MPPI Explained

MPPI, mortgage payment protection insurance or mortgage cover, these are all the names that are used when selling a valuable form of protection that would cover the repayments of your mortgage each month if you lost your own income. When you take out the policy a loss of income would be defined as suffering from an illness that kept you from working, an accident or if you were to be unemployed by such as being made redundant.

If you choose to take out MPPI with a standalone payment protection provider they will offer you a policy based on your needs. For example you might just need to take out protection to safeguard against being unable to work due to accident or sickness. On the other hand you might only need protection against unemployment or you could choose to cover all eventualities.

The level of protection, your age and the amount that you wish to protect each month are all taken into account when deciding how much premium you would have to pay each month for your MPPI. As age is taken into account this means that even the younger first time home buyer who has stretched their outgoings almost to the limit can afford to take out protection. It is these individuals that need protection yet in the past when buying from the high street lender it would have been impossible due to the high cost of the insurance.

MPPI from Burgesses

High street lenders are known to charge well over the odds for the cover. In fact it is estimated that they make around £4 billion in profits each year just from adding in cover alongside the borrowing. If you choose to add in mortgage payment protection with the mortgage then you are adding to these profits and you have to be aware that you do not have to take out protection at the same time as taking the mortgage. You can choose to buy it independently and when doing so you would also be given all the information needed to be able to make an informed decision. There are exclusions that you have to check against your circumstances and if you do not then it could mean you might be buying a policy that you cannot hope to claim against.

Once you have checked the exclusions and determined that MPPI would be suitable, you are able to apply online with the provider. You would also have to check their website to determine when the cover would begin to payout and for how long it would payout. These differ with all providers. Some providers will offer a policy that would payout after just the 30th day of unemployment or incapacity, however some could ask that you wait for as long as the 90th day before you would be able to put in your claim.

You would also have to check in the terms and conditions to see if the benefit would be backdated. Some providers would backdate to the first day of your unemployment or incapacity. Once the policy has begun to provide you with an income then it would continue for a certain length of time before it would just expire. Usually providers would offer a policy that would payout a tax-free income for between 12 monthly payments or 24 monthly payments.

Having some form of protection to fall back on in case you should lose your income is essential and MPPI is a solution. If you miss just a single mortgage payment the lender would send you a letter to let you know and ask when you are able to catch up on the arrears. If you cannot catch up and miss another payment they will ask that you come into see them to make an agreement to catch up on what you owe while at the same time continue paying your mortgage.

MPPI

Without an income behind you and not knowing when you would be able to go back to work or when you would find work again this could be impossible. If this is the case the lender will start Court proceedings to take repossession and you could find yourself being evicted. At the very least a missed mortgage payment will see your credit rating being affected and this will mean that you will have problems when it comes to borrowing in the future.

You could of course rely on savings as a way of getting by if you lose your own income. However as you could have to rely on the for many months this is not a good idea as they could run dry well before you have recovered and gone back to work or found work again. Many homeowners also rely on help provided by the State to get them through. Again this could be a letdown and is not a good safety net. To begin with you might not be eligible for help from the State. You would have to be eligible to claim income support in order for you to be granted any benefit towards your mortgage.

You must also not have a partner living with you who is in full time work or have savings over a certain amount in the bank. This means that if you have been given redundancy money you would be expected to use this first. While you could turn to your redundancy money this would mean you would be making a big dent in money that could be used for your future. Even if the State did allow you to make a claim for help with your mortgage you would not get the sum of money you pay for the mortgage repayment each month.

You would only be provided with benefit towards the interest repayment part of your mortgage and not the capital and then only up to a certain amount. Any benefit you got would not be payable for many months which would mean that you would still have a struggle on your hands in the first months of unemployment or incapacity.

Providing you had checked the terms of the policy and the key facts which include the exclusions then MPPI would work in the way it was designed and provide you with the security that would allow you to make a full recovery and get back to work or gives you time to search around for work which is suitable.