What Happens to PMI When You Refinance Philippines?

In the Philippines, what many countries call PMI (private mortgage insurance) is most commonly known as Mortgage Redemption Insurance (MRI). While PMI in countries like the US primarily protects the lender if the borrower defaults, MRI in the Philippines serves a slightly different purpose — it is a life insurance product that pays off the remaining loan balance if the borrower dies or becomes permanently disabled before the loan is fully repaid.

MRI protects both you and your family (ensuring the property isn't lost due to your death) and the bank (ensuring the debt is recovered). It is standard practice across Philippine banks including BDO, BPI, Metrobank, Security Bank, and Pag-IBIG (HDMF). Some lenders also require a separate fire insurance policy on the mortgaged property, which is distinct from MRI.

So while the acronym PMI isn't commonly used locally, the concept of mandatory mortgage-linked insurance is very much present in the Philippine home loan market — and it becomes a key consideration when you refinance.

When you refinance your home loan, your existing Mortgage Redemption Insurance (MRI) policy does not automatically transfer to your new lender. Here is what typically happens:

• Your old MRI policy is cancelled — once your original loan is fully settled by the refinancing proceeds, the insurance tied to that loan is terminated. Depending on the policy terms and how long you've held it, you may be entitled to a partial refund of unused premiums.
• A new MRI policy is required — your new lender will require you to take out fresh MRI coverage tied to the new loan. This new policy is typically calculated based on your outstanding loan balance and your current age at the time of refinancing.
• Costs may change — because MRI premiums are often age-dependent, if you are older at the time of refinancing than when you first took out the loan, your new MRI premium may be higher per year. However, since your loan balance is also lower after years of repayments, the insured amount is smaller, which can offset the cost.

Always ask your new lender for a full breakdown of MRI costs before committing to a refinance offer.

This depends on your lender's policy and your loan-to-value (LTV) ratio. In the Philippines, most banks require MRI as a condition of the loan regardless of LTV, because MRI is structured as life insurance rather than default insurance. Unlike in the US where PMI can be cancelled once you reach 20% equity, Philippine MRI is generally tied to the life of the loan — not the equity position.

That said, there are some scenarios where mortgage insurance may be reduced or handled differently at refinancing:

• Lower loan amount: If your outstanding balance has dropped significantly and your property value has risen, you may be able to negotiate a lower coverage amount — reducing the premium cost even if MRI remains mandatory.
• Lender flexibility: A small number of banks and lenders may offer more flexible MRI arrangements for borrowers with strong credit profiles and significant equity.
• Self-insured alternatives: Some lenders may accept an existing life insurance policy in lieu of their standard MRI product, though this is uncommon and must be pre-approved.

If removing or reducing insurance costs is a priority for you, raise it directly with your new lender during the application process. Nook can help you compare lender policies across multiple banks at once.

Unlike in other countries where reaching 80% LTV (i.e., 20% equity) triggers the cancellation of mortgage insurance, Philippine banks do not have a standard LTV threshold for removing MRI. MRI is generally treated as a mandatory life insurance product regardless of how much equity you hold in the property.

However, LTV remains critically important when refinancing for other reasons:

• Maximum refinance amount: Most Philippine banks will lend up to 70–80% of the property's appraised value when refinancing. If your outstanding loan balance is below this threshold, you have more flexibility and negotiating power.
• Lower LTV = lower risk = better rates: Borrowers with LTVs below 60–70% often qualify for more competitive interest rates, which can significantly offset the cost of any required insurance.
• MRI amount is smaller: Even if MRI remains required, a lower loan balance means lower absolute premiums — so your total monthly obligation still decreases.

Check your current LTV by dividing your outstanding loan balance by your property's current market value. If you've held the loan for 5 or more years and property values in your area have risen, your LTV may be much more favourable than when you first borrowed.

MRI premiums in the Philippines vary by lender and are influenced by three main factors: your loan balance, your age, and the loan term. Here are some indicative figures to give you a sense of the cost:

• MRI premiums typically range from 0.20% to 0.50% of the outstanding loan balance per year, though this varies by bank and insurer.
• For a refinanced loan of 3,000,000 at a 0.30% annual MRI rate, the first-year premium would be approximately 9,000 per year, or about 750 per month.
• For a refinanced loan of 6,000,000 at the same rate, annual MRI would be approximately 18,000, or 1,500 per month.

Keep in mind that MRI premiums typically decline over time as your outstanding balance reduces with each repayment. Some banks quote a flat annual premium, while others recalculate each year based on the reducing balance.

When comparing refinance offers, always ask each bank to provide the total cost of MRI over the loan term — not just the first year — so you can make a true apples-to-apples comparison. Use our refinance savings calculator to factor insurance costs into your overall savings estimate.

Yes, in virtually all cases MRI is mandatory when taking out or refinancing a home loan with a Philippine bank. This applies to BDO, BPI, Metrobank, Security Bank, RCBC, UnionBank, Chinabank, PSBank, EastWest Bank, PNB, and most other major lenders.

Fire insurance on the mortgaged property is also typically required as a separate, compulsory policy. Together, MRI and fire insurance are standard conditions of every residential mortgage in the Philippines.

There are limited exceptions:

• Some lenders may allow borrowers to assign an existing life insurance policy as a substitute for their standard MRI product, subject to approval of the policy terms and coverage amount.
• Pag-IBIG (HDMF) has its own MRI program for fund members, which is integrated into their loan products at standardised rates.

Even though MRI is mandatory, the premium rates and coverage terms can vary between banks and their affiliated insurance providers. It is worth asking each lender for a quote on their MRI and fire insurance premiums separately from the headline interest rate — these costs add to your effective annual cost of borrowing.

Yes. Pag-IBIG Fund (HDMF) requires both MRI and fire insurance on all home loans, including those obtained through refinancing under their housing loan program. Pag-IBIG has its own affiliated MRI program for members, and the premiums are factored into your monthly amortisation.

Key points about Pag-IBIG MRI on refinanced loans:

• MRI is computed based on age and outstanding balance. Older borrowers pay a higher MRI rate per thousand of coverage.
• Premiums are amortised monthly — they are built into your monthly payment rather than billed separately, making them easy to overlook when comparing rates.
• If you refinance away from Pag-IBIG to a commercial bank, your Pag-IBIG MRI coverage ends and you must take out new MRI with the new lender.
• If you refinance within Pag-IBIG (e.g., under a new loan term), your MRI is recalculated based on your new loan balance and current age.

Pag-IBIG loans are a popular choice for lower-income earners due to their competitive rates and government backing. However, commercial banks such as BPI, Security Bank, and BDO often offer lower market rates for borrowers with strong credit profiles. Nook can help you compare Pag-IBIG versus bank options side by side.

In theory, yes — but in practice, most Philippine banks require you to take out MRI through their affiliated or accredited insurer, which limits your ability to shop independently. However, there are a few ways to manage this cost:

• Compare lenders, not just rates: Different banks have different MRI rate structures through their affiliated insurers. A bank offering a slightly higher interest rate may have significantly cheaper MRI, resulting in a lower total monthly cost. Always compare the full picture.
• Ask about your own policy: Some banks will consider accepting an existing life insurance policy as a substitute for MRI, provided the coverage amount equals or exceeds the loan balance and the bank is named as beneficiary. This is uncommon but worth asking about.
• Negotiate the fire insurance: While MRI flexibility is limited, some borrowers have more success negotiating on fire insurance — particularly if they already hold a comprehensive home insurance policy with an accredited provider.
• Use a mortgage broker: Nook works with multiple lenders and can help identify which banks offer the most competitive combination of interest rate and insurance costs for your specific loan profile.

Don't let mandatory MRI put you off refinancing altogether. Even with MRI factored in, refinancing from a rate of 8–9% down to 5.99% p.a. can still save you hundreds of thousands of pesos over the life of your loan.

MRI adds a small but real cost to your monthly home loan repayment, and it's important to account for it when calculating your refinancing savings. Here's an example to illustrate the full picture:

Scenario: Refinancing a 4,000,000 loan from 8.5% to 5.99% p.a. over 20 years

• Old monthly principal + interest: approximately 34,776
• Old MRI (estimated at 0.35% p.a.): approximately 1,167 per month
• Old total monthly payment: approximately 35,943

• New monthly principal + interest at 5.99%: approximately 28,620
• New MRI on reduced balance (estimated at 0.30% p.a.): approximately 1,000 per month
• New total monthly payment: approximately 29,620

Estimated monthly saving: approximately 6,323

Even accounting for new MRI on the refinanced loan, the interest rate saving more than offsets the insurance cost. See current home loan interest rates in the Philippines to check how your existing rate compares to today's market.

Almost always, yes — and here's why. The interest rate saving from refinancing typically far exceeds the cost of MRI, especially if you are currently paying a rate of 7% or higher. Most Filipino homeowners are paying between 7% and 10% on their existing home loans. Refinancing to 5.99% p.a. — the best rate currently available through Nook — can save you hundreds of thousands of pesos over the loan term, even after accounting for:

• New MRI premiums on the refinanced loan
• One-time refinancing fees (appraisal, documentary stamps, notarial fees, processing)
• The cost of setting up new fire insurance

The key is to calculate your break-even point — how long it takes for your monthly savings to recoup the upfront costs of refinancing. If you plan to stay in the property beyond that point, refinancing is almost certainly the right move.

To check whether refinancing makes financial sense for your situation, use Nook's refinance break-even calculator — it factors in your current rate, new rate, loan balance, and upfront costs to give you a clear answer.

Nook's service is 100% free to borrowers. We do the comparison work across multiple Philippine banks so you don't have to — and we help you understand every cost, including MRI, before you commit to anything.