Mortgage Guarantee Insurance


Which is a mortgage indemnity guarantee? Mortgage Indemnity Guarantee (MIG) is an insurance line that covers creditors if mortgage payments are stopped for any reasons, perhaps due to the loss or dismissal of a house owner at work. MIG is NOT an insurance to protect the Mortgagor, but is intended to mitigate the Lender's loss due to mortgage defaults.

A MIG is usually needed when the debtor takes out a mortgage with a relatively high Loan to Value (LTV) relationship. The majority of mortgage creditors charge a higher credit fee, sometimes known as the MIG, when the LTV is above 75%. Whilst it is important to note that the costs of the mortgage default guarantee are borne by the debtor, MIG is an insurance contract in favor of the creditor.

This said, without a MIG, lenders would not be providing Mortgages at such high level LGTs, so most will be willing to foot this additional bill and get a bigger mortgage with a smaller deposition requirement consequently. As a rule, the fee for a MIG is charged at 6 - 8% of the amount of the LTV 75% over.

Please call a mortgage advisor on 01628 507477 for further information.

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