Do You Need Mortgage Insurance in Singapore? The Essential Answer
Mortgage insurance in Singapore is not universally mandatory, but your situation determines whether you should get it.[1] If you're buying an HDB flat using CPF to pay your home loan, you're automatically enrolled in the Home Protection Scheme (HPS) by default.[2] However, if you're purchasing a private property or paying your HDB loan in cash, mortgage insurance is optional—though financial experts recommend it, especially if you're the sole breadwinner or primary income earner.[2]
The key question isn't whether mortgage insurance is mandatory, but whether it's right for your financial situation. At Homejourney, we believe in empowering you with transparent information to make confident decisions about your home loan protection. This guide breaks down your options, compares costs across Singapore's major banks, and helps you understand which coverage suits your needs.
Understanding Mortgage Insurance in Singapore: Three Main Types
Singapore offers three primary mortgage insurance options, each with different coverage structures, eligibility requirements, and costs. Understanding these differences is crucial for making an informed decision that protects your family and your home.
Home Protection Scheme (HPS): The Default for HDB Buyers
HPS is automatic for HDB owners paying via CPF and covers death, terminal illness, and total permanent disability (TPD).[1][2] The scheme protects you by clearing your outstanding HDB loan if an insured event occurs. Premiums are deducted directly from your CPF Ordinary Account annually, making it convenient and affordable.[2]
However, HPS has significant limitations. It's only available for HDB properties and cannot be transferred if you upgrade to a private property.[3] If you're paying your HDB loan in cash, you're not automatically enrolled and must apply separately. Additionally, if you're purchasing jointly with a spouse, you'll need two separate HPS policies and pay two premiums.[2]
Mortgage Reducing Term Assurance (MRTA): Flexible Coverage for All Property Types
MRTA is available from private insurance companies and covers both HDB and private properties.[2] Like HPS, MRTA covers death, terminal illness, and TPD, with the outstanding loan amount paid off if an insured event occurs. The critical difference is that MRTA's sum assured decreases over time as your mortgage balance decreases, which keeps premiums affordable.[2][3]
MRTA offers greater flexibility than HPS. You can purchase a joint policy if buying with a co-owner, avoiding the need for multiple policies.[2] For private property owners, MRTA is often the only mortgage insurance option available, making it essential for those seeking protection. The decreasing coverage structure means you pay less as your loan diminishes, aligning your coverage with your actual risk.
Level Term Assurance (LTA): Maximum Protection at Higher Cost
Level Term Assurance maintains constant coverage throughout your policy term, unlike MRTA's decreasing structure.[2] This means your sum assured stays the same regardless of how much of your mortgage you've paid off. While this provides more comprehensive protection, it comes at a higher cost—a 40-year-old non-smoking male with a S$600,000 home loan over 25 years might pay around S$816.45 monthly for Level Term coverage.[3]
LTA is ideal if you want to cover not just your mortgage but additional liabilities or leave an inheritance. However, for most homeowners, MRTA provides sufficient protection at a lower cost since the decreasing coverage aligns with your declining mortgage balance.
Who Needs Mortgage Insurance? Key Scenarios
Your need for mortgage insurance depends on several personal factors. Let's examine the main scenarios to help you determine if coverage is right for you.
HDB Buyers Using CPF (Automatic HPS)
If you're buying an HDB flat and using your CPF Ordinary Account for loan repayments, you're automatically enrolled in HPS.[2] No action is required unless you want to apply for an exemption. You can only be exempted if you hold an existing life insurance policy that covers your outstanding housing loan up to the full loan term or until age 65, whichever is earlier.[3]
Private Property Owners (Must Decide on MRTA or LTA)
Private property owners are not eligible for HPS and aren't automatically enrolled in any mortgage insurance.[2][4] However, mortgage insurance is strongly recommended, particularly if you're the sole breadwinner or primary income earner.[2] If you become unable to work due to death, illness, or disability, your family could lose the property without mortgage insurance protection.
HDB Buyers Paying in Cash
If you're purchasing an HDB flat but paying your mortgage entirely in cash rather than using CPF, HPS is not compulsory.[2] However, you should consider obtaining private mortgage insurance through MRTA or LTA to protect your family's financial security.
Property Upgraders and Refinancers
When you upgrade from an HDB to a private property, your HPS coverage cannot be transferred.[3] You'll need to purchase new MRTA or LTA coverage based on your age at the time of purchase. This is a critical consideration in your upgrade planning—your new premiums will be higher than your original HPS because you're older.
Mortgage Insurance Costs: What You'll Actually Pay
Understanding the actual costs of mortgage insurance helps you budget effectively and compare options. Premiums vary significantly based on your age, health status, loan amount, and loan tenure.
HPS Premium Costs
HPS premiums are generally the most affordable option because coverage decreases as your loan balance decreases.[2] Premiums are paid directly from your CPF Ordinary Account, so you don't need cash out-of-pocket. The exact amount depends on your loan amount, age, and loan tenure, but HPS is typically significantly cheaper than private insurance options.
MRTA Premium Costs
MRTA premiums from private insurance companies also decrease over time since the sum assured reduces with your mortgage balance.[2] However, MRTA is typically more expensive than HPS because you're paying cash premiums rather than using CPF funds. The cost depends on your age and health at application—a younger, healthier applicant will pay less than an older applicant with health conditions.
Level Term Assurance Premium Costs
Level Term Assurance is the most expensive option because your coverage remains constant throughout the policy term.[2] As mentioned, a 40-year-old non-smoking male with a S$600,000 loan over 25 years might pay approximately S$816.45 monthly.[3] This higher cost reflects the greater coverage you're receiving, but it's only necessary if you need protection beyond your mortgage balance.
Comparing Mortgage Insurance Options: HPS vs MRTA vs LTA
To help you make the right choice, here's how these three options compare across key factors:
| Feature | HPS | MRTA | Level Term |
|---|---|---|---|
| Eligibility | HDB only (CPF payment) | HDB & Private | HDB & Private |
| Coverage Type | Decreasing | Decreasing | Constant |
| Premium Cost | Most Affordable | Moderate | Most Expensive |
| Transferable | No | No | No |
| Joint Coverage | Requires 2 policies | Single joint policy | Single joint policy |
| Coverage Age Limit | Up to age 65 | Varies by insurer | Varies by insurer |
When You Stop Paying Mortgage Insurance
You don't need to maintain mortgage insurance indefinitely. Most mortgage insurance policies can be discontinued once you've repaid a sufficient portion of your mortgage. Typically, you can stop paying when your loan-to-value ratio drops to around 80% of your home's value.[2]
For HPS, coverage automatically ends at age 65 or when your loan is fully paid, whichever comes first.[1][2] If your housing loan extends beyond age 65, the CPF Board recommends obtaining private insurance coverage after your HPS ends.[8] For MRTA and Level Term policies, you can usually request cancellation once you've reached the 80% loan-to-value threshold, though you should verify this with your specific policy.
How Homejourney Helps You Compare Mortgage Insurance Options
At Homejourney, we understand that mortgage insurance is a crucial part of your home loan decision. While mortgage insurance protects your family, it's also important to ensure you're getting competitive rates on your underlying mortgage. Our platform helps you compare mortgage insurance options alongside bank rates to make comprehensive financial decisions.
When you're ready to apply for a home loan, use Bank Rates to compare mortgage rates from Singapore's major banks—DBS, OCBC, UOB, HSBC, Standard Chartered, and more. You can calculate your borrowing power instantly with our mortgage eligibility calculator, then submit one application to receive offers from all major lenders. Banks will compete for your business, helping you secure the best rates available.
Our Singpass integration allows you to auto-fill your application in seconds, speeding up the approval process and reducing paperwork. Once you've secured your mortgage, you'll be in a better position to assess your mortgage insurance needs based on your actual loan amount and tenure.
Making Your Mortgage Insurance Decision: A Practical Framework
To decide whether you need mortgage insurance and which type suits you best, consider these key questions:
- What type of property are you buying? HDB buyers using CPF get automatic HPS. Private property owners must choose MRTA or Level Term.
- Are you the sole or primary income earner? If yes, mortgage insurance is highly recommended to protect your family from losing the property if you become unable to work.
- Do you have existing life insurance? You may be able to claim HPS exemption if your existing policy covers your full mortgage balance until age 65.
- Are you planning to upgrade properties? Remember that HPS doesn't transfer, so you'll need new coverage when upgrading to a private property.
- What's your budget for premiums? HPS is most affordable, MRTA is moderate, and Level Term is most expensive. Choose based on your financial capacity and protection needs.
Important Considerations: Coverage Limits and Exclusions
Mortgage insurance has important limitations you should understand. Coverage typically applies to death, terminal illness, and total permanent disability (TPD), but specific definitions vary by policy.[2] For example, TPD coverage often has age limits—some policies only cover TPD before age 70.[10]
