A mortgage is likely to represent the most significant commitment you make in your life. The focus is on owning your home, but the mortgage payments, which have to be met each month, is the overriding factor that you need to consider when stepping on to the property ladder.

No one can predict what is going to happen in the future, so it is understandable many people are concerned about obtaining a mortgage. One change to your life could see you saddled with monthly payments that are suddenly out of reach. However, the desire to own property and make monthly payments towards holding a considerable asset is understandable.

Therefore, mortgage insurance is right for many people. You need to consider your own needs, the requirements of your mortgage lender, and of course, the range of mortgage options available to you. Buying a home is expensive. The up-front costs can be startling, and the monthly payments quickly become the most significant outlay of your life. However, adding insurance to your outgoings offers comfort and peace of mind, and it is easy to see why homeowners opt for mortgage insurance.

What insurance policies are available to protect a homeowner?

• Life insurance
• Critical illness cover
• Income protection insurance
• Building insurance

These are all significant insurance policies. Like all insurance policies, you hope never to use it, but if you do need insurance cover, having it is indispensable. Of course, it may be that specific mortgage insurance is your best solution.

What is mortgage insurance?

While general income protection insurance policies can be used to cover mortgage payments in the event of something happening to you, mortgage insurance provides specific coverage. This style of cover is sometimes called mortgage payment protection insurance, or MPPI, and this policy cover ensures you meet your monthly mortgage payments.

If you don’t require this cover, you may feel as though you waste money each month. However, if you were to experience tough times, knowing that your mortgage payments are covered provides you with comfort and peace of mind.

Financial pressure is one of the most significant strains people face, and mortgage difficulties can lead to health and relationship problems. Knowing that you have cover in the event of something terrible happening isn’t perfect, but it is considerably better than having no support or assistance in this situation.

Is mortgage insurance compulsory?

No. Lenders will ask you to have building insurance in place when you buy a home, but as of yet, mortgage insurance or even life insurance isn’t compulsory for mortgage holders. A lot of people decide to obtain this coverage, but this is a decision they make of their own accord, as opposed to being something that they are compelled to do.

Lenders will require you to get buildings cover, but you do not necessarily need to get life cover to ensure a payout is made if you were to die during the overall term. It may seem a good idea, but it is not compulsory in the UK.

What if I am made redundant? Being made redundant can be traumatic, and it can radically change a person or households’ lives. Some mortgage insurance policies provide 12 months cover if the holder is made redundant. These policies only cover involuntary redundancies and are not applicable if the insurance holder accepts a redundancy package.

The diversity in mortgage insurance options should ensure there is something for every mortgage holder. It is critical you consider your options and choose the coverage that best suits your needs. If you would like to discuss mortgage insurance, please contact Mortgage Simplicity.

If you are looking for guidance in arranging a mortgage, contact Mortgage Simplicity, and we will be more than happy to assist you.