A cheaper mortgage insurance quote can be found if you choose to take out your protection independently. By choosing to search and compare the cost of insurance with a standalone provider you could make savings on the premiums of as much as 40%. Another benefit to taking your protection with the standalone provider is the choices you have over your cover.
One of the choices you have is how much of your mortgage repayment you want to protect. The chosen amount would go towards setting how much you pay for the insurance and is the amount of money you receive each month, if the provider pre-agrees with the amount. The income would be tax free and begins once the deferment period has been reached which can be between the 30th and the 90th days. Some providers will date back the cover to the first day of losing your income to unemployment or redundancy so check this in the terms offered before taking out the cover. Payments will continue for between 12 months and 24, again depending on your chosen provider, after this time they would cease. This however could be more than enough time for you to have found work or to have recovered from your illness.
If you were to be persuaded to take the protection that the high street lender offers then you would not be given a mortgage insurance quote. Usually lenders will work out the cost of the insurance for the full terms of your mortgage and add this amount into the money you are borrowing. This means that you will pay interest not only on the amount you borrow, but also the mortgage payment protection. You would also be paying up front for the insurance which would mean you would pay more than needed should you pay off your mortgage earlier than anticipated. When taking cover this way you could be paying hundreds of pounds more than you might if you shop around and compare cover online with an independent payment protection specialist.
The way protection is sold by lenders will change as the result of an in-depth review by the Competition Commission. Lenders will have to wait 7 days before then asking those who have taken out a credit agreement if they want protection.
When getting your mortgage insurance quote with the standalone provide always check what exclusions and limits there is in the policy you are considering. All will come with some exclusions, for instance cover might not be suitable if you are self-employed or have an ongoing medical condition. An ethical specialist provider will ensure that you have this information before taking on the policy as the exclusions could stop you from being eligible to make a claim if needed.
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