National Development Minister Khaw Boon Wan on Friday highlighted the importance of a mortgage reducing insurance (MRI) for HDB flat owners.
In his latest blog post, Mr Khaw explained that the insurance can help pay off the outstanding loan on a flat, should anything tragic happen to the primary earner.
For instance, he brought up a recent case whereby a couple who had not taken up an MRI scheme had suddenly passed away, leaving their only child behind. The teenage girl was still schooling and therefore financially incapable of keeping up with the mortgage repayments.
In this case, the housing board made a special exception and deferred the mortgage payments until she starts working, so for now she can just focus on school.
"Had the parents of this orphan subscribed to one (MRI), the MRI would have helped pay off the outstanding loan and the girl would have been able to continue staying in the flat,” said Mr Khaw.
Currently, public housing owners using their Central Provident Fund (CPF) to service their loans are required to take up the Home Protection Scheme (HPS), which is a mortgage reducing insurance plan, or an equivalent MRI scheme.
The Minister added that the HPS is inexpensive and starts from as little as S$13 a month, for a 30-year loan of S$250,000. But some owners do not subscribe to such insurance, he lamented.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg
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