For many, particularly those hit by ill health or redundancy during the recession, mortgage protection has been a blessing which prevented them from losing their mortgaged houses. For others, the mortgage protection policy is merely an extra monthly cost which, while providing a certain amount of peace of mind, does not really work out as a worthwhile option for the cost involved. Here are the top Do’s and Don’ts for mortgage protection which could help you make mortgage protection work for you.
DO: Widely Research and Plan
Before deciding whether you desire to opt for mortgage protection, you necessitate to know a little about your own finances, and what you might be required to ante up for a policy. Once you have sorted out a monthly budget for yourself, assuming inventory of your income and outgoings, as well as seeing how flexible those finances are and the size of the mortgage you will necessitate to get out, you can start to obtain an estimate of where you are financially and this can inform your decision on protection.
DON’T: Think You Have To Take Out Protection
You are not bound to take out protection. Although you may be strongly suggested to buy policy providers, the choice is completely up to you and you should not feel forced into reading up an offer. Remember, if you do opt for the protection, then you will be paying for the privilege every single month, whether or not you end up making a claim to help you with mortgage payments. An income protection policy may offer better cover for you.
DO: Shop around Yourself
Mortgage protection offers will change greatly from provider to provider, so you will likely be able to get a better deal than the inaugural offer, which is likely to be from your mortgage supplier. Policies will normally set you back £3-7 per £100 of monthly mortgage cover, so you might be paying over £50 a month for protection. You can compare policies online, which means less hassle going from place to place, and it could save you thousands in the long run.
DON’T: Confuse mortgage protection with mortgage life insurance
Some people think their protection will cover them in all different eventualities, but it won’t. For instance, Mortgage payment insurance and mortgage life insurance are two different things, and your mortgage protection will not support you in the case of the death of the breadwinner. However, some policies will allow you to add cover for extra things, such as bills, in cases where you may not be able to pay your mortgage.
DO: Read the small print
Your mortgage protection will have a number of important clauses you need to consider. For example, some policies will cover you for 12 months, another for 24. Also, you will not be covered if you take out the policy after finding out your job is at risk. There is also usually a ‘qualifying period’ of about three months before you can actually make a claim. Once you make a claim, there is usually a ‘deferred period’ before you get your first payment.