What Happens to Your Home Insurance When You Refinance in the Philippines?

Yes — refinancing almost always affects your home insurance in some way. When you refinance, you are entering into a new loan agreement with a new lender (or restructuring with your current one). The new bank becomes the mortgagee on your property, which means any existing fire insurance policy must be updated to reflect the new bank's interest. If you are switching banks entirely, your old insurance policies linked to the previous lender typically need to be replaced or reassigned. Failing to update your policies can create a coverage gap or cause your refinancing application to be delayed, as most Philippine banks require proof of active fire insurance and Mortgage Redemption Insurance (MRI) before releasing funds.

Philippine banks typically require two types of insurance when approving a refinanced home loan:

• Fire Insurance (also called Hazard Insurance): This covers the physical structure of your home against fire, lightning, and other perils. The coverage amount is usually based on the insurable value or replacement cost of the property — not the loan amount. The bank is named as the beneficiary up to the outstanding loan balance.
• Mortgage Redemption Insurance (MRI): This is a form of decreasing term life insurance tied to your home loan. If the borrower dies or becomes permanently disabled during the loan term, MRI pays off the outstanding balance so the family does not lose the home. The coverage amount decreases as you pay down your principal.

Some banks bundle both under a single premium, while others bill them separately. Always ask your new lender for a clear breakdown of insurance costs before signing any refinancing agreement.

In some cases, yes — but it requires coordination between your old bank, your new bank, and your insurance provider. Here's what typically needs to happen:

1. Your existing fire insurance policy must be endorsed to name the new bank as the mortgagee instead of the old one.
2. Your insurance provider must issue a formal endorsement letter acknowledging the change of mortgagee.
3. The new bank must accept the updated policy — some banks have preferred or accredited insurers and may require you to take out a new policy with one of them.

In practice, many homeowners find it easier to simply take out a new fire insurance policy with the new bank's accredited provider. However, if your existing policy offers better coverage or a lower rate, it's worth asking both your insurer and your new lender whether an endorsement is possible. Always get this sorted before your refinancing closing date to avoid any gap in coverage.

Mortgage Redemption Insurance (MRI) is a decreasing term life insurance policy that is linked to your specific home loan. The benefit amount reduces over time as you pay down your principal. Because MRI is tied to a particular loan account with a particular lender, you generally cannot transfer your old MRI to a new lender when you refinance.

When you refinance to a new bank, you will almost certainly need to take out a new MRI policy with the new lender (or one of their accredited insurance providers). The good news is that the premium for the new MRI will be based on your new, lower loan balance — not your original loan amount — so if you've already been paying down your principal for several years, your new MRI cost may actually be lower than what you were originally paying. The downside is you lose any years you've already built up on the old policy.

A few banks, particularly those offering competitive refinancing packages, may offer discounted or waived MRI premiums in the first year as a promotional incentive, so it's worth asking about this when comparing lenders.

Insurance costs when refinancing vary depending on your property value, loan balance, loan term, age, and which bank and insurer you use. Here are some general benchmarks to help you plan:

• Fire Insurance: Typically ranges from 0.10% to 0.25% of the insurable value of the property per year. For a home with an insurable value of 3,000,000, annual fire insurance might cost between 3,000 and 7,500 per year.
• MRI: Premiums are based on the outstanding loan balance, loan term remaining, and the borrower's age. As a rough guide, expect annual MRI costs of around 0.40% to 0.60% of the outstanding loan balance. On a 4,000,000 loan balance, that's roughly 16,000 to 24,000 per year.

Some banks roll these costs into your monthly amortization, while others require annual lump-sum payments. Always ask your new lender how insurance costs will be billed so you can include them in your total refinancing cost calculation. Check our refinance break-even calculator to factor in all costs — including insurance — when deciding if refinancing makes sense for you.

This is one of the most important questions to ask your new lender. Under Bangko Sentral ng Pilipinas (BSP) regulations, banks are not allowed to force borrowers to purchase insurance exclusively through their own insurance affiliates — borrowers have the right to choose from any insurance provider accredited by the Insurance Commission of the Philippines, as long as the coverage meets the bank's minimum requirements.

In practice, many banks have a list of accredited insurers, and they may default to placing you with their own affiliate (such as BDO Insurance, BPI-Philam, or Metrobank's insurance arm). It's worth asking for the full list of accredited providers and comparing premiums — in some cases, independent or non-affiliated insurers offer significantly lower rates for equivalent coverage. Shopping around for your own fire insurance can save you thousands of pesos per year over the life of your loan.

Note that MRI is slightly different — some banks only offer their own MRI product and do not accept external policies. Always clarify this upfront during your refinancing application.

When you switch banks through refinancing, your existing insurance policies do not automatically transfer. Here is what typically happens to each:

• Fire Insurance: Your policy can sometimes be endorsed (updated) to name the new bank as the mortgagee. If your old bank is removed as the mortgagee, they have no further claim on any insurance payout. You'll need to coordinate this with your insurer before or at the time of loan closing.
• MRI: As mentioned above, MRI is tied to your old loan account and cannot be transferred. Once your old loan is paid off using the proceeds of your new refinanced loan, the old MRI effectively terminates. You will need a new MRI from your new lender.

It's important to ensure there is no gap between the termination of your old policies and the start of your new ones. Work with your Nook mortgage advisor to create a clear insurance transition timeline as part of your refinancing process.

Possibly — it depends on the type of insurance and the terms of your policy:

• Fire Insurance refunds: If you paid your fire insurance premium annually in advance and you are switching mid-year, you may be entitled to a pro-rated refund for the unused months. Contact your current insurance provider directly to request a refund. Note that some policies have a short-rate cancellation penalty, which means the refund may be slightly less than a straight pro-rata calculation.
• MRI refunds: MRI policies offered through banks are often structured as single-premium or annual-premium products. Refund policies vary widely by insurer. Some offer a pro-rated refund on cancellation; others do not. Check your MRI policy documents or ask your old bank's insurance department.

Even if the refund amounts are modest, it's worth pursuing — on a 5,000,000 loan, mid-year insurance premiums can add up to tens of thousands of pesos. Document your refinancing date and request refund calculations in writing from both your fire insurer and MRI provider.

For fire insurance, the answer is generally no — at least not because of the loan amount alone. Fire insurance coverage is based on the insurable (replacement) value of the physical property, not the loan balance. Your home's replacement cost doesn't change just because your loan amount does. However, if years have passed since your original policy was issued, your insurer may update the insurable value to reflect higher construction costs, which could increase your premium.

For MRI, the answer is yes. Since MRI premiums are calculated based on the outstanding loan balance, a larger loan means a higher MRI premium. If you're doing a cash-out refinance — borrowing more than your current outstanding balance — your new MRI will be based on the larger loan amount. Make sure to factor this into your affordability calculations when evaluating whether a cash-out refinance makes sense. You can get a clearer picture of how different loan amounts affect your overall costs by checking current home loan interest rates in the Philippines and comparing offers across banks.

Here are the most effective ways to keep your insurance costs down when refinancing:

1. Shop around for fire insurance. Don't automatically accept the bank's default insurer. Request a list of accredited providers and get competing quotes. Premiums for the same coverage can vary by 30–50% across insurers.
2. Negotiate bundled insurance discounts. Some insurers offer lower rates if you bundle fire and MRI coverage through them rather than splitting between providers.
3. Time your refinancing to maximize pro-rata refunds. If possible, refinance close to your annual policy renewal date to minimize the unused premium you'll lose on your existing policies.
4. Maintain a healthy property appraisal. Make sure your home's insurable value reflects actual replacement costs — not an inflated figure. An unnecessarily high insurable value means unnecessarily high fire insurance premiums.
5. Ask about waived or discounted first-year MRI. Some banks offer promotional packages that include waived MRI in the first year. This can be a significant saving on a large loan balance.
6. Compare lenders holistically. The bank with the lowest interest rate may not offer the lowest total cost of borrowing once insurance, processing fees, and other charges are included. Nook compares multiple banks for you, so you see the full picture — not just the headline rate.