Cover Your Home With Mortgage Insurance

By Simon Lance Burgess

Protecting your mortgage repayments should be considered essential as failing to keep up with them could mean you would be evicted by the mortgage lender. Lenders do not put you out on the street without good reason and many will do everything in their power to come to an agreement with you so you are able to catch up on arrears. However if you cannot show that you have an income then you will not be able to show them you can repay. If you should become unemployed or incapacitated for any length of time then you are at serious risk of losing the roof over your head. Mortgage insurance is one way of ensuring that you would not have this risk.

Mortgage insurance can be taken when you take on the loan, it can also be shopped around for independently with someone who specialises in payment protection. Choosing to shop independently is the cheapest way to protect your repayments and in some cases you could save as much as 40% on the cost of a policy. Some providers will offer age based mortgage payment protection and this is where younger first time home buyers can make the most savings. The cost of the policy also takes into account how much you want to protect each month and the amount of cover you want. You might not need to take out cover for accident, sickness and unemployment together. You could just take out protection for unemployment only or you might want to cover yourself against incapacity only. Taking just the level of protection you want can help to keep down the cost of the policy.

There are many factors you have to take into account when looking into taking out protection. The first are the exclusions which are to be found in all payment protection policies. The amount that the provider will put in will vary and you need to check these against your current circumstances to be sure that you would be able to benefit. This is the only way of ensuring that you would have protection to fall back on.

You also need to check how many days of unemployment or incapacity you have to stand to before the policy would payout. The same applies to how long you would be able to benefit for. Some policies will continue to provide you with your income for up to 24 months. Others might payout for 12 months. Some providers will state that you need to wait for 30 days before putting in your claim, with others it could be up to 90 days.

A mortgage insurance policy is a much better plan to have than relying on savings. It could be many months worth of mortgage payments you would have to take out of your savings which means they could run out. It is also a better plan than relying on applying for benefits from the State. Any help you would be entitled to receive from the State would only be towards the cost of the interest part of your mortgage and only up to a certain amount.

Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of mortgage insurance.