The Concept of Mortgage Insurance
The Mortgage insurance is also known as Mortgage Payment Protection Insurance (MPPI). It helps paying one’s monthly mortgage payments that one is unable to pay due to sickness, accident or unemployment. It provides protection for a specified period. Unlike income protection insurance, a self employed is eligible for MPPI.

How MPPI Works?
An MPPI starts paying the mortgage payments for a specified period if one becomes unable to do so. However, there are periods of exclusions when one is not under the coverage of this protection. MPPI will not cover any claims arising out of certain pre-existing diseases or an impending unemployment or even an unemployment caused due to misconduct.

Also, for the first 60 days from the date of taking out the policy shall not be covered for protection. Also, if you are rendered unemployed then a waiting period of 2 months is observed before the MPPI starts paying on one’s behalf. So this implies that one must save up to 2 month’s repayments even if one has the cover of MPPI.

How to Buy?
All lenders will be offering MPPI. It may sometimes be a part of the mortgage package. If one is seeking a new mortgage then one has the liberty to choose from the lender, intermediary or even private mortgage players. Before buying one has to make sure that the cover meets all the needs of the borrower.

How to Claim under MPPI?
Though a detailed claiming process will be specified in the mortgage insurance document still almost all MPPIs require filling a form along with submission of proofs to support the claim.

Before one asks for the claims from MPPI in the situation of a sickness, accident or unemployment, one needs to check out whether the cover provided by individual sickness policy or accident policy is sufficient or not.

MPPI gains its importance from the fact that all mortgage loans are taken against the security offered as collateral. If one fails to honor these repayments, the asset shall be lost forever. Rather than taking the risk with one’s asset, it is wiser to opt for MPPI.

By Nancy Dodds of Financemate.co.uk

©2010 Mortgage Insurance. All Rights Reserved.

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”

©2010 Mortgage Insurance. All Rights Reserved.

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.

©2010 Mortgage Insurance. All Rights Reserved.

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.

©2010 Mortgage Insurance. All Rights Reserved.

You may find that when you take out a mortgage, your lender automatically offers you MPPI. Sometimes they try to give you the impression that it’s obligatory. But don’t let yourself be bullied into taking out their policy unless you are sure it’s the best one. You can often get a better deal by shopping around.

Maybe you feel you don’t want to do this. Taking out a mortgage can be a lengthy, exhausting and time-consuming experience. It’s incredibly tempting to grab the policy the lender offers you, rather than start another lengthy process. Especially if you don’t really know what you’re looking for.

However you could really save money by shopping around. Of course you want to find the lowest premium – but premium levels are not the only factor. Here are some pointers to help you know what else to look out for.

• Unlike most other forms of insurance, mortgage protection insurance policies usually ignore age, health, smoking/non-smoking etc. Just a few give reduced rates for younger age-groups – under 30 or under 40 – so if this applies to you, it’s worth checking this out.
• When will it pay out? Most mortgage protection insurance policies don’t start paying out till a month, or sometimes two months, after the problem (accident, redundancy, or whatever) starts. Now there are a few that backdate the payments to day 1, so you may prefer to choose one of those.
• What is the payout term? Most mortgage protection insurance policies limit their payout term – usually to 12 months. They reckon that most people will have found another job, recovered from their illness, or obtained state benefit by then. But this doesn’t always happen. Try to find one that will pay out for as long as possible – at least two years.
• What is the maximum payout level? Some mortgage protection insurance policies put a ceiling on the amount of their monthly payment during the payout period. If you have a bigger mortgage, or if interest rates have risen, this amount might not be enough to cover your repayments. Try to find out what the repayment policies are.

Sometimes it can be quite difficult to find out exactly what the payment policies are on different mortgage protection insurance policies. It’s worth consulting a broker to make sure you find the best possible deal.

©2010 Mortgage Insurance. All Rights Reserved.