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Mortgage Redemption Insurance (MRI). Is It Really Important?


I think it is safe to say that majority of us Filipinos (if not all) want to have a place that we can call our own. This is why we save/invest part of our income in preparation for our dream home.


Mortgage Redemption Insurance (MRI). Is It Really Important
"home-for-sale-buy-sell-mortgage" by paulbr75 is licensed under CC0

However, not all are privileged to have a stash of cash laying around to cover the cost of a dream home. An aspiring home owner will likely take a housing loan either from the bank or to the government's own Home Mutual Development Fund (PAG-IBIG).


Whatever route you take, both of them will have a common denominator. This is in the form of Mortgage Redemption Insurance or MRI.



What Is MRI?


This is a form of life insurance that covers the insured's remaining mortgage balance in case of sudden demise or total disability. This protects both the insured and the lending company.



How Much Is the MRI Coverage


This should be equal to the loan amount. But will gradually decrease to match the remaining loan balance as you start paying the mortgage.



Where Can You Apply?



No need to look for a third party insurance company to apply for an MRI. This process is already incorporated when you apply for a housing loan.



Is This an Added Expense?


Straightforward answer is YES. As the premium payment is added to your housing loan amount, you will need to pay extra.


If you take the loan from PAG-IBIG, the mode of payment for the MRI is set to monthly along with your mortgage. However, if you take the loan from the bank, the payment for the MRI is set to yearly (lump sum payment annually).



Advantages/Disadvantages of MRI


  • ADVANTAGES
    • You know that you are covered in case of something bad happens.
    • You will not be passing the buck of paying the mortgage to your loved ones.
  • DISADVANTAGES
    • The premium is an added expense.
    • The premium is more expensive than that of an average term life insurance policy.



How Do I Get Around of Not Having an MRI


You need to avoid having to take a housing loan to finance your dream home. You can go with the following alternatives:


  • Deferred Financing
  • Pay the Amount in Full



Purchasing a home can be considered as the biggest expense one can have. It is not an easy feat. Many have tried but only a few succeeded. If you don't want your dream home to be listed on a foreclosed property website, then you already know what to do.



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The future is always uncertain, and yet we've built the habit of planning for tomorrow. Hoping that we will be able to realize what we've planned.




"If you don’t own a home, buy one. If you own a home, buy another one. If you own two homes, buy a third. And, lend your relatives the money to buy a home.”
John Paulson



- Your Life In Perspective by Ælf Ræd (Elf Counsel)

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