What Happens to PMI When I Refinance? Philippines Insurance Guide

Strictly speaking, "PMI" (Private Mortgage Insurance) is a term most commonly used in the United States. In the Philippines, the equivalent product is called Mortgage Redemption Insurance (MRI). MRI is a form of credit life insurance that most Philippine banks require as a condition of your home loan. Its primary purpose is to pay off your outstanding loan balance if the borrower dies or becomes permanently disabled before the loan is fully repaid, protecting both the borrower's family and the bank.

Some banks bundle MRI into your monthly amortisation, while others collect it as a separate annual or single-premium payment. A handful of banks also accept existing life insurance policies assigned to the bank as collateral in lieu of MRI — but this is less common. When Filipinos search for "PMI when refinancing Philippines," they are almost always asking about MRI and how it is affected when they switch lenders. Throughout this page, we use both terms interchangeably to match how homeowners naturally search for this topic.

Yes — when you refinance, your old home loan is fully settled and closed. Because MRI is tied to a specific loan account with a specific bank, the coverage under your old policy also ends at that point. You will not continue to pay MRI to your old lender after the refinance closes. However, this also means you no longer have that protection from the old insurer, so you must establish new MRI coverage with your incoming lender as part of the refinancing process.

It is important to note that you will not automatically receive a refund of any unused premiums just because you refinanced — this depends entirely on the terms of your original MRI policy and whether it was a single-premium or annual product. We cover the refund question in more detail further down this page.

Almost certainly, yes. Every major Philippine lender — including BDO, BPI, Metrobank, Security Bank, PNB, RCBC, UnionBank, Chinabank, PSBank, and EastWest Bank — requires borrowers to carry MRI as a standard condition of any home loan, including a refinance loan. Additionally, all lenders require fire and allied perils insurance on the mortgaged property for the duration of the loan.

When you refinance through Nook, we guide you through the insurance requirements of each bank we submit your application to, so you are never caught off guard by hidden insurance costs. Some banks offer competitive group MRI rates that are lower than what you may currently be paying, which means your insurance cost could actually decrease as a result of refinancing — especially when combined with a lower outstanding loan balance.

In most cases, no. MRI policies in the Philippines are structured as group insurance policies arranged by the bank with its preferred insurance provider. The coverage is specific to the loan account at that bank and cannot simply be transferred or reassigned to a different institution. When you close your old loan and open a new one with a different bank, the new bank will enrol you in its own group MRI scheme or require you to purchase a standalone policy that names the new bank as the beneficiary.

There is one exception worth knowing: some banks will accept an existing individual life insurance policy (not a group MRI) as an alternative, provided the sum insured is at least equal to the loan balance and the policy is properly assigned to the bank. If you hold a large personal life insurance policy, it may be worth discussing this option with the new bank during your application process. Nook's mortgage specialists can advise you on which banks are flexible on this point.

MRI premiums in the Philippines are typically calculated as a percentage of your outstanding loan balance — not your original loan amount. This means two things work in your favour when you refinance after several years of repayment:

• Lower balance: Because you have already paid down a portion of your principal, your new MRI premium will be calculated on a smaller base amount than your original loan, so the premium itself is lower in absolute peso terms.
• Competitive rates: Different banks and their insurance partners charge different MRI rates. If your new lender's MRI rate (expressed as a percentage of the insured amount) is lower than your current lender's, you save even more.

As a rough illustration: if your original loan was 5,000,000 and you have paid it down to 4,200,000 over five years, your new MRI will be based on 4,200,000 — not 5,000,000. Combined with a lower interest rate of 5.99% p.a. versus a typical repriced rate of 8–10%, the overall monthly cost reduction can be substantial.

Yes, Philippine banks require both, and they serve very different purposes:

• Mortgage Redemption Insurance (MRI): This is life and disability insurance. It pays off your remaining loan balance if you die or become permanently disabled. It protects your family from inheriting the debt.
• Fire and Allied Perils Insurance: This covers the physical structure of your home against fire, lightning, typhoon, flood, and other perils. It protects the bank's collateral (your property) and, importantly, protects you from owing a large debt on a destroyed home.

Both are mandatory for any Philippine home loan, including refinance loans. Fire insurance premiums are based on the insured value of the structure (replacement cost), not the loan balance, so they are relatively stable over time. When you refinance, you will need to arrange new fire insurance with the incoming bank's accepted insurer, or have your existing fire insurance policy endorsed to reflect the new bank as the mortgagee. Some insurers allow this endorsement rather than requiring a brand new policy, which can save you money.

It depends on the structure of your original MRI policy. There are two common structures:

• Annual MRI: If you pay MRI annually and you refinance partway through a coverage year, you may be entitled to a pro-rated refund for the unused months. You would typically need to file a cancellation request with the original bank or insurance provider. The refund — if any — is usually credited back to you after the loan account is closed.
• Single-premium MRI: Some banks collect a lump-sum MRI premium upfront (sometimes rolled into the loan itself) that covers the entire loan term. Refunds on these products vary widely. Some insurers offer a pro-rated refund based on the remaining term, while others apply surrender charges that significantly reduce the refundable amount. Review your original loan documents or ask your current bank's insurance desk for the specific terms.

As a practical tip: always request a formal computation of any MRI refund before you finalise your refinance. Factor this refund into your total cost-benefit analysis alongside your interest savings. Nook's team can help you think through these numbers — or you can start with our refinance break-even calculator to understand how long it takes for your savings to outweigh switching costs.

Yes, and this is one of the less-discussed financial benefits of refinancing. Because MRI premiums are recalculated based on your current outstanding balance — often annually — a lower starting balance after years of repayment means you pay less in insurance each year going forward. This compounds over the remaining life of your loan.

Consider a homeowner who originally borrowed 6,000,000 at 9% p.a. and has paid it down to 5,100,000 over six years. Refinancing that 5,100,000 at 5.99% p.a. not only reduces the interest charged but also resets the MRI base to 5,100,000. If MRI is priced at around 0.3–0.5% of the outstanding balance per year (typical range among Philippine banks), the annual premium drops accordingly — saving thousands of pesos per year in insurance alone, on top of the interest rate savings.

In the Philippine context, MRI is generally required regardless of your loan-to-value (LTV) ratio — unlike in the US, where PMI can be cancelled once LTV drops below 80%. Philippine banks treat MRI as a mandatory credit life requirement, not purely as a risk mitigation tool tied to equity levels. So even if your property has appreciated significantly and your outstanding loan is now only 50% of the property's current market value, your new lender will still require MRI coverage for the outstanding loan balance.

However, a lower LTV does have indirect benefits when refinancing. Banks typically offer their most competitive interest rates to borrowers with LTV ratios below 70–80%, as this represents a lower credit risk. If your property has appreciated and your balance has decreased, you may qualify for a better rate tier — which translates to lower monthly payments and, over time, a faster-declining balance (and therefore lower MRI premiums). Check current rate tiers from multiple banks by reviewing Philippine home loan interest rates to understand where you might qualify.

A complete refinancing cost analysis should include not just the difference in interest rates but all associated costs and savings, including insurance. Here is a simple framework to follow:

1. Calculate your interest savings: Determine the difference between your current effective interest rate and the best available refinance rate (as low as 5.99% p.a. through Nook), multiplied by your outstanding balance.
2. Estimate your new MRI premium: Ask the prospective bank for a quote based on your outstanding balance. Compare this to what you currently pay.
3. Check for MRI refunds: Compute any pro-rated refund from your existing MRI policy and treat this as a credit against your switching costs.
4. Include other refinancing fees: Legal fees, appraisal, documentary stamps, and registration costs typically range from 1% to 2% of the loan amount for Philippine home loan refinances.
5. Compute your break-even point: Divide total switching costs by monthly savings to find out how many months it takes to recoup the cost of refinancing.

Nook's service is 100% free to the borrower — we are compensated by the bank, not by you. This means the cost of comparing multiple lenders and finding the best combination of rate, terms, and insurance requirements is zero. Start with our refinance savings calculator to get a personalised estimate of how much you could save each month.