Mortgage Indemnity Guarantee Premium - MIG Premium, fee charged by a mortgage lender
The mortgage indemnity guarantee premium, or MIG premium, is a charge for a lump sum insurance policy that lenders take out on mortgage loans over 75% of a property's value. The insurance policy is to cover the lender against them being left with an unrecoverable debt in the case of property being repossessed.
The mortgage indemnity guarantee premium can also be called an indemnity premium, mortgage indemnity premium, mortgage guarantee premium and high percentage advance fee.
MIG Premium Example
If a customers building is repossessed, due to a court order over none payment, the mortgage lender may only be able recover a percentage of its value when it is sold. The greater the size of the mortgage on a property the greater the chance of a fall in the properties value, therefore there could be a loss to the lender in addition to any arrears that may have built up.
The lump sum insurance policy covers the lender against being left with an non-recoverable debt. The MIG premium is a standard arrangement fee when it comes to a UK mortgage, and is an attempt to minimize the lenders exposure to risk.
MIG Premium Information
Generally customers have to pay the premium, although, as the housing market becomes more competitive some lenders have decided to pay this policy on the borrowers behalf.
Most mortgage lenders will only do this up to 90% of a properties value, over that level and the borrower usually has to pay the premium charge themselves.