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What is mortgage insurance and why do you need it?

Apr 1, 2022 | Insurance

What is mortgage insurance and why do you need it?

Mortgage insurance, or Mortgage Payment Protection Insurance, covers your mortgage payments in the event of illness, injury, or involuntary unemployment.

Mortgage insurance (Mortgage Payment Protection Insurance) is also commonly known as ASU (accident, sickness, & unemployment) cover.

No-one plans an accident, no-one plans sickness (other than the occasional teenager!), and by definition no-one plans involuntary redundancy. But they happen. If the last two years have taught us anything it’s that anything can happen. Many people have been made redundant, many people struggled, and many more spent sleepless nights wishing they’d planned for more eventualities. The reality is that you can’t legislate for all outcomes, but securing the roof over your head is a good starting point.

It’s important to note that, as with any insurance, there are no ‘catch all’ policies. We recommend that when taking out mortgage insurance (MPPI) you take professional advice and always read the small print, particularly when it comes to Covid-19.

The confusing bit for some customers is overlapping policies. It’s possible that you may have adequate accident or sickness cover from your employer or via another policy. If that’s the case you may just want the unemployment element of a mortgage payment protection insurance policy.

We don’t expect our customers to know off-hand their cover arrangements but we strongly recommend reviewing your cover regularly. A cup of coffee and 30 minutes looking through your (carefully filed?) documents every 6 months should see you right.

There is also provision available for those who rent their home.

Mortgage Payment Protection Insurance & PPI

The eagle-eyed amongst you will have noticed a similarity between MPPI and PPI. It’s important to highlight the difference between the two. Despite falling under the same umbrella as PPI, MPPI is a different product.

The main difference between MPPI & PPI is that PPI is paid directly to whomever you’ve borrowed from. Whereas MPPI is paid directly to you, the policy holder.

Both PPI and MPPI have had restrictions placed on them to ensure that the recent mis-selling scandal does not happen again. This monitoring allows you to be confident about purchasing Mortgage Payment Protection Insurance.

Why should I have mortgage insurance?

It’s always difficult to justify speculative expenditure. Monthly premiums on ‘what-ifs’ can seem like a real drain. However, having a few in place to cover the most important elements of life is always sensible. A modest premium suddenly becomes worth its weight in gold should it become required. If you’re at all unsure we would always recommend you speak to an advisor.

Get in touch!

We’re here to advise you on the most appropriate cover for your circumstances by taking an holistic and practical approach to your needs and budget. Get in touch with one of our advisors today.

By Peter Edmonds

Lauren JonesLauren Jones
08:56 03 May 23
We have used Lucie to help us with our mortgage on 3 properties now...and she is wonderful! We wouldn't ever want to... use anyone else and we would recommend to anyone.She is incredible knowledgeable and goes above and beyond to make sure were getting the best possible options.Thankyou again Lucie!xxread more
leo nepomucenoleo nepomuceno
10:26 02 May 23
Thank you is not enough to describe how grateful we are to Lucie Hart for helping us to get our mortgage in our first... home. You’ve been so nice and very helpful through the entire process. CFS is highly recommended.read more
Tomasz NikielTomasz Nikiel
19:31 15 Mar 23
Peter and Ian have helped arranging mortgages for me for many years. I cannot recommend their services enough. They are... always there to answer all questions as soon as possible, professional and friendly, ready to help in any situation no matter how complex. I always receive sound advice and best product possible. Arranging a mortgage with CFS is quick and stress free, they are absolutely brilliant!Thank you!read more
Katie TaylorKatie Taylor
20:30 01 Mar 23
I cannot recommend Central Financial Services enough. Peter and Ian have advised my husband and I on our finances for... over 8 years and they never let us down. Ian is very efficient and highly experienced too. Peter is professional and personable. I have previously recommended Central Financial Services to family, as well as friends, who have all had the exact same, seamless, efficient and excellent service and results.read more
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