Mortgage Insurance, Could you afford to pay your mortgage if you lost your job or were too ill or injured to work? Most of us would struggle – especially because so many of us are now taking out super-size mortgages to cope with today’s high house prices.
Worries about the future are one reason why mortgage insurance is suddenly back in fashion. The insurance promises to pay our mortgages for us if the worst happens, and demand for policies is rising fast now that interest rates and unemployment are both on the way back up.
If you take out the right policy you pay a fixed monthly premium and can relax knowing your insurance company will hand over enough cash for you to meet your mortgage repayments – and possibly a little extra as well – if you ever need to claim. Ben Stafford, head of policy at the Association of Mortgage Intermediaries, is a big fan of the insurance and says the plans make a huge difference to homeowners’ lives when money is tight. But while the idea behind these policies is sound, Stafford and a host of other experts agree that borrowers do need to choose their plans with care.
If you pick the best mortgage insurance policy then your monthly premiums will be relatively modest and your peace of mind can be secure. If you pick badly you can end up paying far more than you need for a policy that might let you down when you need it most.
Research has found that many people are very confused as to where they are able or allowed to obtain building insurance for their home.
Millions of people think they must purchase this insurance from their mortgage provider.
Almost half of those surveyed said they had building insurance with their mortgage lender and only 28% of them thought they had been offered a good deal.
Around one in five people thought that it was compulsory to purchase buildings insurance from their lender with 13% saying it was easy with an immediate quote another 7% did not bother to look around.
The survey also found that most borrowers only get one quote before purchasing insurance with only a few getting two quotes.
There are some very good home insurance deals on the market for those who can be bothered to search for them.
Neil Simpson is a former Personal Finance Journalist of the Year and writes regularly on pensions, property, insurance and investment issues for the Mail on Sunday, City AM newspaper and many other publications.
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