Mortgage Payment Protection Explained

Getting behind on the mortgage repayments and not being able to catch up is the worst nightmare of any homeowner. Mortgage arrears leads to repossession by the lender and this means that you lose your home and everything you have built up in it if the judge sides with the lender and issues a court order to have you evicted. Thousands of people each year fall prey to lender repossession and many of these could possibly have been stopped if they had chosen to insure their mortgage repayments with mortgage payment protection insurance.

Mortgage payment protection does not have to work out expensive if you choose to go with a standalone payment protection specialist for the policy. However if you have the cover added on when taking out the mortgage then this is a very dear way of insuring your mortgage payments. High street lenders would like those taking out a mortgage to believe that they have to take the cover at the same time. Some even have the consumer believing that the mortgage is dependent on them taking out mortgage payment protection.

You can choose to take out mortgage payment protection from a standalone provider of payment protection. You also can choose to take out mortgage cover at any time of the mortgage not just when taking the mortgage. High Street lenders charge high premiums for mortgage cover and in many cases do not supply the information needed for the consumer to make a choice regarding the suitability of a policy. There are exclusions in all forms of payment protection and this included mortgage payment cover. These do have to be checked to ensure that you would be eligible to put in a claim. Providing you have checked them and you are eligible to take out cover then applying with the standalone provider online is quick and simple.

Mortgage Payment Protection from Burgesses

You are able to take out mortgage payment protection based on the level of cover you want, the amount you wish to cover and your age when you apply. The amount that you wish to protect is the sum of money that you would receive back if and when you needed to put in a claim. The level of cover could be choices such as taking out full protection which is for accident sickness and unemployment. You could also just choose to take out cover for accident and sickness only or for unemployment only, depending on your needs. An age based policy means that the younger first time home buyer would get cover cheaper than someone middle aged. Many first time homebuyers with huge mortgages fail to take out valuable protection as they cannot afford to pay the premiums with high street lenders. Age based protection offered by payment protection specialists mean it is now possible to protect their borrowings and the roof over their head.

Those homeowners who rely on being able to claim from the State to cover their mortgage could be in for a huge let down when the time came to put in a claim. For one they would have to be eligible and meet certain requirements laid out by the State. They must be eligible to claim income support, not have a partner in full time work living with them and they must not have savings over a certain amount in the bank. If you have been unfortunate enough to have been made redundant then this could mean you would have to turn to the money from this before being able to claim from the State. Even if you did manage to be able to claim the benefit you would be entitled to would only be towards the interest part of the mortgage and then only up to a certain amount each month. This means that you would still not have the money to pay your mortgage repayment as you would if you had mortgage payment protection behind you.

Mortgage Payment Protection

Mortgage cover of course is not the perfect solution for all. There are exclusions that would need checking, however once you had done this you could relax knowing that if you were to become unemployed or lose your income as a result of accident or illness you would have the money you insured against when taking out the policy, tax-free. You would have wait a period of time before the policy would begin to provide you with an income but this is nowhere as long as State benefit.

Usually providers would ask that you defer from making a claim until between the 30th and the 90th day of incapacity or unemployment. Some providers would also back pay on the cover which means you do not lose out. You would have to check for this in the terms and conditions of the policy. Once your cover has begun to supply you with an income it would continue to do so for a certain period of time. Providers will usually offer cover that would supply you with either 12 monthly payments or 24 monthly payment before it would expire. This in the majority of cases if more than enough time for you to have found work again or to have made a full recovery and be able to get back to work and earn your own living.

Mortgage payment protection along with all other payment protection insurance has earned itself a bad name. This caused a decline due to a lack of faith in policies being sold. However when you take out cover with a standalone payment protection specialist you will be given all the information needed to be able to determine whether a policy would be suitable. It has been a lack of information at the time of selling which has caused the majority of problems and led to mis-selling.

Providing you are aware of what the protection can and cannot do then payment protection will do the job it is designed to do. The Financial Services Authority continues to keep a watchful eye over the sector to ensure that all those selling payment protection do so fairly. They will continue to hand out fines to those caught mis-selling policies and the Competition Commission meanwhile is continuing with their in-depth review of the entire sector.