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Insurance and Finance > Mortgage Payment Protection

A mortgage is a big commitment, and typically it will have funded the largest purchase that you are likely to make during your lifetime. Once a mortgage is in place, keeping up with the repayments is paramount – failure to do so could result in the house being repossessed by the lender. This is of course a worst-case scenario, however it does happen to many people each and every year in the UK.

When taking out a mortgage, it is often a stipulation by the lender that buildings insurance is put in place to cover the property, and most people will also choose to add contents insurance for peace of mind. Having these two insurances in place is indeed a good idea, after all, the house is an expensive asset, and it contains a lot of expensive possessions. Looked at in this context, payment protection insurance makes a lot of sense – if you are going to protect against the loss of your house due to fire or flood, why leave it exposed to the risk of you loosing your income?

The basic premise behind mortgage payment protection cover is that should the insured person loose their income, and so be unable to meet the mortgage repayments, the policy will pay out to cover the repayments for a certain period of time. The number of months for which the payments would be covered is determined by the policy, and will vary depending on the person’s needs and how much the policy costs.

There are many reasons why such cover would be needed, being fired or made redundant is a risk for most people in employment. Finding a new job takes the average person six to eight months – many people with a mortgage would lack the necessary savings to cover the repayments themselves for such an amount of time.

Illness and accident can also lead to a loss of earnings, and in many cases this can be for a prolonged period of time. Mortgage payment protection insurance can ensure that the house is not at risk, while the person concentrates on making a full recovery.