Even in the midst of an unpredictable housing market, most people are unable to buy a property outright and must take out a loan from the bank. A mortgage is a big responsibility whatever the financial weather, and even those who have paid out a big deposit will still incur a significant amount of interest during the lifetime of the loan. Occasionally, unexpected events mean someone suddenly finds it difficult to make the repayments and in the worst circumstances this can actually threaten the roof over someone’s head. A mortgage protection insurance UK policy can help guard against this risk and provide peace of mind when the economy enters stormy waters.
This type of cover is also known as mortgage payment protection insurance, sometimes simply shortened to MPPI. It is designed to help someone keep up with their payments if their income is lost through no fault of their own. This will normally mean losing wages due to suffering an injury in an accident, becoming ill, or being made redundant involuntarily. Some insurers will also cover people if they happen to have to leave work to become someone’s full-time career.
Companies are available who provide mortgage protection insurance UK wide and they will step in and help someone with a lump sum each month towards their repayments after they make a successful claim. The money will simply arrive into someone’s bank account and will be tax free. The first payment will not normally arrive until around one month, or up to 90 days, after a successful claim, but some companies will backdate the payments to the very first day someone was without their income.
The money will not only help towards repayments but other costs like home and contents insurance. It can also be used for things like council tax payments, the interest on the mortgage loan, utility bills, and even to buy regular household groceries.
Mortgage protection insurance is not the same as mortgage life protection, which is a completely different product and is designed to pay off someone’s mortgage in full should they die unexpectedly before they pay it off themselves.
Once they begin, an insurer’s payouts will continue for a set period which will often be from 12 to 24 months, or until someone gets back on their feet and can pay the instalments themselves.. How much someone gets each month depends on the level of cover they choose and this will normally be a percentage of their normal income - perhaps 75 per cent.
A mortgage protection insurance UK policy can be bought not just from large high street lenders but also from standalone independent cover providers like the ethical British Insurance, which can save someone up to 40 per cent on their mortgage protection premium.
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