If you are a homeowner with a mortgage to pay, then if you haven’t got it already, mortgage payment insurance is certainly something you may wish to consider. You may just think that it is another added and unnecessary expense to add to your list of household commitments, but it can, in times of financial distress such as unemployment or incapacity, literally save the roof over your head.

Mortgage payment protection insurance – to give its full title, or MPPI for short – helps you to maintain your mortgage repayments in the event that you lose your income though no fault of your own. By this it means such things as involuntary redundancy; recovering from an accident or a prolonged illness, all things that could see you without an income.

How does mortgage payment insurance work?

If you have this form of payment protection insurance, should you lose your job to involuntary redundancy or become unable to work due to illness, the policy will pay you a monthly tax free benefit that can be used towards maintaining your monthly mortgage repayments as well as other mortgage related costs such as home insurance.

The benefit will usually kick in anywhere from 30 to 90 days after the covered event happens, subject to the individual policy’s terms and conditions. Some providers will allow you to claim just 30 days after you become unable to work and will back date your claim to the first day of incapacity or unemployment, meaning that you get the full benefit of the cover.

You will then continue to receive this benefit typically for up to 12-24 months, again, depending on the individual policy terms and conditions – or when you get back to work, whichever happens sooner.

How much can I claim?

The amount of benefit you will receive will be agreed at the time of taking out the insurance and will be subject to the provider’s own limits, but you can typically insure around 75% of your gross monthly earned income (or up to £3,000). The insured amount will include your monthly mortgage repayment as well as insurance premiums for things such as home, life and critical illness insurance. Some insurers will also allow you to include an amount to cover other household related expenses such as utilities and council tax.

Of course, as when buying any type of financial product, it is important that you fully understand what the insurance entails, so never just skip over the terms and conditions – make sure that the protection offers you the cover you need. This includes the ‘exclusions’ section too of the policy. Do check that you would be eligible to claim on your mortgage payment insurance policy as things like a pre-existing medical condition, or being a part time worker, or retired, would generally be excluded from the cover.

Shop around

One final point to note is that you are free to shop around for your mortgage payment cover. Despite what your mortgage lender may imply, you do not have to take their policy at the time of arranging your mortgage. And if you already have an existing policy, you can switch to another provider.

Do some homework when looking for your insurance, particularly focusing on the independent providers of the product who are, historically, cheaper than their high street counterparts. Mortgage payment insurance can be an invaluable product to have, but you should not have to pay over the odds for it in order to get the peace of mind it gives.

Sean Horton is a Director of Enhanced Wealth who offer competitive mortgage insurance cover for mortgage repayment insurance and mortgage payment insurance

With 2008 becoming the year of the ‘credit crunch’ and literally hundreds of thousands of people in the UK subsequently losing their jobs to redundancy, mortgage unemployment insurance is something that anyone who has a mortgage must have least considered.

And even in times when the economy is stable, redundancy is still a very real threat, so the idea of still being able to continue maintaining your mortgage repayments, even though you have lost your income due to involuntary redundancy, is invaluable. And, quite simply, this is what mortgage unemployment insurance does.

Should you be made unemployed through no fault of your own (and this does not mean should you get fired or dismissed due to misconduct or you elect to take voluntary redundancy) then the mortgage unemployment insurance – also known as mortgage payment protection insurance, or MPPI – will start to pay a tax free benefit. This monthly benefit can be used towards meeting your mortgage commitment every month as well as related costs such as life, critical illness and home insurance premiums, up to a provider’s set limits.

By having this benefit, you will be able to still service your mortgage debt and not worry about getting in to arrears or even, in the worst case scenario, having your home repossessed. At a stressful time, having at least some of the financial worry taken away will mean you can focus on getting alternative employment and not be under pressure worrying how to pay your mortgage.

A typical mortgage unemployment insurance policy will start to provide an income from 30 to 90 days after you are made unemployed. This varies on the individual policy terms and conditions, as does the length of time you can receive the benefits (which can be for up to 12 to 24 months, or when you find new employment, whichever is the sooner).

How much you receive will have been agreed at the time you took out the mortgage payment protection insurance cover and this will be reflected in the premiums you will pay which will be x amount for every £100 worth of protection you require. By shopping around for your mortgage payment cover, you can often find it an affordable price, particularly among the independent brokers.

Also, for an additional fee, you can add on accident and sickness cover to the policy (that is why you may sometimes hear it called by the term Accident, Sickness and Unemployment Insurance – or ASU for short). That means that should you lose your income due to involuntary unemployment or due to recovering from an accident or a prolonged illness, the policy will start to pay out the benefit to give you financial assistance at a difficult time.

When choosing your mortgage unemployment insurance, do check that the terms and conditions very carefully, especially for any exclusions which would render the insurance useless. Typical exclusions will include the policyholder being in part time employment or of retirement age. If you are unsure as to whether you would be eligible to claim on your insurance, speak to your broker.

Sean Horton is a Director of Enhanced Wealth who offer competitive mortgage insurance cover for mortgage repayment insurance and mortgage unemployment insurance

Anyone who has a mortgage will no doubt have worried how they would manage financially in the event that they lost their income due to involuntary redundancy or incapacity (ie accident or sickness). It is a frightening thought that with just a few missed payments you could face going Court and even having your home repossessed. The good news is that you can protect your ability to maintain your mortgage repayments in the event of financial distress caused by one of these events, by taking out a mortgage repayment insurance policy.

Mortgage payment protection insurance – or MPPI for short – is an innovative insurance that protects homeowners against the financial fallout of losing their income due to no fault of their own. Should you need to make a claim on your policy, then you will start to receive a tax free benefit anywhere from one to three months after the event, depending on the policy you buy.

Some providers will offer the additional benefit of you being able to back date your claim to the first day of unemployment or incapacity, meaning that you do not lose out financially whatsoever.

This mortgage insurance payment will continue to run for one to two years’ (again, depending on the individual terms of the policy) or until you are back to work, whichever event happens sooner. This means that at a difficult time you can focus on your recovery or looking for a new job, rather than worry about having your home repossessed.

However, if you are feeling the pinch financially already, you may think that mortgage repayment insurance is something that you simply cannot afford, however much you think it is a good idea. But, by shopping around for the cover, you can get a deal that suits your budget, with cover starting from just a few pounds every month for every £100 worth of cover required.

Certainly, by buying your mortgage protection insurance from your mortgage lender, you could find that the cost is prohibitive. Independent brokers however can often offer cover at a much reduced price, without any loss of policy features and benefits, so never just accept the first quote for cover that you are given – look around at whom else is offering the cover as you can often make quite substantial savings on the cost of the premiums.

Another consideration when looking at buying mortgage repayment insurance is to check your eligibility for the product. As with all insurance cover, there will be some exclusions within the policy terms and conditions, typically people who are part time workers or are retired, and those with a pre-existing medical condition, so make sure that meet all the eligibility criteria before you sign up for cover.

Chosen wisely, mortgage repayment insurance can be a financial lifeline that will help you to maintain your mortgage repayments at a time when you have no income. It will make any worries about repossession literally melt away, leaving you free to find alternative employment or to recover.

Sean Horton is a Director of Enhanced Wealth who offer competitive mortgage insurance cover for mortgage repayment insurance.