The Biggest Concern For Mortgage Protection Insurance

OK, now you have a beautiful new home and with it comes a new mortgage. With an average mortgage in advance which stands at around £ 150,000 it is a long-term commitment to pay back a lot of money. Reimbursement also take a fair chunk of your monthly income. What can go wrong with the financial arrangements and protect you can value your bets with risk? After all, you have a family to protect. Most people would identify five anxiety, all which boil down to your ability to maintain mortgage payments:
[-] Interest rates may increase and make monthly payments unaffordable
[-] You may loose your job
[-] You may have to take time off work through illness or accident
[-] You may permanently unable to work through accident or serious illness
[-] You may die before the mortgage is paid.

The financial industry is filled with people who are quite crafty so it will come as no surprise to learn that there are financial products to help with each of these risks. If you want to reduce the risk of interest rates to a level unaffordable, you should have discussed these things with your mortgage Adviser. He would then have been telling you about "fixed" and "limited" interest rate mortgage. As its name implies, a fixed rate mortgage to fix the interest rate you pay the mortgage, while with "limited", the lender agrees not to raise your interest rate exceeds the agreed level. Both types of mortgage revert to the standard variable rate after the period fixed or capped off that is usually after three or five years, depending on your lender.

Fixed rate mortgage is now a very popular accounting 55% new advances and there are some excellent deals around. Capped rate mortgage is usually set at the beginning of limited on a fixed rate corresponding to available but the rate you pay is lower than the fixed rate. In this context your interest rate risk can be effectively controlled. After the expiration of protection you always have the option to re-mortgage and find other rates covered agreement. There is never any guarantees at a rate which will be provided but the mortgage market is very competitive, especially for re-mortgages, and offer special rates. It is really a matter of knowing who the lender with the approach. When the time comes you will also be advised to ask the mortgage broker to find the most appropriate choice.
Worried about paying your mortgage if you loose your job? Then you need mortgage payment protection insurance but as basic, this insurance really know only designed to cover redundancy. If you resigned or was fired for gross misconduct you are not covered. Cost? Online, you can expect to pay around £ 2.45 per £ 100 of monthly mortgage payment the policy began to pay 30 days after you have been made redundant and will pay up to 12 months. You sure you have the insurance offered by your company bank or mortgage but watch out, the premium will be possible two or three times higher for similar protection.

Mortgage payment Protection policy can also be extended to cover the third concern area, you loose your income through illness or accident. But before you rush into this insurance you should ask your employer how longs they will continue to pay you if you have been out of work. Remember, you only need to insure for a period after your employer stop paying. Later, you will receive the statutory sickness pay, but chances are you will need income for the general cost of living. The cost of this insurance? Well, online it will cost around £ 2.45 per £ 100 of monthly mortgage payment the policy starts paying after 30 days, however, if you combine unemployment, sickness and accident cover for all to one policy you can now gets a combined insurance for around £ 3.95 per month. The important point to remember is that this policy will only pay for a period of 12 months. That leads to an area of the fourth concerns.

How you will pay your mortgage if you are unable to work again through a serious accident or critical illness? In this context, it is important to appreciate the reality of risk. The insurance industry estimates that one in five men and one in six women suffer a critical illness before normal retirement age. Just think what a heart attack at 40 financial means to your family, especially if you have a mortgage with a lot of years still to run. For most people insurance is a must.
The best option is to manage the insurance really repays the outstanding mortgage if you cannot continue to work. That is at least get rid of one large concern. Insurance you need is called critical illness insurance cover but make sure "missing-total and permanent disability" are also available. This makes sure that your mortgage will be repaid if you will be able to crash. You can buy critical illness insurance with "reducing coverage" where the size of returns is reduced as the years go on. This is ideal if you have a repayment mortgage to pay where you will mortgage back little by little every month. Reduce the protection is also the least expensive form of insurance.

If you have an interest only mortgage, the situation was different because the amount that you owe your lender, remained constant. You sure you do not want to cover for reduced-so here you need critical illness insurance with "level of protection". With all this insurance, there is always a touch of to watch out for. With critical illness insurance you always need to survive for a minimum period as a result of an accident or diagnosis of a critical illness. If you do, not this policy will not pay. With insurance companies that most survival period is 28 days although some have reduced this to 14 days.
That led to what happens if you die. Most lenders insist on mortgage life insurance to repay the loan in one lump sum. However, you really do not need it if you are single and live alone. In this situation, if you are going to die, your estate will only pay your mortgage by selling the property. For others, the mortgage life insurance is a form of the most commonly held mortgage protection. Again it comes in the format of "reducing coverage" for those who are paying off the mortgage and the format of the "level of protection" to repay interest only mortgage. This insurance is not cheap but there are ways to reduce the cost significantly. Buy a mortgage payment protection policy that includes combining unemployment, disease and accident. Sometimes this is called "unemployment and disability" cover. This will saves about 20%. Cheapest way to buy critical illness and life insurance mortgage are yet to buy a policy mix. Here it is difficult to be precise about the cost savings will be calculated strictly on your personal details and medical records but you certainly can expect to save 20-25%.
A final Bit of advice is shopping around for insurance. Building society or bank you will be really happy to manage it but you will pay on the pound. The Internet is by far the most expensive way to buy all this insurance, especially if you use one of the discounting broker. You will find this broker if you search under "life insurance", "cheap insurance", "life insurance quotes" or "mortgage protection insurance". The Internet is full of competition, so it is normal for the broker to cut commissions and pass on the savings to you through lower premiums. There are other aspects that you need to consider such as whether to buy a policy with a guaranteed premium or premium reviewable. So you are best advised to talk matters with a life insurance adviser. Ten minutes on the phone with an advisor that can saves you a lot more and prevent a lot of heartache. Successful, healthy, happy and also insured.