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Mortgage Insurance Provides a Replacement Income if You Lose Your Own

Jun 28, 2008
Mortgage insurance is a versatile payment protection product that would provide an income allowing you to cover your mortgage repayments. You are able to take cover for a fixed sum each month and if you should lose your own income you would be able to fall back on your policy.

The cost of mortgage payment protection depends on the provider and it is essential to shop around with independent providers if you want the cheapest premiums. Usually when taking out a mortgage the lender will ask if you want to add cover onto the loan. While the lender might have been able to get you a great deal on your mortgage with the cheapest rates of interest, this does not mean that you will be given the best deal on protection for the borrowing. Far from it, usually high street lenders charge way over the odds for payment protection which brings in around 4 billion every year in profits. A far better way to take out protection is to take it with someone who specialises in payment protection.

Standalone providers will give you a quote for the protection which is based on the amount of your mortgage repayments you wish to protect. Also your age will be taken into account and the level of protection that you need. You can choose to take out mortgage cover as accident, sickness and unemployment insurance but you might not need full cover. You could just want to protect against being unemployed through no reason of your own. You might also just want to take out protection against accident and sickness. Age based mortgage insurance is great for the younger first time buyer who often stretch their budget to the maximum. The younger you are the cheaper you can get your mortgage protection.

It is essential to check the conditions of the policy as they differ with providers. You could find a provider offering a policy that would cover you for a maximum of 12 months. However some providers will extend this for up to 24 months. You also have to wait a period of time before the provider will begin to pay on your policy. Some will ask that you are out of work due to unemployment, accident or sickness for 30 continuous days, while others will ask you to wait a period of up to 90 days.

Mortgage insurance would provide a great deal of peace of mind with the tax-free income you would receive. This would allow you to concentrate on getting fit and well or it would allow you to search around and find another job. You would not have to apply for State benefits and wait many months to see any money, even if you were entitled to benefit. Any benefit you would receive from the State would only payout towards the interest part of the mortgage and then only up to a certain amount. Those homeowners who rely solely on savings could also be making a mistake. Savings would only last for so long and then they would run dry. If you were out of work due to an accident or illness then you would not know when you would be able to go back. You could be relying on your savings for many months. Mortgage payment protection also needs to be checked against your circumstances but you will know in an instance if it is suitable if you go with a payment protection specialist.
About the Author
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of mortgage insurance .
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