If you want peace of mind that you would not be at risk of losing your home to repossession then consider taking out mortgage payment protection. A policy would provide you with an income after so many days of unemployment or incapacity and would payout for a certain length of time which is set by the provider. You would not have the worry of falling into arrears with the mortgage and the lender taking you to court to seek possession of your home. You would be able to make a recovery or look around for work knowing that your mortgage payments were safe.
Lenders will not repossess at the drop of a hat, but they will as a last resort and if you cannot continue paying your mortgage while catching up on the arrears then repossession is a strong possibility. Repossession means losing your home and the memories built up in it. It also comes with stigma of eviction and of course your credit rating is in tatters, which makes borrowing again extremely hard in the future. One way of ensuring that you are not faced with this possibility if you lose your income is to keep up with the payments of the mortgage by taking out mortgage payment protection. Relying on any help from the State is not the best option. You would have to meet criteria set out and even then you would only receive help with the interest part of the mortgage. You could also expect to wait several months before you would see any benefit. If you were relying on savings as a way of keeping up with the mortgage then savings could soon deplete if you were to be unable to work or could not find work for many months.
Mortgage payment protection can be taken cheaply with a standalone provider. This is a better way to take out protection than having it included into the mortgage. High street lenders charge highly for their protection when adding it onto the mortgage at the time of borrowing. A standalone specialist will also provide you with all the information you need to ensure that a policy is right for you. You are able to choose the level of protection that is most suitable. You could insure against accident, sickness and unemployment together, accident and sickness as a standalone policy or just for unemployment. This will reflect on the cost of the cover as will your age and the amount you wish to protect of your mortgage repayment.
When your policy would begin paying out and for how long would depend on the provider. Some policies would provide you with an income tax-free after the 30th unemployment or incapacity date. Other providers could ask you defer from claiming until the 90th day and some could back pay to day one of you being made unemployed or of suffering accident and sickness. Once the term of the mortgage payment protection policy has been reached then the policy would expire regardless of whether you had found work or recovered and gone back to work.
Author Resource:-
Simon Burgess is Managing Director of the award-winning British Insurance (http://www.britishinsurance.com), a specialist provider of low cost income payment protection insurance (PPI), mortgage payment protection insurance (MPPI) and loan payment protection insurance.
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