1.3.3 Indemnity Guarantee Premium
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Insurance is generally required by the lender where a high proportion
of the purchase price is funded by a loan e.g. 75% or more.
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The insurance is to safeguard the lender (only) against all possibility
of loss if the borrower defaults and the property needs to be repossessed
and sold.
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The premium is usually a single payment, and can often be added
to the loan.
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Rates vary, but have increased over recent years owing to the increased
number of repossessions. It is likely, also, that the rate will
increase, the higher the loan amount.
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A number of lenders now only charge such premiums where loans exceed
say 90% of valuation
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