Mortgage Indemnity Guarantee?

ng1993

Hello,

Had an email today off my Mortgage broker saying the following -

“Just  to point how Saffron BS work (and all other small building societies) - the underwriter agrees the case which he has now pending the valuation report and Your girlfriends work reference. Once these two outstanding items are back and he agrees the case fully the application is then referred to the insurance board for MIG (mortgage indemnity guarantee) approval. 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. This costs the lender approx 6-8% of the loan amount to put in place. The board will look at the case and decide whether they will provide insurance to lender. Typically if the mortgage is approved by the lender and the lender is happy then MIG is granted as ultimately it is the lender whom pays for it. However, in some instances the insurer can reject to provide MIG if they deem too risky and then the lender has no choice but to decline the case. This is rare but given the overall risk weighting of the case I wanted to let you know this - historic default, betting and short time in employment for your girlfriend. The insurer may deem it too risky BUT Saffron want it so that adds weight.”

Should I be worried about this? I’m thinking this may take some time again with my approval, and I’m hoping this doesn’t put my mortgage in jeapardy? 

Anybody help with this or know how this works? Is it straightforward?

[Deleted User]

The MIG makes it more likely you'll be accepted, though obviously nothing is guaranteed.

Acceptance won't need your approval. It's based on the insurer's risk.

ng1993

I see, so would you say with my case (Had betting transactions on bank statement, historical defaults in 2014 and GF in probation but has good employer references, probation ends Sept) we should be ok?

I am a worrier and was told yesterday Saffron ‘approved’ us but now I’m not sure if its fully been approved for us with this being told to us, Is there many instances were people get rejected as too high risk?

Thrugelmir

In the current climate all lenders are dialling back on risk taken. Don't take it personally.  Just a commercial business decision. That protects the lender. 

dunstonh

During the credit crunch, there was talk about MIG returning.   It gets hinted at with each financial crisis that occurs.   So, seeing it reappear is not a surprise.