Mortgage payment protection insurance (MPPI) could ease any financial worries regarding arrears if you find you are unable to work after suffering incapacity or you are made redundant. A policy could be taken to protect against both events and if you then fall victim to either you could claim on your insurance. This income would go a long way towards you being able to keep up with your monthly mortgage repayments each month for up to the term of the cover.
You could save up to as much as 40% on your mortgage repayments if you compare the cost of the insurance with a standalone provider as taking protection with the lender on the high street is generally the most expensive way to take a policy. You choose how much of your mortgage repayment you want to protect and this sum of money would need to be agreed with the provider you choose to take your policy with. It is then your monthly tax free income if you were to have to claim on your policy due to one of the events you had covered. With some providers you might be eligible to claim on your policy once the 30th day has passed. With others you could need to stand to the first 90 days before claiming and others pay out in between. You might get your income dated back to the first day that you suffered from one of the events but you do need to check. Some providers might offer mortgage payment protection that continues providing an income over 12 months and with others this might be 24 months of protection.
While you can take protection against redundancy and incapacity in the same insurance policy you could choose the events you want to protect. You might just want to protect against redundancy alone if you got a good sick pay plan. You could alternatively decide that you just want protection against the possibility of incapacity if it suited your lifestyle more. You could also be able to claim your income in the event that a family member fell ill and you had to take time off work to stay at home to take care of them. However not all providers are generous enough to give you this so you would need to check in the terms of the policy.
Mortgage payment protection can be a far more reliable choice of covering your mortgage repayments than being eligible to claim an income from the State. Should you claim a State income you would need to prove eligible and you would then only get help with up to so much of the interest part of your repayment? You also have to stand to the first 13 weeks before claiming any income which means that mortgage arrears could already have occurred and you could have to struggle to repay them. If you were going to rely on using savings as a form of maintaining your mortgage repayments then you could also be let down as they might not last for the entire duration of your unemployment or incapacity.
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