Difference Between Mortgage Protection and Mortgage Insurance
The words mortgage protection and mortgage insurance seem similar. But, there is difference in the two terms. Let us see the difference. Mortgage protection insurance protects the borrower and home while lenders mortgage insurance is intended to protect the bank.
Mortgage Protection Insurance
A borrower is required to find mortgage protection insurance by his own and insure himself. Mortgage protection normally offers life insurance, permanent disability and income. Mortgage protection insurance is generally more expensive and flexible in unforeseen situations.
Lender’s Mortgage Insurance
A borrower is required to take out the lender’s mortgage insurance. It is a condition of the loan because a bank thinks that the borrower is a greater risk. It is a separate product. It protects mortgage provider in case the borrower becomes defaulter on his loan and the bank or lender finds itself recover the full amount is due to some conditions or circumstances.
Usually, lender mortgage insurance is calculated for a portion of the loan amount which differs from lender to lender.
Sometimes the amount of lender’s mortgage insurance is added on top of the amount of the loan so that borrower may pay the insurance in repayments.