Income mortgage protection could supply you with a replacement sum of money if you lost your own income. A policy would pay out in the event that you were to become incapacitated due to sickness or accident or if you became redundant. The cost of cover and terms of the policy can vary considerably with the provider so therefore checking the terms offered is essential before you pay for cover.

For instance all providers will set a limit as to the amount you could protect so therefore they need to agree to your chosen amount. You then receive this amount back for up to the term if you need it as tax free benefit. Of course you do need to have been redundant or incapacitated for so long before you can make a claim. Some providers will allow you to make a claim after the 30th day had passed but others could state a deferment period of 90 days. Check how long your benefit would continue as some providers pay out over 12 months and others might extend benefits to 24 months.

90 days can be a long time and it could cause a great deal of stress as you would probably already be behind on your mortgage repayments by 3 months before your policy provided you with the first payment. Therefore cover paying out from 30 days could be a great deal better. If you should receive your payments over 24 months you should expect to pay more in monthly premiums as you would benefit twice as long. However also take into consideration that if you should have to depend on the policy until its term it would cease when that term had been reached.

With a policy behind you there would be a substantial sum of money coming into the home while you searched for work or recovered. This income could be enough to stop you from falling behind on the repayments of your mortgage. Mortgage arrears of any amount can be very stressful as if you should become unable to catch up on the missed payments your home would be at risk.

You could take income mortgage protection to insure against incapacity and redundancy in one. However due to your circumstances you could only want protection for redundancy alone. Alternatively you could want cover solely for accident and sickness. You should also be aware that some providers add in carer cover. If your provider offers this then you would be eligible to claim on your cover if a close family member were to become incapacitated. You would then be able to take care of them and avoid having to bring a stranger into the home to care for them.

Income mortgage protection can be taken out to ensure that you are able to maintain the repayments of your mortgage each month if you lose your income. There are two ways that you could ensure you have money coming in each month if you suffer redundancy or incapacity. Mortgage payment protection is specifically designed with your mortgage repayments in mind, while income payment protection would secure so much of your income which would allow you to maintain any essential outgoings, which could include your mortgage repayments.

To take out income mortgage protection you would choose the amount of your mortgage repayment you want to protect or in the case of income cover, your income. This amount would have to be pre-agreed with by the provider at the time of you applying for the protection as it would be the amount of money you got back if you fall victim to one of the insured events. All providers will set a period of unemployment or incapacity that you have to stand to before putting in your claim and this will generally between the 30th and the 90th day. Some will also date back your income to the first day that you became unemployed or incapacitated so this would need checking in the small print before you take the protection. Once your policy has begun to provide you with an income it would continue to do so for a period of 12 monthly payments or 24 and then cover stops providing your income.

However it could be more than enough time for you to have found work or made a recovery.
Being able to service the repayments of your mortgage is essential as if you should fall into mortgage arrears you would be at risk of losing your home to the lender through repossession. Just a single missed payment would see the lender sending out a letter reminding you of the missed payment. If you were to be unable to catch up on the missed payment and continue to miss more the lender will expect you to meet with them to try to reach an agreement to repay what you owe. If no agreement can be made then they would have no option but to take court proceedings against you to seek to repossess your home. If this should happen the outcome would be down to a judge and you could be given an eviction date and have to move out.

Income mortgage protection taken as income cover would allow you an income that could be used as you wanted so you may be able to use it towards meeting your mortgage repayment. However essentially this type of protection allows you to maintain your essential outgoings.

If you have the commitment of a mortgage then you rely heavily on your income each month to continue to meet the repayments. Imagine for a moment how you would manage to keep up with these repayments if you should suddenly without warning lose it after becoming ill, suffering an accident or becoming a victim of redundancy. While we cannot stop these things from happening we can at least protect against the possibility that they could happen by taking out income mortgage protection.

Income mortgage protection can be taken by way of mortgage payment protection which solely provides an income towards meeting your mortgage repayments each month. You could also consider income protection. Income protection provides an income that you can use how you wish to maintain any essential outgoings, which could extend to your mortgage repayments. If taking income cover you have to decide how much of your income you want to protect. With mortgage insurance this would be the amount of your monthly repayment you want to cover. The sum chosen would need to be agreed by your provider and it is the amount paid back, tax free, should you suffer from the events you insure. Providers will payback your income once you have been unemployed or incapacitated for a period of time which is usually between 30 and 90 days depending on the provider. Payments will last for either 12 months or 24 months and when the term reaches its end they then cease. This can give you more than enough time to have found work or to have recovered and got back to your own job.

You could tailor your policy to suit your lifestyle. You might not need to take cover against unemployment and incapacity together. If this is so then you could just take protection for unemployment alone or incapacity alone.

Your income mortgage protection can be a better form of plan to fall back onto than risking being able to claim from the State.
While you might be entitled to receive help towards your mortgage repayments any help you would get would only go towards the interest repayment and you would only get help with up to so much of this. You would also need to wait for several weeks before making your claim which of course could see you in arrears by this time anyway. It might also be a better solution than risking being able to use savings as a means of getting by. You could have to turn to your savings for many months and they could run out well before this time. It is essential to be able to maintain your repayments each month as mortgage arrears can lead to the lender taking court action against you. If you are taken to court it would be down to the judge as to whether you would be given an eviction date and have to move out. Without being able to show that you have an income coming into the home the chances of a repossession order being granted are very high.

Income mortgage protection would provide help with your repayments to ensure that you did not lose your home. You would be able to choose between two different forms of payment protection, income or mortgage payment cover. Mortgage cover is just taken to secure a portion of your mortgage repayment while income cover would provide an income towards all essential outgoings which could include your mortgage repayment.

Income mortgage protection could be taken with an independent payment protection provider. If you shop around online before taking out the protection you could save a great deal of money on the protection. In the case of mortgage payment protection you could save up to 40% on the premiums. You would be able to choose how much of your mortgage repayment or income that you wanted to protect and this amount is pre-agreed by the provider. This would be the sum of money paid back tax free each month, once the deferment period has passed. Providers will either offer a policy that runs for 12 month or 24 months with you being able to claim on the cover between the 30th and the 90th day of unemployment or incapacity.

You could also choose the level of protection needed. While you could take out protection for your mortgage for both unemployment and incapacity together you could just need protection for unemployment alone or incapacity alone. This would determine how much the premiums would cost as would age and the amount chosen to protect.

Both forms of cover can be an excellent way of protecting against the chance that you might become unemployed or incapacitated and be unable to afford your repayments. Being able to maintain your mortgage repayments over the entirety of the term of the mortgage is essential. If you cannot keep them going you are in danger of losing your home to the lender by way of repossession. Just one single missed mortgage repayment would be enough for the mortgage lender to send out a letter with a reminder. If you should be unable to catch up on the repayments and continue to miss more the lender would ask you to reach a payment agreement with them. However without a regular income coming in an agreement would be impossible to reach and the lender would have no option but to take you to court to seek to repossess your home. This could mean you would be evicted from your home by the judge and have to leave.

Income mortgage protection would come with some exclusions and these have to checked before buying. They could differ with providers with some adding in more than others. The exclusions could stop you from being able to claim so always compare them against your circumstances.

For homeowners concerned about job security or how they would pay their bills if they could not work due to sickness, income mortgage protection is aimed at removing the stress by providing extra financial support.

The job of this cover is to pay the mortgage while the homeowner looks for another job or recuperates from an accident or illness.
Mortgage cover is a debt specific insurance – that means homeowners take the cover with the intention of protecting their mortgage repayments and if the policy pays out, the money generally goes direct from the insurer to the lender.
Taking out the insurance is easy. Mortgage lenders normally offer the cover when someone takes out a mortgage or second mortgage on their home.

It’s not a good idea to take the first offer, as other, cheaper products may be available from specialist insurance providers that offer similar or better cover.

The lender cannot make taking their payment insurance a condition of the loan.

In fact, whether a borrower takes the insurance out at all is optional.

State benefits might be a further option for some homeowners who lose their jobs or are too ill to work.

The trouble is state benefits are limited and do not kick in until 13 weeks after the claim. Even then, the benefit only covers mortgage interest on the first £200,000 of borrowings.

Another criteria is the homeowner must have less than £16,000 savings to qualify as well.

Savings are not taken in to account by income mortgage protection providers.

For homeowners who have had a mortgage since before October 1995, other less strict rules might apply.

Mortgage payment insurance was often paid as a single premium with interest running alongside the loan, but many banks and building societies have now withdrawn this cover following criticism from independent financial watchdogs.

Many people thought it unfair that if a single premium was paid, interest was charged on the payment when people paying monthly premiums paid no interest but had the same cover.

The amount paid depends on the monthly mortgage repayment.

For instance, if the homeowner’s mortgage repayment is £500 a month, then the monthly premium is five times the lender’s cost for £100 of income protection cover.

Payment insurance can be cancelled. Most policies have a 30-day cooling off period from signing the contract that allows the applicant to withdraw. The policy can also be cancelled at anytime by giving notice to the provider according to the terms and conditions of the policy.

Homeowners should always make sure they read the policy small print before signing up to any income mortgage protection agreement to make sure their personal financial circumstances tie up with the policy conditions.

When the going gets tough, it’s time to consider income mortgage protection. And even given the most circumspect of assessments by financial commentators these days, the going has become especially tough and is unlikely to see much of a let-up during the course of 2009. Whatever employment normally brings in the income, it is almost certain that the coming year will be particularly tough.

Most economic commentators are already predicting that the increased number of redundancies will swell the total number of jobless to some three million before the end of 2010. Add to that the number of people who are lucky enough to retain their jobs but still need to take unpaid time off work to recover from an accident or illness, and the insecurity of a regular, dependable income becomes all too clear.

It is just such a regular and dependable income, however, on which we all rely for the paying that most basic of all essentials, the mortgage. With the loss of an income for several months at a time, the mortgage repayments become practically impossible to meet. And if those payments are not met, then the spectre of repossession looms an ever more distinct possibility. Indeed, the Council of Mortgage Lenders itself has warned that a total of 75,000 home repossessions are likely to be made during the course of 2009, according to reports in the daily Telegraph newspaper of the 18th of December 2008.

Income mortgage protection is designed to alleviate such worries with a simple and straight forward insurance policy that will provide the regular, monthly wherewithal to ensure that the mortgage repayments continue to be met, even if the policy holder loses his or her regular income as a result of an accident or illness or because he or she has been made compulsorily redundant.

The cover is readily available and one of the leading suppliers is an independent insurance provider by the name of British Insurance. The company’s managing director, Simon Burgess, says: “income mortgage protection has become an even more indispensable component of the prudent homeowner’s armoury than ever before. Whatever misfortune the current economy throws up in terms of redundancy or whatever fate deals in terms of accidents or sickness, this reasonably priced insurance can rise to the challenge”.

Income mortgage protection can be bought by anyone currently in regular employment and who has been regularly employed for at least the past six months. Although policies will differ in their details from insurer to insurer, it is generally possible to arrange cover up to an equivalent of 50% of the policy holder’s normally earned income, or £1,500 a month, whichever is less. In any event, however, this is likely to be a level of cover that will make all the difference between holding onto the home when misfortune strikes and facing the heartache of repossession. Income mortgage protection, therefore, can be a financial lifesaver.

http://www.telegraph.co.uk/finance/economics/houseprices/3831321/Repossessions-to-reach-75000-in-2009-as-half-a-million-fall-into-arrears.html
http://www.britishinsurance.com/mortgage-payment-protection-insurance/policy-summary.html

Owning a mortgage is a huge financial step, it can also be a bit scary. Not only is it a large financial commitment, but you’ll have an emotional attachment to your new home as well. If you rely on your income to make the mortgage payments and you were to suddenly lose all or part of it, the effects could be financially and emotionally devastating. Luckily you can avoid the worst effects by taking out income mortgage protection.

When you protect your income in this way, your mortgage payments will also be secured if your salaried income was no longer available.

Policy Features

To be able to apply for a policy, the provider will normally require a minimum employment time but, once you’ve met that criteria, you should be able to set up your protection. When it comes to making a claim however, there is a standard deferment period of around 30 – 90 days, but this period will vary depending on the provider policy.

Depending on the generosity of your provider you may be able to select a deferment period that suits your needs and your premium will most likely reflect such changes

Another feature of income mortgage protection is the events that it pays out for. The main incidents covered are involuntary and unforeseen redundancy, accident and sickness.

After your policy is in place and the benefits payment has begun, you can expect the payment to last for 12 or 24 months depending on the provider you choose. Should you go back to work within the maximum period however, the benefit payment will stop.

While the benefit is in payment, you will not have to pay for your monthly premiums and no tax will be deducted from the amount you receive so the payment is essentially tax free. There are maximum benefit levels however.

Selecting Your Provider
Choosing your provider does not have to be difficult. The main thing to look at is the cost of premiums. By going to a high street provider you will find your premiums are much higher than if you obtained your income mortgage protection from an independent provider.

Simon Burgess, Managing Director of British Insurance – an independent provider of protection products says ‘High street providers often take advantage of consumers by selling them high premium policies on the back of mortgage products. This is very unethical and consumers should be encouraged to compare the wider market before making a final decision. At British Insurance you can save up to 40% on premiums for protection products so it is worth looking at what independent companies can offer’.

Conclusion
Protecting your mortgage payments with income mortgage protection can be just what you need to keep you financially afloat if your salaried income was to decrease or disappear. The peace of mind alone is enough to entice anyone to take out a policy.

Income mortgage protection allows you to maintain your mortgage repayments if you should become a victim of incapacity caused by accident or sickness. It would do the same if you should become unemployed through redundancy. You can take mortgage protection when you take on the mortgage with the lender on the high street but usually this would be the dearest choice for covering your repayments. If you want to save up to 40% on the cost of cover then get in touch with leading standalone provider British Insurance.

Income mortgage protection can be taken out after checking the exclusions against your lifestyle, which ethical British Insurance provide you with information about before buying. You then choose how much of the mortgage repayment you make each month you want to protect, up to the amount stated as the maximum. This would be the sum of money you would receive back each month if you should make a claim on the policy after suffering from one of the events. The income would be paid back each month as a tax free payment and you would put it towards maintaining your mortgage repayments.

If British Insurance was your chosen payment protection provider you could claim with them after the 30th day of your unemployment or from you being incapacitated. The payments would also be dated back to the first day you became unable to work or from being made redundant and you then have an income each month for up to 12 months. During this time you would have the security of some money coming into the home on a regular basis at least to go towards your mortgage repayments. This would leave you free to concentrate on finding work or to recover and get back to work again.

Should you choose to look at the protection offered by other payment protection providers you need to check the small print of the policy offered. There are some providers that could extend the deferment period up to as long as the 90th day of unemployment or from you being unable to work. Some could also provide cover that would payout for up to the 24th month, at a greater expense of course than the 12 month policies. Whilst checking the terms also find out what the exclusions are in a policy and compare them against your lifestyle.

Without income mortgage protection behind you life could become a great deal harder than it should be. Even though you might make some considerable changes to your lifestyle by making cutbacks you might even fall short and not be able to maintain your mortgage repayments. If you do get into mortgage arrears you would have to struggle to get back out of them and without a regular income coming in an agreement with the lender could be impossible to make.

Having a mortgage is a huge deal by any means. It is one of the largest commitments you could make and because you probably rely on your salary to make the payments, it could be the most exposed debt you have. If you were to lose your regular income and failed to meet your mortgage payments, your home could be taken away. To avoid such an event, you can take out an income mortgage protection policy to protect your income.

By protecting your income you will be able to maintain your monthly mortgage payments if you were to lose your job.

If you want to own a policy you will have to be employed for a minimum period as specified by the provider. Once you have met this requirement and your policy is up and running, if you want to make a claim you will have to wait out the deferment period as well. The deferment is usually between 30 – 90 days.

Some providers may allow you to choose the deferment period and this will have a direct impact on the cost of your premiums.

The other main feature of an income mortgage protection policy is the qualifying events. The policy is designed to pay out in the event of involuntary redundancy, sickness or accident and the criteria surrounding this should be obtained from your provider.

Once you own your policy, the benefits you can receive are worth it. The monthly replacement income will be paid for 12 or 24 months depending on the provider you choose. If you were to return to work within the maximum payment period, your benefits will cease.

The income you will receive is tax free which is good because these policies don’t pay the equivalent of your salaried income. The benefit will be based on a percentage of your salaried income and there are maximum levels imposed by the providers.

Choosing Your Provider
When deciding on your provider, the main thing to look at is the cost of premiums. If you got quotes from your mortgage lender or high street providers then compare it with a stand alone income mortgage protection policy from an independent provider, the premium of the latter will be much lower.

Simon Burgess, managing director of the independent protection provider British Insurance says ‘The cost of protection products tend to be unnecessarily high if you obtain your policy from traditional outlets but if you visit independent companies like British Insurance, you can receive savings of as much as 40% on mortgage protection products’

Summary
Protecting your income and by extension your mortgage payments with an income mortgage protection policy could be one of the most important decisions you could make in an effort safeguard your lifestyle in the event of job loss, sickness or accident. The security and peace of mind you can receive is second to none.

Although things might appear to be changing for the better on the mortgage front, it is still important to make sure that the repayments on a mortgage continue to be made if unexpected misfortune strikes. Not only that, but many homeowners will soon discover that income mortgage protection has become even more affordable.

The best news for homeowners, of course, is the reduction in the Bank of England’s base rate of interest to a mere 2%, which is the lowest it has been for more than 50 years – in fact, it has never been any lower in more than 310 years of the Bank’s history! Announcing the decision on the 4th of December 2008, the daily Telegraph newspaper reported the even better news that some mortgage lenders had already said that they would be passing on the full interest rate cut to their customers. Clearly, this is good news indeed for borrowers.

But before allowing yourself to be carried away by the good news, it is worth spending a moment or two thinking about what would happen if an accident or prolonged illness kept you off work and potentially without an income for several months, or if that income similarly dried up as a result of redundancy. Although your lender will probably have reduced the mortgage payments, they still need paying if the risk of repossession is to be avoided. Income mortgage protection – an insurance that will cover mortgage repayments in the event of any of these misfortunes – is still the safest bet.

Even given the reduction in interest rates, of course, the economy at large and the housing market in particular remain in a vulnerable state of affairs and the Council of Mortgage Lenders has reported a steep rise in the number repossessions as struggling borrowers default on their loans. The government has, of course, tried to help both by persuading lenders not to rush into repossession proceedings without attempting some alternative arrangement with stricken borrowers and also by brokering an agreement under which a proportion of mortgage interest payments can be deferred by up to two years. The latter was announced in a report appearing in The Independent newspaper on the 3rd of December 2008 and will be available on mortgages of up to £400,000.

Commenting on the news, Simon Burgess of independent insurance providers, British Insurance, says: “Whilst such measures might help borrowers who have to struggle with the temporary burden of accident, sickness or unemployment, the fact is that the full mortgage repayments will have to be paid at some time and, even with the recent assistance brokered by the government, cannot be delayed indefinitely. An insurance which provides an income specifically to cover these mortgage repayments – income mortgage protection – therefore, is a safeguard certainly worth considering”.