What Exactly Is Mortgage Protection Cover
Many housing loan lenders talk about mortgage protection cover and how home buyers can benefit from it. Just what is it exactly? It is an additional premium on a mortgage payment that seeks to cover monthly payments should the borrower be unable to do so due to illness, injury, or employment redundancy. This means that in case of an unfortunate event that the borrower is financially compromised and cannot make his monthly mortgage payment, he and his family is assured that their home will not be immediately repossessed or taken away from them.
Mortgage Protection Cover vs General Income protection
However, it is very important for home buyers to distinguish mortgage protection cover from various other types of insurance covers or additional premiums. For instance, mortgage life insurance is a different type of cover that would pay out a sum or cover a buyer’s mortgage in completion upon death or disability. Mortgage protection cover would only be limited in number of payouts, usually 12 to 24 months. It is designed only as a temporary measure until the borrower finds a new job, or gets back to good health. General income protection cover would be lengthier and probably permanent, such as in a critical illness cover, but applying for these is difficult due to the many health background checks and questions that need to be passed.
The Difference Between Mortgage Protection Cover And Mortgage Insurance
Mortgage protection cover is also different from mortgage insurance. The latter is more for the benefit of the lender in case the borrower is not able to continue payments anymore for one reason or another. The lender can recoup losses through an insured percentage of the value of the property. Also, mortgage insurance is usually required by lenders especially for homeowners who are not able to provide the usual 20 percent down payment. On the other hand, mortgage protection cover is not compulsory. It is purely up to the borrower to avail of this type of cover or not.
Given such a situation, a home buyer should think carefully and weigh the benefits of getting a mortgage protection cover. First of all, borrowers are absolutely not required to avail of a mortgage protection cover from their mortgage company or lender. If they do decide to avail of a protection cover, they can freely shop around for the best rates and coverage among various insurance companies that offer this cover.
There are also quite a number of circumstances that surround the validity of a mortgage protection cover that home buyers should be aware of before they may decide to get such a cover. For instance, the policy might not take effect if it is found out that there has been prior knowledge that a borrower would be at risk losing his or her job. Also, there is a holding period of around three months from when the policy is taken out when claims toward the protection cover could be made.
Whatever the situation a home buyer is in, it does pay to be prepared by way of additional insurance covers such as mortgage protection cover, but each individual borrower must still assess his or her specific financial needs and requirements.
Mortgage Protection Cover
If you have monthly mortgage repayments to make and are in full time employment the you should give some serious thought as to how you would continue to meet your mortgage repayments if you were to find yourself without an income after losing your job due to suffering from an illness, an accident or unemployment through no fault of your own. Providing you have checked the exclusions, then mortgage protection cover can be a very valuable product to have in your corner.
Mortgage protection cover can give you a replacement income with which to continue servicing your mortgage debt each month after a pre-defined period of time of being out of work. The time before the policy would begin varies depending on the provider, but as a general rule it is between one to three months’ after having been continually being out of work. Once started it would then continue to give you the income agreed at the time of taking out the policy which would be tax free and last for between 12 and 24 months depending on the mortgage protection cover provider – do check the terms and conditions of the policy as all differ.
While mortgage protection cover can be a very valuable product it has to be chosen wisely, if you take it out alongside your mortgage with the high street lender then it can cost a great deal and you could end up buying a product which you cannot claim against because high street lenders infamously give very little information at the time of selling the policy. If you want the security and peace of mind that mortgage protection cover can bring then shop with a standalone specialist provider for your mortgage protection cover. The specialist will only deal in payment protection products and as such can offer their experience in selling mortgage protection cover which in turn allows you to make an informed decision regarding suitability.
Mortgage protection cover along with the rest of the family of payment protection products has gained a bad reputation and faith in the product has been lost which has led to a decline in policies being sold and leaving many homeowners with no back up if they should lose their income. While it is true that the mortgage protection cover product has been mis-sold it can still help to keep the roof over your head and provide you with an income providing you have bought your policy sensibly. This means understanding that there are exclusions which can stop you from being eligible to claim under your mortgage protection cover . General reasons which could mean a policy isn’t in your best interests include if you only work part time, are of retirement age, or suffer an ongoing illness at the time of taking out the mortgage protection cover.
Mortgage protection cover can be hard to understand but hopefully when the Financial Services Authority introduce comparison charts in March 2008 it will open up the products and make them easier to understand. The charts will be based on a series of questions which will go towards determining which mortgage protection cover policy is suitable for your circumstances and will make sure the exclusions are highlighted along with giving the consumer the total cost of the cover. For now a specialist’s advice is the only way to determine if the mortgage protection cover product is suitable for your needs and is the best way to get the cheapest quotes for what could be a valuable lifeline.
Mortgage Protection Cover