Momay's Blog

Having the money to be able to continue paying your mortgage month after month is imperative. Get behind on the repayments and you are at serious risk of losing the roof over your head as the lender will take you to court. You could lose your income and not be able to pay your mortgage if for instance you lost your job to unemployment. Redundancies happen and it could happen to you with little warning. The same applies to illness or having an accident. Mortgage protection insurance would safeguard against all three eventualities.

Often when taking on a mortgage the lender will try to get you to take out mortgage protection insurance. However this is not entirely due to the fact that they are looking out for your best interests, but rather that it brings them in around £4 billion in profits each year. Protection for your loan is notoriously expensive when taking it this way and you do not have to take it alongside the borrowing. You are able to shop around and find a policy much cheaper if you look with an independent payment protection specialist. This is also the way to get access to all the information needed to be able to determine if cover is suitable.

There has been a lot of controversy regarding payment protection products since an investigation into the sector began in 2005 after the Citizens Advice began an investigation into the sector. The Financial Services Authority also conducted an investigation and this led to firms receiving fines, which included a mortgage firm. It is important for consumers to realise that payment protection products are not at fault but it those who sell them without giving out advice that are to blame. If you have access to the key facts and exclusions so you can check them against your circumstances then you can have a policy that you can rely on.

With a specialist payment protection provider you are able to choose the amount of protection you wish to take out. If you need protection against accident, sickness and unemployment only then you can take just this. However you might just want to insure against unemployment only or accident and sickness only. This will go towards determining how much you pay for the premiums along with how much cover you need and your age. If you take out age based mortgage payment protection then even those who have pushed their outgoings to the limit can afford to protect their mortgage repayments.

You do have to compare the terms and conditions of any mortgage protection insurance policy you are considering taking out as this will tell you when the cover would begin and when it would end. Some providers will offer a policy that could payout after unemployment or incapacity of just 30 days. Others could ask that you wait for as long as the 90th day. Sometimes providers will payout for a period of 12 months and others might continue providing you with benefit for up to 24 months.

You have to look carefully at any mortgage payment insurance you are considering taking out before you choose which provider to take out your cover with. All policies differ in when they start, stop and in the exclusions which you have to check against your circumstances. Some providers will also offer protection that will be back dated to day one of you being made unemployed or of becoming incapacitated. Checking the terms of the cover is essential to know what the policy entails.

Shopping with and buying your mortgage payment insurance from someone who specialises in payment protection is the best way to get all of the information needed. It is also the best way to make sure you get the cheapest premiums possible. While you could have the cover added onto the borrowing when taking out the loan this is often the dearest option for taking out cover for your mortgage. In some cases it can boost up the borrowing considerably. A specialist on the other hand would give you a quote based on age, amount of protection and level of protection you want.

In some cases you could make savings of as much as 40% on the cost of your policy. Mortgage protection is essential as it provides you with an income which is tax-free after so many days of losing your own income to such as redundancy or accident and illness. Usually the provider will state payout commences from between days 30 and 90, so checking before taking out the protection is essential. Some policies will run for as long as 24 months while others will provide you with an income each month for 12 months. All policies only run for the time stated in the terms and they then cease but usually you have plenty of time to find work or to make a recovery.

If you were to get behind on your mortgage repayment then you could end up losing your home. While all lenders will do their best to try to come to an agreement for you to catch up on what you owe while maintaining your mortgage sometimes it is not possible. In cases such as this they will have no choice but to take you to court to seek repossession of your home. All of this can be avoided simply by paying out a small premium each month for mortgage payment insurance. Providing you have ensured that the exclusions would not stop you from claiming then you have a viable back up plan. Relying on money you have saved is not a great form of protection because you do not know how long you would have to rely on them. The same would go for any redundancy money you had and this would stop you from claiming with from the State. If you wanted to claim State benefit you would have to meet many requirements and even if you could claim you would only get help with the interest part of the mortgage repayment and only up to a certain amount.