In my recent talk at the University of the Philippines-Diliman as part of UP Phil Delta Alpha Sorority’s Alternative Classroom Learning Experience or ACLE, I discussed about securing one’s future through frugal living and growing money through various investment vehicles.
The two other guest speakers spoke about insurance and its importance in protecting our finances, homes, and lives in the event of natural calamities and disasters.
What caught my attention the most was the sharing of Mr. Jay Castillo of Foreclosure Philippines about their experience with Ondoy back in 2009. There are a handful revelations from his talk as his was a first-hand experience as a home loan borrower who lost a home right where Ondoy struck the heaviest, Marikina City.
According to Jay, his Pag-ibig home loan insurance has helped him recover a big portion of the cost of the house after selling it. While it was expected to find it hard to look for buyers, Jay was lucky enough to find one: their neighbor.
The Importance of MRI or Mortgage Redemption Insurance
Jay mentioned that when taking a housing loan in buying a property, paying for the MRI is now being required by banks as part of the loan agreement. However, a lot of borrowers wonder why they have to pay for a considerable amount for this type of insurance. Is it really important for borrowers and future homeowners?
![DSC_0243[1]](http://farm6.staticflickr.com/5540/11698028143_8f5510e926.jpg)
MRI or Mortgage Redemption Insurance is a type of insurance that gives financial protection for home loan borrowers and their family members as this helps pay for outstanding home loan balances in case of the borrower’s death or total disability.
If you are a home loan borrower and the main provider of the family (and extended family as well), then MRI is a must. You don’t want to give headaches to your loved ones when you die or become gulay by letting them pay off the remaining balance of your housing loan.
This is one of the reasons why there are a lot of foreclosed properties in the Philippines because of failing to avail this type of home loan insurance in the past. Most family members just don’t have the ability to pay for it or don’t have the knowledge about real estate legalities. And sometimes, they even have to sell the properties at lower than what the price is offered in the market.
This is why the MRI is very important to be signed up on when borrowing so that in case the borrower dies or gets disabled, the family members will be protected as the MRI will have to cover whole or in part of the unpaid housing loan balance.
So if you have plans to buy a home through a housing loan, don’t forget to ask your bank about the MRI and that you want to avail its maximum coverage especially if you are breadwinner and provider of the family.
On another note, if you already have your life insurance you can actually ask your bank if it is possible to apply it as the MRI for your home loan.
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Is this insurance really for borrowers or for lenders? How much does this costs? Php 4k-5k a month? If I have a good home insurance, health insurance and life insurance, why do i still need to cash out for this?
I manage to do some research online and found out that certain financial guru’s like Dave Ramsey is against this kind of product for it serves only the interest of banks and not the interest of the consumers.
http://www.daveramsey.com/article/cancel-private-mortgage-insurance/lifeandmoney_mortgage?atid=davesays
http://www.daveramsey.com/index.cfm?event=askdave/&intContentItemId=116227
http://www.churchillmortgage.com/dave/radio/drop-your-mortgage-insurance.aspx
Hi. Reading articles are there to help us act on our current situation based on our acquired knowledge but it doesn’t always hold to be factual. We must also take note that insights are applicable to their country and governing laws under it, and as a reader we could be flexible enough to apply, add or revise it prior to the country and situation we are living in. Getting MRI insures risky mortgages. Health insurances insures health. Life insurance insures living expenses of your loved ones after your death. How much each of them cost really depends on what kind of lifestyle you are living in. As well as getting MRI insures risk for both buyer and seller of property. The lower your equity you put in and the longer the years you have to pay, the more you need your MRI. But that’s not always the case. If a person can afford to pay 80% equity and the remaining you could pay it through your other passive income streams, I don’t think you need an MRI. Again, it’s all case to case basis. Insurance are there to cover risk. The higher your risk, the higher your premiums will be, just like in Health and Life Insurance.
Jonathan, MRI is equivalent to a term life insurance. And just like term life insurance, MRI is relatively cheaper. Costs are usually Php5k or less for a 5-year term. MRI is also a requirement now by local banks for those applying for home loans.
Sir, do you think term insurance is better than any other insurance? As of now I’m paying for my MRI less than 12k and fire insurance less than 8k and thinking if ever I paid my loan balance it means my house are not insured any more? God forbid if something happen with the house after bank cleared us and the insurance already expired, can I still claim or consider it loss?
Please advice thanks and more power.
I’m an OFW and was required to submit a copy of my term life insurance when I applied for a housing loan.
So for those who wants to buy a house while working overseas, make sure to get a term life insurance which will cost around C$20-30 if you are still young, non-smoker, and in good health.
You can also add a critical illness insurance for yourself in case of being diagnosed with an illness stated in the insurance.
what if you already paid your loan and you are still kicking 🙂 what will happen to that MRI? and please do tell me how long MRI required on the housing loan
In a blatant term – “tapon pera” na po.
But look at the brighter side – if something happens to the insured, at least it will not leave the family the headache of paying the mortgage.
Hello team,
This will regards to my Pag ibig housing loan. Sa monthly payment po na binbayaran ko kasali si MRI. I just want to ask if I died do I get money from MRI? Or MRI will only paid for the balance of the property?
In tagalog po. Pag namatay po ba ako may mkukuha pa akong cash galing sa MRI thru pag ibig housing loan? Or babayaran lang po nila ung balance na matitira ko sa housing loan?
Salamat po sa magrereply.