Should I Protect My Mortgage?

As protection brokers, we have seen first-hand how important it is for homeowners to protect their mortgage. It is a vital safety net and provides excellent peace of mind. However, the type of protection you choose depends on your unique circumstances. In this article we will look into what to consider protecting, the different types of cover available, how much it might cost, and the key information you need to make an application.

So, what Is Mortgage Protection?

Mortgage protection is an insurance policy designed to cover your mortgage repayments if unexpected events (illness, injury, or death)occur. It provides peace of mind, knowing that your home is safe, even in the most challenging times.

Why Should You Consider Mortgage Protection?

Protecting your mortgage ensures your home remains secure no matter what life throws at you. It keeps your family financially stable if your income is lost or disrupted and knowing your mortgage is covered can be an invaluable comfort during uncertain times.

Types of Mortgage Protection

There are several types of mortgage protection policies,each designed to meet different needs:

Life Insurance pays out a lump sum that can be used to clear some/all of your outstanding mortgage balance if you pass away during the policy term, providing your family with financial relief in a difficult time. This is the most basic policy available and should be the minimum level of protection you effect.

Income Protection Insurance replaces a portion of your income if you’re unable to work due to longer term illness or injury. This ensures your mortgage payments and living costs are covered after any other benefits cease. Typically considered by those that are self-employed or who have little or no sick pay arrangements through work.

Critical Illness Cover pays a lump sum if you’re diagnosed with and survive a serious illness covered by the policy. This can help with mortgage payments or other expenses during recovery and provides peace of mind at a particularly difficult time.

Family Income Benefit provides a regular, tax-free income to your family if you pass away during the policy term. It ensures your loved ones have ongoing financial support to meet living costs, maintain their previous lifestyle and can also cover mortgage payments if you still have them. Parents generally consider this to help until the children become independent.

What to Consider Before Choosing a Policy

When choosing a policy, consider these key factors:

First, assess your financial situation. If you have savings or other safety nets, how long could you manage your mortgage payments without income? Next, evaluate your health and employment—do you work in a high-risk industry or have existing health conditions? Opt for policies tailored to your specific risks if you do.

Understand the policy’s features and exclusions. Pay close attention to what’s covered, waiting periods, pay out limits, and terms. Lastly, consider your budget and find a balance between affordability and the level of protection you need.

How Much Will It Cost?

The cost of mortgage protection varies based on factors like the type of policy, your age, health, mortgage size, and policy features. For example, basic life insurance might cost as little as £10-£20 per month, while critical illness or income protection policies can range from £30-£70 per month or more, depending on your individual circumstances.

Do You Need Mortgage Protection If You Have Savings?

Even with savings, mortgage protection can still be valuable. Savings can quickly deplete during extended periods of illness. A protection policy ensures continuous financial support, preserving your resources for other needs.

Final Thoughts

We strongly recommend making mortgage protection as part of your financial planning arrangements. It’s not just about safeguarding your home; it’s about securing your family’s future. Whether you’re a first-time buyer or a seasoned homeowner, there’s a policy to suit your needs.

If you’re unsure about which type of mortgage protection is right for you, we are here to help. We will have an initial conversation with you to assess your circumstances and explain the options available. We will then research the market to obtain the best terms for your requirements and ensure you have a solution to keep your home and family secure.