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Mortgage Protection Insurance Protects Your Home From Repossession

Sep 8, 2008
Repossession is a huge worry to any homeowner and it can and does happen and sometimes this is a result of either being made redundant or losing your income to accident and sickness. In cases such as this repossession might have been avoided if the homeowner had taken out mortgage protection insurance. A policy would provide you with the income needed for you to be able to meet the repayments each month without a struggle. You would not have to make changes to your lifestyle and cut down on other things in order to be able to keep up with your mortgage.

Mortgage cover is offered when taking out the mortgage with the lender. However in the majority of cases this is often the dearest option for protecting the repayments. A far cheaper solution comes by way of standalone specialist providers. Such providers offer premiums based on your age when applying and the amount that you wish to cover, this is your mortgage payment. All providers will allow you to insure up to a certain amount each month and this is the sum paid to you as a tax-free income. You are able to tailor mortgage protection for your needs. You could take out cover for accident, sickness and unemployment together, unemployment only or incapacity only.

When the mortgage is due you then carry on paying it as you would normally do and this stops you from getting into mortgage arrears. Lenders will have no option but to take you to court and apply for repossession of your home if you fall into arrears. This of course will lead to eviction if the judge believes that you are unable to keep up with the payments and also repay the arrears. Your policy of course stops any of this happening.

When buying mortgage protection insurance from a standalone provider, the policy will differ slightly with each provider. Some may offer protection that would begin to payout after 30 days of you being unemployed or of being incapacitated. Other providers might ask you wait for a period of up to 90 days and then you are able to put in the claim. Cover will last for so long once it has started to payout; providers usually offer either 12 or 24 monthly payments before the policy ends. During this time you would be able to concentrate on finding work or making a recovery.

Mortgage protection insurance earned itself a bad name along with all payment protection products when an investigation began into the sector in 2005. Fines were handed out by the Financial Services Authority which included a mortgage firm who had mis-sold cover. High street lenders give inadequate information which led to consumers taking out cover that they could not possibly hope to claim against. Cover also came at high cost which boosted up loans and mortgages considerably. Consumers should be aware that the products when sold with the correct information regarding the exclusions can and does work as it is supposed too. Ethical providers will ensure that they provide you with the information you need to check suitability before buying.
About the Author
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of mortgage protection insurance .
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