A Mortgage Indemnity Guarantee (MIG) is an insurance policy that protects lenders if the mortgage repayments cease for some reason, perhaps due to death or a homeowner being made redundant at work. The MIG is NOT insurance protecting the borrower but is there to reduce the lender’s losses as a result of mortgage default.
MIGs are usually required when the borrower is taking out a mortgage with a relatively high Loan to Value (LTV) Ratio. Most mortgagees will levy a Higher Lending Charge, sometimes known as an MIG when the LTV is over 75%.
It is important to know that whilst the cost of the Mortgage Indemnity Guarantee is born by the borrower, the MIG is an insurance policy in favour of the lender. That said, without an MIG, lenders would not provide mortgages at such high LTVs, so most people are willing to pay this extra cost and obtain a larger mortgage with a smaller deposit requirement as a result.
Typically the charge for an MIG will be calculated at between 6 - 8% of the loan amount over 75% LTV. Although charges vary, most lenders will simply increase the interest rate offered in order to collect the fee, so the borrower doesn’t have to find a lump sum payment.
For more information, contact a mortgage adviser on 01628 507477.
Recent posts
Getting on the property ladder is a big milestone in life, and is not something to take lightly. There are several things to take into consideration such as saving up for a deposit, finding your dream home, and finding the best mortgage product to suit you. Here we look at UK first time buyer statistics.
Can I get a mortgage without a deposit?
13 days ago
If you are struggling to get over the hurdle of saving enough deposit due to being in a rental property, but wish to purchase your own home, you may be able to with a 100% mortgage. You will need to meet certain requirements and be financially stable.
Reasons to Remortgage your Home
19 Mar 2024
If you are looking at remortgaging your property but you are unsure whether it’s the right decision, we have listed five reasons why it might be for you.
Debt Awareness Week | Consolidating Debts
12 Mar 2024
As the cost-of-living crisis continues, many people across the UK are struggling financially, many of whom are finding it hard to get debt-free.
According to research by StepChange, there are five common reasons people don’t seek help and advice with debt concerns.
Friyay Rate Reviews
6 Feb 2024
Every Friday our experts search the market for the latest rates from every lender saving our clients some serious £'s!
Looking to Extend?
2 Feb 2024
Are you looking to extend your property? There are many benefits to adding an extension to your existing home, here are a few.
Why should you consider Equity Release?
30 Jan 2024
Put simply, Equity Release is where you can release equity (money) tied up in your home for any purpose you like. In this short article, we share some reasons why you may want to consider Equity Release.
How to cut your food shopping bill
17 Jan 2024
The team at Mortgage Required may not be able to lower the prices in your local supermarket, but we have come up with a list of tips to help you lower your food shopping bill.
More information
Trusted by
