Mortgage Insurance in Singapore: Do You Need It to Improve Loan Approval? | Homejourney

In Singapore, you generally do not need mortgage insurance to get a bank loan approved, but having the right mortgage insurance Singapore coverage—whether HPS for HDB or private MRTA/home loan insurance for condos and landed—can improve your approval chances, especially if you are stretching your loan tenure, borrowing at a high loan-to-value (LTV), or have dependants relying on your income.

For HDB buyers using CPF, Home Protection Scheme (HPS) is effectively mandatory and forms part of the bank’s overall risk assessment, while private property buyers who show clear mortgage protection (e.g. MRTA or term insurance) often present as lower-risk borrowers when banks assess long-term repayment capacity.[1][6]

How This Topic Fits into Your Overall Mortgage Protection Plan

This article is a focused cluster in Homejourney’s mortgage protection series, building on our main pillar guide “How Much Mortgage Insurance Coverage Do You Need: Homejourney Guide” How Much Mortgage Insurance Coverage Do You Need: Homejourney Guide .

There, we cover how to calculate the right coverage in detail; here, we zoom in specifically on Mortgage Insurance Singapore Do You Need It: How to Improve Approval Chances—what banks look at, how HPS/MRTA interacts with your loan application, and the tactical steps you can take today to present a stronger profile.

If you are planning your first BTO in Tengah, upgrading from a 4-room in Sengkang to an EC in Punggol, or refinancing your Bukit Timah condo, understanding how mortgage protection plays into bank risk assessment will help you borrow more confidently and safely.

Mortgage Insurance in Singapore: What Counts as Protection?

In Singapore, “mortgage insurance” usually refers to policies that pay off some or all of your outstanding housing loan if you pass away, suffer terminal illness, or total permanent disability (TPD).[1][4][8]

The main types relevant to loan approval are:

Home Protection Scheme (HPS) – CPF Board’s compulsory mortgage-reducing cover for HDB buyers who use CPF OA to pay their installments.[1][6] HPS covers you up to age 65 or until your loan is fully paid, whichever is earlier.[6]
Mortgage Reducing Term Assurance (MRTA) – a private insurance policy where coverage decreases in line with your loan balance; commonly offered by banks like DBS, OCBC, and UOB alongside home loans.[4][5][8]
Level Term Insurance used as mortgage protection – coverage stays constant (e.g. S$1,000,000) over the policy term; many borrowers use a term plan to cover their home loan plus extra for income replacement.[8][9]

For HDB buyers, HPS is the default; for private residential properties, you can choose between MRTA and level term insurance. In both cases, banks are mainly concerned that your dependants are not forced to fire-sell the property if something happens to you.

Do You Need Mortgage Insurance for Loan Approval in Singapore?

Technically, banks do not require mortgage insurance as a blanket condition for all loans, but it can be indirectly required and practically important in three common situations.

1. HDB Buyers Using CPF OA (HPS is Practically Mandatory)

If you are buying an HDB flat (BTO, resale, or DBSS) and using CPF OA savings to pay the instalments, CPF’s HPS is required unless you are granted an exemption by CPF Board for equivalent private coverage.[1][6][9]

In practice:

Without HPS or an approved exemption, you cannot use CPF OA to service your HDB loan.[6]
If your loan repayment plan depends on CPF, the bank will view the application as incomplete until your HPS status is resolved.
For couples in estates like Punggol, Sengkang, or Jurong West who rely heavily on CPF for monthly instalments, not sorting HPS early can delay approval and completion timelines.

2. Private Property Loans: Why Mortgage Protection Still Matters

For private condos, ECs (after MOP), and landed homes, there is no legal requirement to have MRTA or term insurance.[1][2] But banks still look at your overall risk profile, including:

Age at loan maturity (e.g. still paying at 70+)
Income stability and industry
Household dependants and spouse’s income
Existing insurance protection covering death/TPD

If you are a sole breadwinner financing a S$1.2 million condo in Bishan at 75% LTV with a 30-year tenure, showing that you have (or will take) adequate home loan insurance coverage for at least your share of the loan can reassure the bank’s credit committee that your family will not default if something happens to you.[1][3][8]

3. Refinancing & High-Risk Profiles

When refinancing, especially if you are older (late 40s/50s) or your income has become more variable (e.g. self-employed Grab driver, commission-based agent), having solid mortgage protection in place can support your case that the overall risk to the bank is still manageable.[3]

Insider tip from the ground: in mature estates like Toa Payoh and Ang Mo Kio, where many borrowers are in their 50s refinancing older flats or condos, showing a combination of CPF savings, a funded term plan, and a reasonable loan tenure often results in smoother underwriting compared to applicants with no protection at all.

How Mortgage Insurance Affects Bank Risk Assessment

Banks in Singapore assess home loan applications holistically, taking into account income, debts, and risk mitigants such as insurance.[3]

Key factors include:

Total Debt Servicing Ratio (TDSR) – capped at 55% of your gross monthly income for all property loans and other debts combined.[1]
Mortgage Servicing Ratio (MSR) – capped at 30% of income for HDB and EC loans using a bank.[1]
Loan-to-Value (LTV) limits – up to 75% for your first housing loan with a bank, lower if you already have existing loans.[1]
Loan tenure and age – longer tenures and older ages mean a higher probability of health issues and income disruption.

Mortgage insurance interacts with these in several ways:

Lower perceived default risk: If death/TPD risk is covered, the bank’s chance of non-payment due to catastrophic events is reduced.
Better comfort on longer tenures: For 25–30-year loans that stretch into your 60s, protection gives comfort that the loan can be cleared even if you cannot work until the end.
Support for borderline cases: For buyers close to TDSR or MSR limits, strong insurance coverage can tip a marginal approval into a conditional or accepted one, especially when combined with other mitigants like higher cash savings.

Understanding Interest Rates, SORA, and Why Protection Matters Over the Long Term

Most bank loans in Singapore today are pegged to SORA (Singapore Overnight Rate Average) plus a fixed spread, or offered as fixed-rate packages for the first few years. As interest rates move, your monthly instalment and the risk of cash-flow strain change too.

The chart below shows recent interest rate trends in Singapore:

Because SORA-pegged rates can rise and fall over your 20–30-year loan, banks prefer borrowers who are not only able to service today’s instalment but also have buffers against shocks—including income protection and mortgage insurance. Homejourney’s live SORA tracking on the bank-rates page helps you time decisions and understand how rising rates affect both your loan size and the amount of housing loan insurance you may want.[1]