For most households, a mortgage is the largest debt they have. It is important that payments are protected if the income of the mortgage holder is reduced through being unable to work.
It is not pleasant think about worst case scenarios such as how you will manage to pay the mortgage if you cannot work because of illness or injury. Mortgage protection insurance gives you a degree of peace of mind that, should you lose your job, at least your home will not be at risk.
What about state benefits?
Some believe that the state will take care of them if they cannot work. However, state benefits are low and will not pay the mortgage. Residents of Wales and Scotland can obtain limited help towards mortgage payments, but the English Mortgage Rescue scheme has been cancelled. You can get some help towards the interest part of the repayments, but only after being out of work for 39 weeks and for mortgages up to £200,000.
Payments and timing
Most mortgage protection insurance policies pay out for up to one year, which is fine for most people as the majority of people off work from injury or sickness are usually back to work in under a year.
Many policies will start paying between 31 to 60 days after you stop work, though payments will often be backdated. You can also get polices that pay out from day one of unemployment.
If you have a policy where you need to wait for a few months before payments start and you cannot afford the mortgage repayments, then you should speak to your lender who may offer to temporarily reduce the payments.
Most insurance policies pay out a maximum amount per month, usually between £1,500 to £2,000.
What is covered?
The standard insurance protection cover is for illness and injury. Some policies will also cover redundancy but this may cost extra. If you employer has a generous redundancy payment scheme, then the redundancy cover may not be needed.
Other ways to protect your mortgage
As well as mortgage protection insurance, there are other ways to insure mortgage payments. Income protection insurance will pay a percentage of your regular salary if you become unemployed. Life insurance can provide money for your beneficiaries to pay the mortgage if you die, and critical illness cover is another option.
There are also insurance policies suitable for the self-employed who want to protect their mortgage payments.
How to buy mortgage protection insurance
The best way to buy mortgage protection insurance is through an insurance broker. At Ascot Mortgages, we can arrange mortgage protection insurance when you get a mortgage through us. If you already have a mortgage, you can still purchase mortgage protection using Ascot.
We are experts in matching a policy to an individual’s particular circumstances, and can usually provide a quote in minutes.
Contact Ascot Mortgages today to find out how income protection insurance can provide financial peace of mind for you and your loved ones.