What is an independent mortgage insurance quote? Just as the name suggests, it is a quote given by a specialist insurance provider quite independently of any lender that actually arranged the mortgage. An independent quote will state the monthly premium payable for mortgage payment protection insurance, which ensures that the policy holder’s mortgage commitments continue to be met, even in the event of his or her incapacity to work (as a result of suffering an accident or contracting an illness) or lack of work through enforced redundancy.
Why is it important that any such mortgage insurance quote is independent? Because of the very high-pressure selling of this type of mortgage insurance cover by all the major lenders in the past, many people are in fact unaware of the opportunities for buying it on a standalone basis from an entirely independent provider. This is an opportunity certainly worth pursuing, however, if only for the atrocious record of mortgage lenders and other finance companies for their mis-selling of payment protection insurance of all kinds.
According to The Independent newspaper on the 10th of December 2008, 19 companies have now been the subject of punitive action by industry regulator, the Financial Services Authority for their mis-selling of payment protection insurance, including failures to provide a fair or accurate mortgage insurance quote. The biggest culprit, attracting a record fine of £7 million in October of 2008, was Alliance and Leicester and the most recent, online bank, Egg, was fined nearly £¾ million.
To a great extent, however, these punishments represent only the tip of the iceberg. Even where lenders have avoided the temptation to mislead customers into making a purchase, the Competition Commission has reported that mortgage insurance bought “at the point of sale” directly from the mortgage lender, is invariably over-priced compared with comparable products available from independent insurance providers.
Proving just that point is probably the most experienced independent insurance provider in the country, British Insurance. “We arrange insurance. We do not advance mortgages or any other kind of loan” says managing director, Simon Burgess. “As a result, we’re able to offer the customer a mortgage insurance quote that is truly competitive and, on average, some 40% less than any available through a high street bank or building society”.
New rules proposed by the Competition Commission and announced in the middle of November 2008 have been designed to put sufficient distance between the mortgage lender and the customer’s purchase of mortgage cover so that borrowers are given a valuable breathing space during which to test the market and search out an independent mortgage insurance quote before buying the product.
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