Mortgage Protection – 4 steps to properly protect your mortgage.
Let’s analyse the most important types of insurance available on the market that should be considered by all UK property owners as well as those planning to buy.
1. Home Insurance
Buildings Insurance is usually a requirement for every mortgage and protects the house structure (i.e. such as walls, roofs, floors) and permanent fixtures (e.g. fitted kitchens or bathroom suites). Policies usually cover damage caused by floods, earthquakes, fires, theft or vandalism. It also includes damage caused by falling trees, motor vehicles, and burst pipes.
Insurance can also be extended to include your household personal possessions and furnishings, i.e. Contents Insurance, which additionally protects your belongings, e.g. furniture, household appliances and electronics, clothes and other valuables at home.
2. Income Protection
The last thing anyone would like to avoid are problems with paying the mortgage payments and the subsequent loss of property. Without a doubt, a mortgage is one of your biggest life commitments. Both in terms of the amount of money borrowed, but also the repayment time. It is not difficult to imagine what could happen if, as a result of an accident or illness, you would be unable to work for several months or longer. Savings can run out quickly, and even if you are not able to work you will still need to repay your mortgage.
Here, the key form of securing the mortgage repayment, as well as other regular expenses and living costs, will be the Income Protection policy, commonly known as Permanent Health Insurance. It guarantees monthly, private benefit payments when you cannot work and earn money due to an illness or an accident. As a minimum, choose a monthly benefit at the level of your mortgage repayment.
3. Mortgage Life Insurance
It is a policy that secures the repayment of the mortgage at the time of death of one of the borrowers. This type of insurance is relatively cheap, but undoubtedly very important, because it can often keep a roof over your family’s head in a situation where you pass away.
Depending on the type of loan, decreasing or level insurance policies are available.
The insurance can also be extended with an additional option for critical illness that will help you pay off your loan completely or partially if you were diagnosed with a serious illness such as cancer or stroke.
4. A good adviser is a treasure.
Unfortunately, no loan has a built-in automatic repayment function when someone falls ill, has an accident or dies, so it is very important to have the right insurance to help you in all kinds of unexpected situations. Your lender will always be reliably secured, because if you have a problem with repaying the mortgage, it can take over your property and get the money back. However, you have to think of Plan B yourself, which is why it is quite important to seek the advice of an experienced adviser before the final decision to buy insurance.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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