Mortgage Payment Protection Insurance – Helping Borrowers in Adverse Situations
Mortgage payment protection insurance (MPPI) is a concept catching fire in United Kingdom. It has started influencing the thought process of mortgage borrowers, who find themselves incapable of affording monthly mortgage repayments. With such good aspects, this type of insurance is ought to be expensive. However, you can always search for reasonable packages offered by various brokers in the field.
MPPI – The Elaborated Aspects
MPPI is helpful for individuals, who suddenly lose their employment due to unforeseen conditions like sickness and accidents. These circumstances enforce them to cut short the monthly mortgage repayment. On top of that, these individuals are handicapped to get any support from State, especially if they bought the mortgage after 1995. For home-owners, cost of interest levied on first £100,000 is only facilitated by the State. In such circumstances, MPPI becomes the last resort of people in distress.
Do You Really Need MPPI?
The fact could not be denied that MPPI policies are expensive and if you are not fully aware of the terms and conditions associated with them, you might unnecessarily desecrate your money in purchasing them.
- If you suddenly turned unemployed, check out for the benefits offered by your company. If you are eligible to get handsome amount for being efficient during the service, there is no need of buying these policies.
- In case of sickness or accident, if you company is ready to pay you a considerable proportion of your regular salary, there is no need of going for MPPI.
- MPPI policies have started extending their support to people running their own businesses, provided these businesses are about to face big disasters.
- If you have admirably saved during your service to bear the expenses of mortgage payments, MPPI is not worth considering.
- Finally, if you have already purchased a beneficial health policy or other, you actually don’t require spending upon MPPI.
Some Facts about MPPI
- MPPI policies start benefiting their owners after 30-60 days of mishaps, though many insurance providers can offer benefits from day one.
- MPPI policies aid only for first 12 months of the problem.
- The range of monthly payout is between £1,500 and £2,000.
- While switching from one policy to another, it is important to consider hidden aspects. So be careful in this direction!
- Though, the cost of MPPI policies doesn’t count factors like age, still you can find these policies varying on the basis of age group you belong to. Regardless the expensive nature of MPPI, a good internet research will help you to grab a policy at reasonable price.
By Nancy Dodds from Financemate.co.uk
Mortgage Payment Insurance – Can you afford to take a chance?
Ask yourself this question; if your earned income stopped for reasons beyond your control, lets say, redundancy, illness or accident, could you continue to keep up the repayments on your mortgage?
The economy is faltering, businesses are folding and more and more jobs are set to go. Could you be next?
A recent press report said that the numbers of company insolvencies are set to rise, so if your employer goes bust, the rather generous redundancy terms that have been paid to others, may not be available to you.
Up until fairly recently, many of the mortgage payment insurance policies sold were very widely worded, so that companies could avoid paying claims. They were was often mis-sold, innocently or fraudulently, and therefore turned out to be a total waste of money. The bad press has put people off a purchase that they really need.
Well, now, there is no need to worry, the authorities have acted and forced the industry to clean up its act. Mortgage Payment Policies now have to meet “benchmark” standards, which are the minimum standards that a mortgage payment insurance policy must achieve or exceed.
You can now buy a mortgage payment insurance policy in the confidence that it has not been deliberately worded widely to avoid paying a claim. These days you can avoid the” speed and surprise”, high pressure tactics used by some lenders in order to take you out of the market, to prevent you seeing what a good quality Mortgage Payment Policy can do for you in terms of benefits and value.
Half an hour on the internet will allow you to find an industry “bench marked” mortgage payment insurance policy at the right price and the benefits that you require.
Mortgage Protection Insurance through your Bank – Vote with your feet
The Banks have come in for a lot of flack in recent times and do you know; they do deserve it
Let’s look at the back catalogue shall we:
Irresponsible lending, leading to a collapse in the financial system
The unreasonable overdraft charges debacle
Failure to pass on B.O.E. rate cuts to customers
Removal of tracker rate products from the mortgage market
………and criticism over shoddy sales practices and price of Mortgage Payment Protection Insurance (MPPI) to their customers.
Well with MPPI you get the chance to vote with your feet!
Over 25% of mortgage payers have Mortgage Payment Protection Insurance; this cover pays your mortgage, at a time when you can’t; for example, involuntary unemployment or inability to work, due to sickness. This cover is a saviour to many at a time when the economy is in tatters and many, many jobs will go.
Now if you have Mortgage Payment Protection insurance; well, good move, you should be sleeping fairly soundly at night.
If you have MPPI and are being ripped off with the bank, would like to change, but are aware that if you do, you could be exposing yourself to the risk of the new policies 90 day initial exclusion period; there is some good news.
Some better quality Mortgage Payment Protection Insurance Policies, will, if you transfer from another insurer, give immediate cover, avoiding the initial exclusion issue.
Not all Mortgage Payment protection Policies, offer this facility, so it is very important to read the policy booklet carefully.
As always, best shop on the internet in a nice free non pressure environment.
Mortgage Payment Protection Insurance
During the term of any mortgage loan, the property is charged to the lender as security, meaning the lender has rights over your property. This is why we see the warning “your home is at risk if you do not pay your mortgage”
When things are going great in your life, job, relationship, health, it is human nature to feel somewhat invulnerable in terms of finances. Below are some figures, which might just get some alarm bells ringing:
- Every day in Britain, around 600 people in the UK become unemployed. In the current economy this figure is expected to grow rapidly.
- Each day around 100 families have their home repossessed, the major being financial problems associated with unemployment.
If you can’t pay your mortgage, get into arrears and can’t get the account in order fast enough, you could easily lose your home.
Many people pick up arrears, but don’t fall victim to repossession before they return to work, however succumb further down the road. This is because, either credit is not available due to adverse credit or where it is the cost is crippling; eventually creating a financial crisis.
Of course at this time, the limited state benefit of the interest being paid on the first £100,000 of your mortgage, after nine months is not available, because you are working. It simply appears to be a case of over commitment.
Well if your family home means as much to you as most people, you might well want to spend a little money on making sure that you do not become a statistic.
This can be achieved fairly easily, at the stroke of a pen, and for very little money; if you buy right. It’s called a Mortgage Payment Protection Insurance Policy, known as MPPI.
If you should suffer involuntary unemployment, which means that you lose your job through no fault of your own, a Mortgage Payment Protection Insurance Policy, will start to pay a monthly benefit to cover your mortgage, for up to 12 months or your earlier return to work; whichever is sooner. Some Mortgage Payment Protection policies will not only cover your monthly mortgage costs, but will also contribute to other costs associated with running your home. In addition, one of the other main causes of repossession, which is the loss of an income due to incapacity, due to accident or sickness can be built into the policy and covered quite cheaply.
Shopping for a Mortgage Payment Protection Insurance Policy could not be easier; two tips though:
Avoid the Banks or your existing lender, they love to overcharge.
Watch out for the price comparison websites; these are middle men and someone has to pay!
Best look on “Google yourself”
How to get the cheapest mortgage insurance
So you want to buy mortgage insurance but quite rightly also want to buy the cheapest mortgage insurance.
Buying cheap sometimes means that the quality is also lower. When buying mortgage insurance you want to ensure you get the best possible cover but at the lowest price. It is therefore important to compare the cover provided under several mortgage insurance policies before you look to the price.
Some of the dearest mortgage insurance policies, or mortgage payment protection insurance (MPPI), come from the banks, lenders and building societies. These organisations don’t have to compete for their business, they have a steady stream of new customers to sell mortgage insurance to. This invariably means that although the cover might be good, the cost tends to be high.
Buying an independent mortgage insurance policy should be your starting point. The companies that provide these need to have good quality morgage insurance cover at a competitive price.
If you look for an age related mortgage insurance policy you will find that younger lives get charged less than older lives. This could be good or bad depending on your age! Typically these policies will provide excellent premiums which are much lower than many other policies.
To ensure you get good cover look for a mortgage insurance policy which has a Defaqto 5 Star Rating. These policies have been vetted and only the really good ones get 5 stars.
What is Mortgage Payment Protection Insurance? (MPPI)
Mortgage Payment Protection Insurance or MPPI for short is a product designed to pay your monthly mortgage repayment, if you are unable to do so. It is an insurance product designed to keep the roof over your head, during a period when your earned income ceases, due to accident, sickness or redundancy.
An illness or redundancy can strike at any time and without warning. By having an MPPI policy in place you have increased peace of mind that should the worst happen you have some breathing space to get things back on track.
A typical MPPI policy will pay up to twelve months mortgage payments in the event of a valid claim, some with no deferred period, therefore offering you “back to day one cover”. Not all mortgage payment protection insurance policies offer back to day one day one cover so if this aspect is important to you then check the policy before buying. With back to day one cover you will generally need to be off work for 30 days, after this the insurance company will back date your initial payment to the first day of the claim. After this payments will be made monthly in arrears.
The mortgage insurance policy will pay, for up to 12 months or your earlier return to work; whichever is sooner. Some Mortgage Payment Protection policies will not only cover your monthly mortgage costs, but give you an extra percentage towards other household costs, for instance like life insurance or other mortgage related insurances.
The level of cover you can choose under these policies differs from each provider. Most will allow £1500 per month with some going as high as £3,000 per month. This figure includes the actual mortgage payment and any additional insurance policy premiums you want to protect against accident, sickness or unemployment.
It is estimated that 24% of mortgage payers have Mortgage Payment Protection Insurance, unfortunately sold heavily through their mortgage lenders. The lenders find these products an easy “bolt on” to the mortgage sale; well who wouldn’t purchase a product that good from a Bank or Building Society? Well if you are smart, you would not. The lenders like to sell these heavily commission loaded, generally inferior products at the point of sale, at a time when your mind is on other things.
People forget the golden rule; spend time shopping around before buying.
It gets worse though; the lenders get to make a packet from you on the sale of an overpriced the MPPI policy, whilst simultaneously reducing their exposure to risk. Why? They are involved in a clever cost containment exercise by selling you a policy to make sure that you do not go into arrears with them! Brilliant idea.
Don’t fall for it; get on the internet, and pick up a quality Mortgage Payment Protection Insurance for a good price from a respectable provider. There are some excellent MPPI policies to choose from with some having received a 5 star rating from Defaqto, this means they provide excellent cover at competitive costs.
