You may wonder what mortgage protection is and whether you need it. So, first of all, let’s take a look at how you home could be under threat. Repossessions are soaring and, according to a recent news paper report, some 130 families are losing their homes every day. The credit crunch has bitten us all hard and it is unlikely that there is no one who has not been affected. So, how would you protect your home if you were made redundant or became unable to work due to incapacity?
Redundancy package
Even the most generous of redundancy packages could soon be eaten away if you were unable to find a job straight away. Mortgage repayments, as well as other costs such as insurances etc could soon see any severance pay dwindle.
State benefits cannot be relied upon as the assistance they give will often not match all your monthly mortgage costs. You also have to meet strict eligibility criteria in order to receive benefits and even then, will have to wait several months before the payments become effective.
Sick pay
The same goes for sick pay. Even if your employer offers an extremely sick pay scheme, will it be enough to meet your monthly outgoings? The last thing you want to be doing when on your sickbed is worrying about paying the bills.
That is why mortgage protection insurance is so valuable. Should you make a claim, you will receive a tax free amount every month that can be used towards maintaining your mortgage repayments and other costs such as home insurance and life cover.
How the long the mortgage protection policy runs depends on the individual provider, but it will typically be for 12-24 months or when you are back at work - whenever is the sooner.
The mortgage protection policy will have a waiting period before you are able to start receiving the benefits. This is typically between day 30 and 90 of being out of work due to incapacity or involuntarily unemployed.
Some mortgage payment protection insurance providers will also backdate their policies to the first day of you being unfit for work or of involuntary unemployment, ensuring that you don’t lose out financially.
As you can see mortgage protection really can take away the stress and worry of how you will you manage financially in the event that disaster strikes, And by purchasing your cover from a standalone provider such as British Insurance, it does not have to cost a lot, with premiums starting from as little as a few pounds for every £100 worth of protection required every month.
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