Protecting Your Home

  Mortgage Services -> Protecting Your Home

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Whatever your circumstances may be in the future, you are responsible for keeping up the repayments on your mortgage.  You should carefully consider what protection you require to ensure that you can always meet your mortgage commitments.

 

Think carefully whether you need the following protection.

 

Life Insurance

The lender may insist that all individuals involved in the loan take sufficient life cover to repay the whole mortgage, and it is vital that this life cover is taken and kept in force throughout the mortgage term. Even if it is not compulsory, you should think about whether you would want your mortgage repaid in the event of death.  This is particularly important to consider if you are a joint borrower or have dependents.

 

Critical Illness Cover

In conjunction with or instead of life cover you can ensure that you mortgage is repaid wholly or in part should you contract a serious illness, such as a heart attack or cancer.  In these cases you could survive the illness but not be well enough to work.  The amount of cover you arrange can be set to repay the mortgage whilst you are ill, whilst you are recovering and even more. Providers vary in the comprehensiveness of the cover and the diseases covered so it is worthwhile taking advice on what policies to take out.

 

Accident and Sickness

To protect yourself in the event of long-term illness, it is recommended that consideration is given to correct and adequate Permanent Health Insurance (PHI) or accident and sickness insurance.  PHI policies usually have a term until your selected retirement age and cover can normally be arranged up to 50-60% of salary, with deferment periods to suit your employer’s benefits. Accident and sickness policies will usually cover the mortgage payments.

 

Any income received from these arrangements may be taken into account by the DSS when they calculate your entitlement to income support benefits for mortgage payments. 

 

Unemployment 

Periods of unemployment may affect your ability to meet your mortgage repayments, which will put your home at risk. Such a possibility should therefore be considered when taking on mortgage commitments and adequate insurance arranged.

 

Policies can be arranged to cover the possibility of unemployment and for the amount of the mortgage.  Alternatively, the cover can be linked to an accident and sickness policy.

 

Buildings and Contents

It is a requirement that buildings insurance is arranged to cover the cost of rebuilding a property.  The valuation will establish the rebuilding cost.  It could be a condition of the loan that the lender provides the buildings insurance, if so you will be advised accordingly, alternatively you can make other arrangements although your lender will need confirmation that cover is in place.

 

Contents insurance can be added to buildings insurance policy or arranged separately. Cover may be tailored to your individual requirements and include additional cover such as damage caused by accidents.  

 

Your home may be repossessed if you do not keep up repayments on your mortgage.