How does Mortgage Insurance help in affordable housing?
Mortgage guarantee is a boon for those who are planning to buy a new home, and are looking for home loan options with low interest rate and lower EMIs. In that regard, home loan mortgage insurance is beneficial scheme that covers the risk of the lender, and enhances the loan eligibility of applicants. Let us discuss the benefits of the mortgage guarantee scheme:
What is a mortgage guarantee-backed home loan scheme?
With the Mortgage guarantee scheme, borrowers get longer tenures with higher LTV, and therefore, a higher loan amount.
Such home loans provide homebuyers with the opportunity to avail Home Loans in the most convenient way. Such Mortgage Guarantee backed Home Loans not only help in early ownership but also allow people to get Home Loans in the later years of their life. With increased Home Loan accessibility and longer loan tenures, people are able to invest and come close to realizing their dream of owning a place.
While common in US and Canada, mortgage guarantee is relatively new in India. Banks like National Housing Bank, NYSE-listed Genworth Financial, International Finance Corporation, and Asian Development Bank are the entities responsible for conceptualizing Mortgage Guarantee.
Who all get benefitted?
When the borrower is near to the age of retirement or past that, he is highly unlikely to get the loan from any of the banks. And it is also a risk for the bank to provide the loan in such cases. Even if the loan is awarded to the borrower, it will be given with a lower tenure and higher EMIs. Also, most banks offer lower tenures to self-employed people, as compared to the salaried class. So, Mortgage Guarantee backed loans are the best fit for such people.
Advantages of Mortgage Guarantee home loans
When borrowers search for home loans, they find it difficult to meet the bank’s requirements and eligibility for home loans. Also, in many instances, a borrower has to opt for a personal loan, over and above the home loan, to compensate the excess funding needed to materialize their dream home. In such instances, Mortgage Guarantee-backed home loan schemes come to aid such borrowers, and fulfill their dream.
Mortgage guarantee-backed home loan scheme has the capacity to substantially change the scenario in calculating mortgage insurance with lower EMIs. With this scheme, the average home buyer gets increased accessibility to get their home loans. With higher LTV and increased tenure, many people get closer to realizing their dream of owning their own home.
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