When buying a new flat, you have the option of signing up for private mortgage insurance.
Alternatively, you can choose to stay on the HPS.
But which is best? Compare the home insurance now because there are a couple of differences between them when it comes to portability, benefits, claims and rates.
1) Portability
With HPS your cover will be terminated if you sell your flat, or redeem your loan earlier.
Similarly, if you buy a new flat or upgrade, the HPS cover for your old flat will be terminated.
Also, buying new HPS insurance may be more expensive depending on your age, and is also subject to underwriting.
With private mortgage insurance the plan is portable.
You don’t need to cancel or buy new insurance for your property. Instead, all you need to do is top up the difference between the sum insured and the outstanding mortgage loan.
2) Extended benefits.
With the Home Protection Scheme you are not able to add on benefits such as critical illness or personal accident coverage.
But with private mortgage insurance you have to option to protect against critical illness or personal accidents
3) Claims process.
With HPS, the CPF will liaise directly with HDB or the approved mortgager to settle the outstanding housing loan up to the insured sum.
But with private mortgage insurance, the insured sum of money will be given to the HDB flat appointed beneficiary.
(This allows full flexibility on how to make use of the money.)
For example, you could use it to pay for emergency expenses.
Or simply put it aside to generate interest concurrent with your housing loan payment.
4) Premium rates.
With the HPS there is only one flat rate and the premium will be deducted automatically from your CPF ordinary account (OA)
But with private mortgage insurance you can shop around the insurance companies for a competitive rate.
What’s more there are monthly, quarterly, half-annual and annual modes to choose from. And your premium is paid in cash.
The type of insurance you choose is up to your specific situation. This blog will give you valuable tips and advice but if you’re ever looking for more help feel free to contact me.
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