Mortgage Insurance

Even though you pay the premium Mortgage Insurance is to protect the "BANK" should you default on your loan. In the case of you defaulting the mortgage insurer promises to pay the BANK any short coming to what the bank is owed.

Even though you have paid your premium (to protect the bank) if you default on your loan and the mortgage insurer pays the bank as they promised, they will still chase you for the outstanding money.

Not really much of an insurance for you is it!

However them the rules.

Normally if you borrow over 80% for a property the bank will insist that you pay mortgage insurance. In actual fact there is almost always mortgage insurance on a property regardless of the LVR (loan to value ratio) it's just that it starts to get expensive at the 80% mark, up until the 80% mark the banks pay the insurance.

The cost depends on LVR and amount borrowed.

If at all possible try and avoid mortgage insurance for your own home

On your own home it can be expensive and it is "NOT" TAX DEDUCTABLE

At least on your investment property's it "IS" TAX DEDUCTABLE at a rate of 20% per year for the first 5 years as part of depreciation for buying and establishing loan costs.

Also the interest you pay on the borrowing of the mortgage insurance is tax deductible each year (ie: if you borrowed all costs)