Mortgage protection – is yours right for you?
With an increasing number of UK residents becoming unsure of their financial futures there has never been a better time to assess whether you have the right type of mortgage protection insurance.
One of the most frightening effects of the recession is the growth in unemployment and the fear of losing one’s home as a result of the household’s reduced income.
Mortgage protection insurance is an important way of guaranteeing that this disaster doesn’t happen to your family. Anyone who has a mortgage is supposed to have insurance in place. Currently in the UK 67% of us are owner-occupiers, according the government’s Department for Communities and Local Government.
Obviously this statistic is not comprised solely of mortgage holders but the vast majority of homeowners do have a mortgage.
Many in the South West are aware of the vast number of buy to let properties in the region but with the onset of the recession people in financial difficulty have found it harder to let the properties and even harder to sell them.
One couple near Sidmouth even featured their property on the BBC’s ‘Escape to the Country’ in a bid to sell their house. The housing market is extremely tough at the moment and anyone who flies in the face of the lenders’ rules and doesn’t have mortgage protection in place could be courting catastrophe.
This type of insurance will cover the mortgage repayments thereby allowing anyone who is experiencing a change in their financial circumstances the opportunity to make their regular repayments without adding this burden to the stress of unemployment.
The range of these policies is large and the terms and conditions as well as the premium prices do vary. Some of the policies will also cover existing buildings and contents insurance, others will protect the mortgage should the policyholder have a serious accident and be unable to work for some time.
Some policies also provide protection for the self-employed, as long as you can demonstrate to the insurer that your earnings are sufficient to cover any future premiums. Of course, this isn’t always possible but if the mortgage provider has approved you then so should an insurer.
It is important to let the insurer know if there are any structural problems with the house. Insurers hate subsidence so if the property has been underpinned in the past you must let them know so your buildings insurance can continue to be put in place.
If you feel that you may have difficulty in meeting your premiums, inform the insurance company sooner rather than later. Even though the insurance industry has been designed around the concept of the unexpected it really doesn’t like any surprises with its payments.
Given that to most homeowners the house is the most important asset they posses, eviction or repossession would be a complete tragedy for all. Mortgage protection insurance is probably one of the most important policies to obtain – helping to safeguard against this.