Use our UK Finance guide and learn by experience. We outline pitfalls so that you don't have to learn the hard way, as many of us often do.
Mortgage
Mortgage Protection
As the UK market get set for another housing boom, especially in the East of London City due to London winning the 2012 Olympic bid, there are some concerns I have that people are getting into a mortgage before they have thought it out thoroughly. Anybody who has a mortgage on their home will know that payments can sometimes be tough to meet. Making provision for when you might not be able to make your mortgage payment should be taken into consideration before you take out your initial mortgage.
If you are not able to make payments on your mortgage you will run the risk of having your home repossessed by your lender. One way of making sure you are covered for this actuality is to get Mortgage Protection, mortgage payment protection insurance (MMPI).
Mortgage Payment Protection Insurance (MMPI) is one in which you pay the mortgage lender a monthly amount to cover part of the loan, along with part of the interest on the loan.
Mortgage Payment Protection Insurance (MPPI) covers your mortgage payments in the event of your being unable to work due to an accident, sickness or unemployment, so it is also known as ASU.
While about 60 per cent of new mortgage borrowers take out Mortgage Payment Protection Insurance, only one-third of all borrowers have this insurance. This may simply be because the cover is not particularly cheap - many lenders charge around £5 per £100 of mortgage payment you wish to insure each month. But note that you may be able to find cheaper Mortgage Payment Protection Insurance if you shop around. And some mortgage deals come with free MPPI, either for six months or a year. Note that if you remortgage at any point and increase the size of your mortgage, you will also need to increase the level of Mortgage Payment Protection Insurance cover.
