Owning your own home is a dream for most people in the UK, but clearly losing it to repossession is not. However, if you fail to pay your mortgage, for whatever reason, your bank will choose to repossess your home to recoup their loss.
Unfortunately, in today’s uncertain economic climate, being unable to pay your mortgage is a very real threat. With food, fuel and utilities always on the up, lots of homeowners are discovering that the cost of living is increasing beyond their annual wage rise. Add to that the threat of redundancy and long-term unemployment and you are looking at several very good reasons to invest in mortgage protection.
There are two types of mortgage protection cover, but mortgage payment protection insurance, also known as MPPI, is what you should be looking at if you are seeking cover for illness, injury or unemployment. Other mortgage protection will only cover you in the event of your death, paying out to ensure your partner or dependant has the ability to pay off the mortgage and live in the family home.
MPPI: the basic facts
You do not have to take out an MPPI policy under normal circumstances, although it can be a prerequisite for some mortgage providers. You will be able to find this out when your mortgage is set up.
MPPI is viewed by some people as an extra unnecessary expense at a time when, having just taken out a mortgage, they can ill afford to embark on extra outgoings. However, for these people who have stretched themselves financially, mortgage payment protection insurance is actually all the more important. This may be viewed as a double-edged sword by some out-of-pocket homeowners.
When does it pay out?
MPPI usually pays out for a period of one or two years, starting one month after your employment ends. If you find employment during this time, your policy will not pay out.
The best sort of MPPI policy will pay out for any bills, repayments and interest related to your mortgage in the event that you can’t work. However, you should check your policy’s details on this issue.
If you think MPPI is for you, consider the cost of the policy as part of your monthly outgoings before you make the leap. It might also be wise to consult an expert in the field to guide you through the nuances of each individual policy.
John Golding wrote this blog about Mortgage Life Insurance Quotes on behalf of Life Broker.