Mortgage Protection Insurance - The Essentials
It's tempting to sit back and relax once you've moved into your
new home - but hang on, have you made sure that you're insured
against all the risks that could stop you from paying your
mortgage? Many things could go wrong and make it impossible for
you to work, and in this article we go through each risk, and
assess how important it is that you take that into account. If
you are responsible for a family, then it is particularly
important that you take heed of the following five issues:
What happens if interest rates increase and you can no longer
afford your monthly repayments
What if you get made redundant
What happens if you become ill or have an accident and you can't
go to work
What if you have a serious accident or become critically ill,
and you can never go back to work
What if you die and your family is left to cope with the
outstanding mortgage
These are all questions that new homeowners have to ask, and
find answers to. The good news is, the insurance industry have
it covered, and there are policies out there that can provide
peace of mind against all these possibilities.
On the subject of rising interest rates, you are unfortunate if
you end up in the position where you can't afford the
repayments, because there are mortgages that help protect you
from this. The fixed rate mortgage sets a rate for an agreed
period of time in which your interest rate remains the same
irrespective of the Bank of England base rate. A capped mortgage
allows your payments to fluctuate, but there will be an agreed
rate at which the interest rate that you pay will be capped.
Capped mortgages protect you for an average of 3-5 years, and
then, as with the fixed rate mortgage, it will revert to the
standard variable rate.
55% of all new mortgages are fixed rate deals, so they are by
far the most popular type of mortgage. The capped mortgage is
less popular because it still retains an element of risk, and
they can be more expensive at the outset, which deters a lot of
potential customers. At the end of the protected period, for
both types of mortgage, you can choose to re-mortgage with
another company without paying any penalties. It's a good idea
to keep your eye on the available offers as the end of the
protected period approaches, because there are likely to better
deals out there. The market is so competitive that new offers
are always arising, and they are particularly focused on
attracting re-mortgaging customers. Ask a mortgage broker to see
what else is out there, as they have all the latest information
to hand. You don't have to commit yourself to anything.
If you want to insure yourself against the possibility of losing
your job, then you need Mortgage Payment Protection Insurance.
However it's important to be aware that this type of insurance
is designed to protect those that are made redundant, not those
that resign or are dismissed. We found quotes on the Internet
for around