resi mortgage corporation pty limited ABN 61 092 564 415
Level 3, 458 Wattle Street, Ultimo NSW 2007
Tel 02 9280 0007 Fax 02 9280 0009 E-mail save@resi.com.au PO Box 12 Broadway, NSW 2007
MEDIA RELEASE
JANUARY 4, 2010
MORTGAGE RELATED INSURANCES SET TO BECOME MORE POPULAR
Leading non-bank lender Resi Mortgage Corporation says mortgage related insurances are set to become
more popular this year as repayments rise and mortgage holders seek to protect their financial ability to keep
their property.
Resi’s Head of Consumer Advocacy, Lisa Montgomery, says the current rate climate is likely to jolt some
borrowers into action to investigate what protection they can put into place, if the ability to pay their mortgage is
affected by an event.
She says: ”The value of having home and contents insurance is already well known but if a borrower can’t
continue to pay their mortgage on that property for any period of time, that policy is not much use as they may
be forced to sell the very asset they have that policy in place for.”
Montgomery says many borrowers are blissfully unaware of the risk posed to their home if they are rendered
incapable of meeting their mortgage repayments because of sickness, prolonged illness, injury or death.
She says: “In short, if they cannot meet their mortgage repayments and they exhaust the hardship provisions
of the lender, selling the property may be their only option - unless they have mortgage protection insurance in
place.”
She says: “Unfortunately when some borrowers first sign up for a home loan, they mistakenly hear the words
Lenders’ Mortgage Insurance and assume that it protects the borrower if they are unable to meet their
repayments. But there are in fact two types of insurance related to mortgages – one is mortgage protection for
the borrower, whilst LMI protects the lender in case the borrower defaults on their loan.”
Montgomery says mortgage protection policies available today can offer various combinations of income
protection and life insurance, paying out the borrower’s outstanding mortgage amount in the event of
permanent disability or death; or continuing regular mortgage repayments for borrowers who may be injured or
sick for a prolonged period until they recuperate.
She says: “And with mortgages routinely taken out over twenty years, it’s likely that at some point during that
time a borrower may be faced with a life-changing event which can instantly impact on their ability to meet their
mortgage repayments – so it’s wise to consider taking out this insurance in order to avoid the extreme
repercussion of losing your home.”
Montgomery says with property investors also set to pay more for their loans this year they should also
investigate insurances specifically related to renting out a property, such as Landlord Insurance.
She says: “Outside of being covered by the limits of a bond paid by the tenant, Landlord Insurance can cover
the landlord for loss or damage to their building and contents, or loss of rent or rental default by a tenant.”
Montgomery explains that mounting pressure on household budgets will lead people to review their
insurances, including those related to home and contents, car and health.
“So when this is being done it’s important to get the right cover for your particular circumstances, by not paying
for benefits you won’t use and by not doubling up on life policies that may be attached to your existing
superannuation arrangements,” she says.
Montgomery cautions borrowers to read any policy fine print regarding pre-existing medical conditions and
exactly what benefits are associated with various illnesses before making a final and considered decision.
resi mortgage corporation pty limited ABN 61 092 564 415
Level 3, 458 Wattle Street, Ultimo NSW 2007
Tel 02 9280 0007 Fax 02 9280 0009 E-mail save@resi.com.au PO Box 12 Broadway, NSW 2007
ENDS
Media Contact:
Lisa Montgomery, Head of Consumer Advocacy,
RESI Mortgage Corporation: (02) 8204 5012 or 0414 592 553
Karen Bristow – Kardan Consulting 02 9967 3245/0414 320 146
MORTGAGE PROTECTION INSURANCE
Mortgage Protection Insurance can combine the benefits of income protection and life insurance into one simple
package.
On a large scale, most policies operate by paying out the borrower’s outstanding mortgage amount in the event of
permanent disability or death. And on a small scale, for borrowers who may be injured or sick for a prolonged period,
income benefits can be paid monthly until the time they recuperate.
Mortgage Protection Insurance is offered by a range of licensed lenders. Borrowers can investigate their options by
speaking to their own lender to see if they provide it, or by researching a range of alternatives online.
LANDLORD INSURANCE
Apart from the bond that is required to be paid by tenants to cover any basic damage to a property when they vacate,
there are other incidents that can occur that can have a significant financial impact on the landlord who is left to foot the
bill.
Landlord Insurance can cover flats, units, apartments and houses which are leased or rented to tenants - and
depending on the policy an investor chooses, it can cover the landlord for loss/damage to buildings, contents (if the
landlord has leased the property furnished), loss of rent or rental default by a tenant.
Landlord Insurance provides an added level of financial protection for property investors, with policies available through
a variety of insurers.
LENDERS’ MORTGAGE INSURANCE
Lenders’ Mortgage Insurance (LMI) is a requirement by lenders where the Loan to Value Ratio (LVR) is generally
greater than 80 per cent, so a borrower may be unaware they must pay for LMI as part of the requirement of their home
loan.
LMI covers the lender for the shortfall of the price of the property if the borrower defaults on their loan and the property
has to be sold.
LMI is obtained through the lender, and involves a one off premium, paid by the borrower at settlement. The premium
is generally calculated by taking into account the amount of the loan, the LVR and the value of the property.
As a rule, borrowers should allow for LMI in their budget if they are unable to pay more than twenty percent of the
property value as a deposit on their loan.
NEWS 
