Mortgage protection insurance – protecting your home
Even at the best of times, a mortgage can be a tricky thing to have to deal with as it will usually be the single biggest debt a person faces during their lifetime. Thankfully most people will be able to handle their home loan, with a few ups and downs aside, but some will struggle and could find the whole burden too much to bear, especially if they do not have mortgage protection insurance in place to protect their ability to keep up with repayments.
Mortgage protection insurance is a type of cover which can be bought in the same way as many more traditional policies and is geared towards helping a home loan borrower keep up with the regular repayments should they lose their income after becoming ill, injured or being made involuntary redundant. In effect it provides a safety net should the worst happen and they be left without wages through no fault of their own.
This type of cover can be particularly important in a crisis as a home may be possessed by a lender if the borrower fails to keep up with repayments. If a house is shared by a couple, they might be able to keep going for a while with one person’s wages coming in after one fell very ill, for example, but they could face problems very quickly if the other lost their job through involuntary redundancy. A mortgage protection insurance policy for one or both of these people would pay a tax free sum each month, starting around 30 days after the initial claim, and could prove to be the difference between keeping hold of a house and facing repossession.
A policy will not normally provide protection for 100 per cent of someone’s mortgage repayments, and will often start at 50 per cent. Cover can be provided for a bigger slice, usually for a bigger premium – check with the individual insurer to find out what the options are. Time frames are also important to consider – how long will an individual policy pay out for and is it long enough? Most will pay out for 12 months following a successful claim, but some will stretch to 24. Some will also pay out towards mortgage payments for 12 months if someone has to leave work to become someone’s full-time carer.
One firm which can provide flexible mortgage protection insurance cover at reasonable prices is specialist payment protection provider British Insurance. Managing director Simon Burgess says: “Insuring the mortgage could be a good idea if someone doubts their ability to pay in the event of a crisis. The ability to keep the roof over your head with a little help for the home loan is worth its weight in gold in the right circumstances.”
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For many years I have been a staunch campaigner against the major names in finance who, I believe, rip-off their customers by selling over priced, often unsuitable payment protection insurance (PPI) cover.
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