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Mortgage Protection

Save £100s a year on insurance

Many homeowners' worst fear is missed mortgage payments, and ultimately repossession, which is why mortgage payment protection insurance can be an effective product.

Yet many people pay massively over the odds. This guide explains the basics of MPPI, asks whether you need cover and outlines some of the cheapest policies on the market.

Many homeowners' worst fear is missed mortgage payments, and repossession, which is why mortgage payment protection insurance can be effective.

This guide explains the basics of MPPI, asks whether you need cover and outlines some of the cheapest policies on the market.

Mortgage payment protection insurance: The basics

Long-term sickness, an accident which prevents you from working or redundancy can hit you hard in the pocket and put your home at risk. Mortgage payment protection insurance covers your monthly repayments if you can no longer make them.

Typical MPPI policies will cover mortgage payments for up to two years and will pay up to £2,000 a month or around 65% of your monthly income (whichever is lower), providing protection when you need it most.

Quick questions:

What are the different types of MPPI?

When does the policy pay out and how long do I have to wait before I can claim?

What are the typical MPPI exclusions?

What are the age and employment restrictions?

I am on benefits? Can I still get cover?

How long will a policy pay out for?

How easy is it to switch policies?

How much will I receive each month?

What if my insurer goes bust?

Do I need cover?

Before you shell out on MPPI make sure that the product is right for you and you need the protection that it offers. Your circumstances may mean that you may not need cover for accident, sickness and unemployment so consider your position carefully before you buy.

  1. You may get a large redundancy pay out

    If you will net a bumper a redundancy package you may not require MPPI cover but may need protection if you fall ill and can no longer work. However, even if you feel you are due a large payout, if this doesn’t happen statutory redundancy may be significantly less. The best approach is to work out how long your redundancy pay, and any savings, will last taking into account the cost of your other household costs such as food and energy.

  2. You may get help from the Government

    MPPI may be unnecessary if you are entitled to help from the Government with your mortgage. Personal details, such as the size of your mortgage, your savings and the chance of your house being repossessed, will affect what you are able to claim. However, the most the government will pay is your interest. MPPI covers your full repayment and associated costs. For more information on Government help you check out Gov.uk.

  3. You may get substantial sick pay

    Some employees, usually in the public sector, receive generous pay if they have an accident at work or long-term sickness strikes. If you are likely to receive a favourable amount of sick pay, an MPPI policy which only covers redundancy might be the best option.

  4. You may be already covered

    Many other policies cover similar circumstances; the most common is permanent health insurance which pays out a proportion of your salary if illness prevents work but does not cover unemployment. It is usually more expensive, but it pays out for a longer period of time and can be used in conjunction with unemployment-only MPPI. It may also be the case that your work provides you with some form of cover, so check.

MPPI: Best buys

MPPI is not a simple product so unless you understand the finer points back to front seek advice. An independent mortgage broker or an IFA may be able to help (which could increase costs) but avoid talking to your bank or lender as they will try and sell you their own, usually expensive, policy.

I am under 50

Below are the best rates for a policyholder aged 30, with a mortgage of £1,000 earning £26,500 (the average UK salary).

I am over 50

Below are the best rates for a policyholder aged 50, with a mortgage of £1,000 earning £26,500 (the average UK salary).