benefit you, let’s dispel these usual misconceptions about it first:
It’s the Same as Fire Insurance
No. MRI is a kind of life insurance, which would pay the lender the remaining balance on your mortgage if you pass away. Without it, your surviving family might inherit the debt and potentially lose the property after years of payment. It would keep the lender from foreclosing on the loan, and spare your loved ones the ordeal of mortgage repayment.
On the other hand, fire insurance would only pay you money if your home, along with its contents, gets damaged by fire and other acts of God.
Some financial institutions don’t require it, but more and more banks are starting to. After all, it helps make the best out of a bad situation.
It’s a Major Burden
The MRI premium is manageable. While it can be irritating to think that you have another bill to pay, it’s easy on the pocket. If you apply for a Pag-IBIG housing loan worth PhP800,000, the projected annual MRI premium is only PhP2,208 (at the time of writing), which is only PhP184 per month and can be included into your regular mortgage payment.
It’s Not Necessary If You Have Existing Life Insurance
You can use your existing life insurance as MRI only when its proceeds can cover your full mortgage balance. However, it’s usually wise to get MRI separately to leave your loved ones some money when you’re gone.
MRI is never overrated; rather, it’s widely unheralded. Placing a premium on it is a mark of a prudent Filipino mortgage borrower.