High Percentage Loan Insurance
High Percentage Loan Insurance, sometimes known as mortgage indemnity insurance, is designed to protect the lender if a property used as security for a mortgage is repossessed and subsequently sold for less than the amount outstanding at that time.
The high percentage loan insurer, having paid out a shortfall between the sale price and the outstanding mortgage to the lender, would then attempt to recover from the defaulting borrowers the money paid to the lender.
However, if a loan is for less than 75% of the value of your home at the time the loan is taken out, a lender normally does not require such insurance to be put in place.
Increasingly, when a lender does require high percentage loan insurance, it pays the cost of the cover.
However, in the event the borrowers default on the mortgage, even though the lender may have paid the cost of the insurance, this would not prevent the high percentage indemnity insurance provider from pursuing the defaulting borrowers for their loss.
