MPPI otherwise known and sold as mortgage payment protection insurance could make the difference between you losing your home or keeping it if you become a victim of unemployment or incapacity. If you fall victim to either of these events you could have a struggle on your hands to be able to find the money needed each month to service your mortgage repayments. With a policy to fall back onto you would have the income from the cover to rely on and use towards your mortgage repayment.
The amount of money you get from the policy each month would depend on the amount you choose to protect. This sum would have to be pre-agreed by the lender and it would be paid back as a tax free sum each month for the term of the cover once the deferment period had passed. These would vary depending on the provider with some providers offering to pay your income after the 30th day has passed and others asking that you wait for up to 90 days before claiming. Some providers could offer to payout on your MPPI policy for up to 12 months and others could continue providing you with an income for as long as the 24th month.
You could choose to take out protection to cover unemployment and incapacity together or you could just want to take out protection for unemployment alone or incapacity alone. This would go towards determining how much you pay for the premiums as would your age and the amount of your mortgage payment that you want to protect. You could make savings of up to as much as 40% in the case of some providers.
If you should choose to take out protection alongside the borrowing the lender will calculate how much the protection would cost for the term of the mortgage. This would then be included in with the borrowing and interest would be added onto the whole amount. With an independent provider you would be able to pay a monthly premium for as long as you wanted protection. If you should be lucky enough to be able to pay off the mortgage you could then cancel the insurance.
When you take into account if you fall behind on your mortgage repayments by just a couple of months and cannot repay what you owe the lender could repossess, MPPI is worth considering. While the majority of lenders will allow you to make an agreement to catch up on what you owe, without an income coming in an agreement would be impossible. They would therefore have no other alternative but to take you to court and you could lose your home.
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