Mortgage Protection Explained

Being able to pay your mortgage is essential if you wish to keep that mortgaged roof over your head. Making the regular monthly repayments might be possible now but what if you lose your job and are unable to find immediate re-employment?. How would you cope if you have an accident that takes months to recover from or suffer long-term sickness? If this is a real worry to you especially in today’s uncertain, economic climate or perhaps you are just the cautious type who prefers to have all eventualities covered if possible, just to be on the safe side. Then taking out mortgage protection insurance could be the answer you are looking for.

For a monthly premium, you could enjoy the peace of mind of knowing that the bulk of your mortgage repayments could be covered in the event of illness, involuntary redundancy or an accident. Receiving these monthly tax-free instalments might also help reduce the associated stress, allowing you to concentrate on returning to work rather than the worry of losing your home.

You might look at the expense of the mortgage protection premiums and think that it is not worth the additional expenditure. However, most mortgages are for 20 to 25 years and the probability of you incurring ill health increases as you age. In addition, finding a job could be relatively easy for younger people than for those who are older. In this light, mortgage payment protection insurance (MPPI) is worthwhile considering. Especially as your age tends to influence the cost of the premiums for any insurance product, taking it out when you start a mortgage might also prove cost effective and yield favourable terms. Even the young first time buyers who may have financially stretched themselves to the maximum to achieve a mortgage, could afford this protection

Mortgage Protection from Burgesses

Perhaps you are of the opinion that surely the State helps those who suffer unemployment or incapacity. Well, yes it does, but only if you qualify and normally the benefits are minimal. It is doubtful that the amount of State benefit paid would cover your monthly mortgage repayment. It is wise to be aware that if you miss one payment on your mortgage, you are deemed to have broken your contract with the lender. This could result in your home being repossessed. However, most lenders will probably enter into negotiations with you in an attempt to avoid this situation. An agreement allowing you to catch up with the mortgage arrears might be drawn up. Having mortgage protection could reduce the risk of arrears and repossession arising in the first place.

Mortgage payment protection insurance makes payments up to a certain previously agreed amount each month to cover your mortgage for up to one year, although some lenders could pay for two years. The criteria of the cover available might differ between various financial providers. Some will allow a claim to be made on the 30th day of not working whilst others request that you wait until the 90th day. The length of the excess period might also be different. Some providers might permit a claim to be made within three months’ of commencement of the protection, whilst others might make you wait a full six months.

Mortgage Protection

Having decided that mortgage protection insurance is worth having, you should gather as much information as possible to ensure that the cover is suitable for you. There is little point in taking out cover if you are unable to make a claim because of the exclusions in place. For example, this product is often unsuitable if you work part-time (normally less than 16 hours per week) or are of retirement age. If you have left the country, you may not be able to make a claim or if you are self-employed, this protection may be useless. Therefore, it is important that you read the small print before committing to any legal contract to ensure that if offers appropriate cover.

This product may already be familiar to you as most mortgage lenders like you to buy this when you take out one of their mortgages. However, historically, this is often the most expensive way to take out this cover and going with a standalone provider can secure a much better deal.

Taking this protection out when you accept the offer of a mortgage might seem the easiest option but it may not be the cheapest way of doing it. You might have secured a good mortgage with favourable terms from a lender but it does not necessarily mean they will offer excellent value on other products. Many mortgage providers sell mortgage payment protection at rather inflated prices to help increase the profit margin of their mortgage deals. The protection product could be a valuable and helpful thing to have but it does not have to be expensive. Taking out this type of protection from an independent standalone provider could yield savings of up 40%.

The premiums are often calculated on the amount and level of cover required as well as your age. Further savings could be obtained by selecting to protect against just incapacity or unemployment. It could still be considered worth having as a safeguard even though the amount of cover might be reduced. By choosing the most suitable amount of protection for your needs, you could easily have a safety measure in place to protect against not being able to make your mortgage payments. Any non-payment could affect your credit rating. It could be prudent to avoid gaining a poor credit history as this might cause problems in the future should you require additional loans. Any savings you may have put by for a rainy day would soon be depleted. As often when it rains, it has been known to pour and your savings would be quickly washed away. For an affordable monthly premium, you could enjoy so much peace of mind. An independent specialist could help you to assess your needs and find the most appropriate mortgage protection cover for your circumstances and at a reasonable price.