What is mortgage protection insurance?
Mortgage payment protection insurance (MPPI) covers the cost of your mortgage each month should you lose your job or become unwell. Many policies will pay out for a maximum of a year.
Frequently asked questions
Why might I need mortgage insurance?
Mortgage repayments are one of the largest bills people face, taking around 18% of combined household income each month, or 24% if you live in London. With that in mind it’s important to think about how you’d continue to pay your mortgage if you or your partner lost your source of income.
If it would be difficult, or if you’re self employed and therefore not eligible for sickness or redundancy pay, then mortgage protection insurance, also called mortgage payment protection insurance, might be for you.
How does mortgage protection insurance work?
If you’re unable to work, mortgage payment protection insurance or MPPI can pay you a certain amount each month. This can be enough to cover your mortgage, or you can choose a policy that will pay out 125% of your mortgage costs to cover other bills too. The payouts can last for up to two years, although some policies offer cover for six or 12 months.
Mortgage protection insurance can cover you for the following reasons:
- accident and sickness
- accident, sickness and unemployment
The type of mortgage protection cover you choose will depend on your personal situation.
How much will mortgage protection cost?
That depends on a variety of factors including how much your mortgage repayments are, your age and the type of policy you want.
You can choose a policy that’s based on your mortgage amount or on your salary.
Can I claim on my mortgage protection insurance straight away?
No. There will be an exclusion period before which you can’t claim on your insurance. These periods are longer with with mortgage insurance that covers you for unemployment – this is to stop people taking out insurance when they know they’re going to be made redundant.
There also will be an agreed waiting period, between the time you became unable to work and the time your payouts start. This sometimes called a deferred period, and will usually last between one and six months. You might want to choose a deferred period based on when your sick pay from your employer ends.
You can choose cover that will pay back the payments you made during the deferred period. This is called back to day one cover but is expensive.
Does everyone with a mortgage need mortgage protection insurance?
Not necessarily. If you know you’re likely to get a large redundancy payout, or if your employer’s sick pay is very generous, you may not need it. You may also be covered under your health insurance policy, if you have one, so check first.
You also may not need mortgage cover if you’re eligible for government benefits that will help you pay your mortgage – but be aware that these Support for Mortgage Interest (SMI) benefits only pay the interest on your mortgage and depending on your circumstances there can be a delay of 39 weeks before the first payment is made. They are also a loan that you will need to pay back when you sell your home.
How can I compare mortgage protection insurance?
It’s easy with our comparison service. Just fill in a few details about yourself and whether you’re interested in mortgage cover for unemployment only, accident and sickness, or accident, sickness and unemployment. It only takes a few minutes.
You’ll then see a page listing your quotes in price order, with the cheapest at the top. There are also different tabs you can select to see the different kinds of cover and how much they would cost.
Can I talk to someone about MPPI?
Yes. Our friendly advisers at Assured Futures are just at the end of the phone. Call Freephone 0808 141 1332.
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