Vanmark Financial Services

Mortgage Protection

Mortgage Protection

What is mortgage protection and do I need it?

Mortgage protection insurance acts a safety net to cover your monthly mortgage repayments if you can no longer afford them due to a range of circumstances. It can prevent you from having to default on your mortgage, and so avoid repossession of your home.

But is this type of protection right for you, or are there better options available? We are all overwhelmed by the number of advertisements offering cheap insurance with so much choice we understand the most cost-effective solution to protecting the things you care about is to explore all the options available. Vanmark Financial Services has access to all the products in the marketplace and importantly a comprehensive understanding of all the benefits so can provide a tailored cost effective solution.

A young man wondering what mortgage protection is

What is mortgage protection insurance?

Mortgage protection insurance is a type of plan that helps to pay your monthly mortgage repayments if you can’t work due to illness, a serious injury or redundancy. Sometimes it’s called mortgage payment protection insurance (MPPI).

After you’ve been out of work for a specified waiting period (generally between 30 to 60 days), your insurance will pay you a set amount each month. You may be able to get cover for your bills, too, which usually means the provider will pay 125 per cent of your mortgage. However, there is usually an exclusion period, again between 30 to 60 days, that you need to have the policy in place for before you can claim. Furthermore, you’ll only receive payments for up 12 months or two years, depending on the policy.

A woman wondering if there are different types of mortgage protection

What are the different types of mortgage protection insurance?

There are three main types of mortgage protection insurance, which cover different circumstances:

Unemployment policies only pay out if you can’t work due to redundancy.

Accident and sickness policies will cover you if you can’t work because you’ve become seriously ill or had an injury.

Combined policies also exist that cover for both unemployment and accident/sickness.

Some providers will cover self-employed people, let us investigate the options on your behalf .

A man deciding if he needs mortgage protection

Do I need mortgage protection insurance?

Mortgage protection insurance isn’t compulsory, but you should think very carefully about how you will keep up mortgage repayments if you find yourself out of work for a while. You might choose to do this using mortgage protection insurance, or with some other method.

Several alternatives exist that that cover more than just your mortgage and may provide better overall protection and value for you, depending on your circumstances. These are:

Income protection
Critical illness cover
Life insurance

Mortgage protection from the Vanmark Financial Services
A lovely countryside estate in need of mortgage protection

Income protection vs mortgage protection

Income protection is far more comprehensive than mortgage protection. It covers a portion of your salary, rather than just your monthly mortgage payments, and it usually pays you for longer than the MPPI limit of two years. Your policy may even cover you until you go back to work or retire. The trade-off, of course, is the higher cost of the premiums. But it can be invaluable especially for people in high-risk jobs.

A large estate in need of mortgage protection

Critical illness cover vs mortgage protection

Critical illness will pay you a lump sum if you get a serious illness that stops you from working. It is usually offered alongside life insurance. A vast array of illnesses are covered, although it won’t cover you for an injury or redundancy.

A countryside house in need of mortgage protection

Life insurance vs mortgage protection

If you have a joint mortgage, your lender may require you to take out life insurance. It pays out a lump sum or instalments if you die, so the person sharing the mortgage with you and other dependents can cope financially. This type of life insurance is usually known as ‘decreasing’, because your cover and premiums go down as your outstanding loan shrinks.

Life insurance isn’t designed to replace mortgage protection insurance because it won’t cover you for unemployment or redundancy. You might like to explore a combination of both life insurance and either mortgage protection or income protection to cover every scenario.

How do I choose mortgage protection insurance?

The best way to find the right kind of protection for your mortgage repayments is to ask your Vanmark Financial Services. We can also help you access more providers, so can find cheaper policies or more comprehensive, tailored insurance.

Like other income protection policies, your mortgage protection policy may not cover you for pre-existing conditions, especially if you have been unwell in the past year. You may need a medical assessment if you’ve had any health problems.

Let us protect you and your family
A father on a beach holding his wife and children, thinking he needs mortgage protection.

Family protection

If you’ve got kids, there are some simple steps you can take to help protect them

Here are some things to consider when protecting your family.

It’s understandable why people prefer to avoid awkward topics of conversation, but if we can’t talk about something, it’s impossible to plan for. To get started, pick a time and place when you won’t be disturbed and discuss things with your partner and/or immediate family.

Once you start seeing making these plans as an unavoidable part of life planning, it becomes less of an emotional and more of a practical task.

A Vanmark legal professional helping with a will

Make a will

The foundation of any good financial plan is a legal Will.

One of the best ways of doing this is to make a will, where you can also say what you’d like to happen to your money, property, and possessions when you die (otherwise known as your ‘estate’).

If you die without a will, the law decides who gets what, and it may not be the people you’d have wanted. A will can also help reduce the amount of inheritance tax that may be payable on the value of the money and property you leave behind – potentially leaving more for your family.

Wills, trusts and Lasting Power of Attorney are not regulated by the FCA so please visit our specialist website for more information.

Another way to help protect your children (and give yourself some peace of mind) is to consider a life insurance policy.

In the same way that home insurance covers your property, life insurance covers you, and pays out if you die while you have the plan. This means that if the worst happens, your family could use the money to pay for everyday bills and expenses – helping them to maintain the lifestyle they currently have.

Explore the cover you may ideally need by using our simple protection calculator.

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