Losing the income that you rely on to pay many outgoings is a devastating blow. However the consequences can be severe if you cannot keep up with the mortgage repayments and cannot make an agreement with the lender to repay. In cases such as this they have no option but to take you to court and seek repossession of your home. Already this year up to June there has been over 18,000 home repossessions and the Council of Mortgage Lenders estimate that this will raise to around 45,000 by the end of 2008. If you want to avoid becoming one of the statistics then you need to consider taking out mortgage cover in the UK against a loss of income.
A loss of income can come around as a result of unemployment caused by redundancy or it could be through such as becoming ill or suffering an accident that meant you were unable to work. You could choose to take out mortgage cover in the UK to safeguard all three eventualities. However, if unemployment cover only would suit you better that you could just choose this or you are able to take out protection for incapacity alone. This your age and the amount you want to protect of your mortgage are all taken into account when deciding how much you would pay in premiums.
With age based mortgage cover in the UK the younger generation are able to make some of the biggest savings. This means that protection is now affordable to them as a great many younger first time homebuyers are on extremely tight budgets. The amount that you choose to protect, all providers will allow you to insure up to so much, is the sum of income that you would claim each month.
Different providers will set different start and end dates for the policy. This is the amount of days that you have to stand before putting in your claim. With some it could be 30 days, others might state you have to stand to as long as the 90th day of incapacity or unemployment before claiming. There are some providers that could backdate the payment of the policy to the first day of becoming unemployed or of being incapacitated. Mortgage payment protection only pays for a certain amount of time and then it ends. You are usually able to buy protection that would pay 12 monthly payment or 24 monthly payments.
Mortgage cover in the UK is a much more viable option than relying on savings in the bank. You might have to rely on them for many months before finding work again or recovering from your illness or accident. If you are relying on receiving help from the State then again you could be in for a shock. You would have to be eligible to claim income support and not have savings which are over a certain amount. You must also not have a partner living in the home who is working full time. The downside even if you are eligible for benefits is that you would not get help with all of the mortgage repayment. You would only be entitled to get help towards the interest on the mortgage not the capitol.
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of mortgage cover UK. |
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