IMGC

FAQS

Frequently asked questions

  • Q1What is Mortgage Guarantee?

    Mortgage Guarantee is a financial guarantee in which the Mortgage Guarantee company assumes a portion of a lender's risk in a mortgage loan.

  • Q2Are MG and homeowners insurance /general insurance the same thing?

    No, it is not. Homeowners' insurance, protects homeowners from loss due to theft, fire or other disasters. In comparison, Mortgage Guarantee protects the lender from a loss due to credit default by the borrower.

  • Q3Why is MG needed?

    Experience shows that homeowners with less than 20% invested in the cost of a home are more likely to default, subsequently making low down payment mortgages riskier for lenders. To offset that risk, lenders and investors typically require mortgage guarantee for loans with low down payments (less than 20-25%). The Mortgage Guarantee Company is an expert in understanding and managing the risk related to a low down payment for a home loan, which offsets the risk for Lenders.

  • Q4How do borrowers benefit from MG?

    MG makes it possible for families to buy homes with lower down payment, helping them become homeowners sooner than otherwise possible. For first-time buyers, MG helps clear the biggest hurdle to homeownership: coming up with a 20% down payment. This low down payment can really help if you’re a first-time buyer – as you can now afford your first home without any delays. Both first-time and move-up buyers can benefit by putting down less money and keeping cash for other uses: making investments, paying off debt, or paying for home improvements or emergencies.

  • Q5How much does MG cost?

    The fee for Mortgage Guarantee may vary, and is based on the size of the down payment, the borrowers' credit score, type of mortgage and amount of guarantee coverage.

  • Q6Who determines the amount of MG coverage needed for the loan?

    It is the lender who typically determines the amount of MG coverage required for each specific loan /group of loans/product.

  • Q7Can MG be cancelled by the MGC?

    No. As per the MG regulations, Mortgage Guarantee is irrevocable and unconditional.

  • Q8Do I need to provide additional documents for MG?

    No, you only need to provide all the documents as required for your normal home loan.

  • Q9Will taking MG delay my loan sanction process?

    No, it will take the same amount of time as your normal loan sanction process.

  • Q10Won't MG just increase my mortgage payment?

    Your mortgage payments are determined mainly by the interest rate and the loan amount. In actuality, Mortgage Guarantee represents a very small percentage of your mortgage payment.

  • Q11Are Mortgage Guarantee and mortgage linked life insurance the same thing?

    No. Mortgage Guarantee is not mortgage linked life insurance, which pays off a mortgage if the borrower dies or becomes disabled. Mortgage Guarantee is a credit risk mitigant while the other covers life.

  • Q12Who orders the MG?

    MG is ordered by the lender while the loan is being underwritten. The loan originator consults with the home buyer to determine which loan product best meets their needs, and then determines the MG requirements.