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Mortgage Payment Protection

Your mortgage is likely to be the largest and most important financial commitment that you will make and the roof over your head depends on you being able to keep up repayments on your mortgage. It’s never pleasant to think the worst, but think for a moment about what would happen if, for some reason, your mortgage repayments cannot be met.

Are you aware that if you are unable to work through unemployment, disability or illness, you may receive state help but the following restrictions apply:

If you are taking out a new mortgage or remortgage, you will not receive any help with your repayments for the first nine months of any unemployment or disability.
If your partner works for more than 16 hours a week, or you or your partner have more than £8,000 in savings, you will not receive any help with your repayments whilst you are off work through unemployment or disability.
The payment of state benefit only applies to mortgage interest and does not cover any capital repayments and associated mortgage costs such as life cover.
Any state benefit entitlement is limited to the first £100,000 of any amount that you borrow.

 

Mortgage protection is designed to help repay your mortgage if any events that you have chosen to cover yourself against happen during the benefit term. The following is an explanation of what can be covered under mortgage protection:

Mortgage Payment Protection Insurance

These policies are designed to pay out up to 125% of the monthly mortgage payment for a maximum period of 24 months on a single claim in the event of the policyholder being unable to work due to sickness, accident or redundancy. There is usually a deferred period, with the longer the deferred period, the lower the premium. “Back to day one” cover is also available which ensures that after the initial qualifying period, a full month’s instalment is paid out. The policyholder has the choice to take sickness and accident cover, redundancy cover or a combination of all three. Self employed applicants can obviously only claim on the redundancy cover if they are declared bankrupt. As a mortgage payment protection policy is designed to typically pay out for only 12 months in any one claim, in the event of long term sick, there are Income Protection policies available that offer deferred periods of up to 13 months (to takeover when the Mortgage Payment Protection Insurance finishes) and is designed to continue giving you an income if you are on sick for longer than 12 months. This will enable you to continue to make your mortgage payment until either, you return to work, your mortgage is repaid, the policy expires or you die.

Following a full financial factfind in which we will discuss your attitude to risk and key protection objectives as well as your budget, we can recommend the most appropriate policies for your particular circumstances. However, as your life continually changes, we will regularly review your requirements to ensure that the policies continue to meet your needs and update as necessary.