What is Mortgage Protection?

Mortgage protection is a dedicated type of life insurance. It helps secure ownership of your home, by clearing your outstanding mortgage if you die within a specified period of time. You can also choose to add serious illness cover to your policy which means you will be covered for specified illnesses. If you have a joint mortgage both people need mortgage protection insurance. Mortgage protection insurance can help alleviate any financial burden that may fall on a family member if you are no longer around.

The cover runs for the same amount of time as your mortgage. By law your lender must ensure you have this cover in place when you are taking out a mortgage. However, lenders may make exceptions to this rule if:

  • You are buying an investment property
  • You have a life insurance policy already
  • You are over 50 years old

Exemptions are made on a case-by-case basis and even if you fall within one of the above exemptions, the lender may make it a condition of the mortgage that you have mortgage protection in place before they approve your mortgage.

Who is mortgage protection for?

Anyone taking out a mortgage is required by their lender to have mortgage protection in place. Many people take up a policy with their mortgage provider, but it’s always a good idea to shop around. We will always be able to offer you better value than your lender. Not only does this allow you to see the best premium available to you, but it ensures that you get the most suitable product for your needs.

How does mortgage protection work?

When you take out a mortgage, your provider will want to ensure that you have enough cover in place to guarantee you will be able to repay your loan. The cover will also protect your family in the event of your untimely death or diagnosis of a specified serious illness, leading to an inability to repay the mortgage. By paying a premium each month for a specified term, the policy will pay out a lump sum if the unexpected happens.

Book Now

Review your Public Sector Pension Benefits

Book a complimentary review with a financial advisor online. We calculate what your take home pay at retirement will be Review your pensions & investments Advise on best income protection, life insurance and AVCs
Book Now

Types of Mortgage Protection Insurance:

Reducing Term Cover

As you pay more off your mortgage, the amount that the policy covers reduces in line with the outstanding balance of your mortgage. Under normal circumstances the policy will end once the mortgage is paid off. It is the most common and the cheapest form of mortgage protection. Generally, your premium does not change, although the level of cover reduces.

Level Term Policy

The amount you are insured for and the premium you pay remains the same. This gives you the same amount of cover throughout the term of the mortgage. If you die before your mortgage is paid off, the insurance company will pay out the original insured amount. This will pay off the mortgage and any remaining balance will go to your estate.

Serious Illness

If you wish to, you can add serious illness cover to your mortgage protection policy. This means your mortgage will be cleared not only if you die, but also if you are diagnosed with, and recover from, a serious illness that is covered by your policy. This will be more expensive than other types of cover.

Life Insurance Policy

You can use an existing life insurance policy if it is not already pledged or assigned to cover another loan or mortgage and it provides enough cover. Additionally, if there is a balance remaining after the mortgage is clear, this will go to your estate. To learn more about life insurance click here

What happens to my policy if my mortgage changes?

If you are changing your mortgage there are a number of things to consider, depending on whether you are topping up your mortgage or switching.

Topping up your mortgage

If you are topping up your mortgage, you will need to make sure that your policy meets the new value of your mortgage. You could get a new mortgage protection policy for the total amount of your new mortgage, or just for the top-up amount. Compare the costs and benefits of both options. It may be cheaper to keep your original mortgage protection policy and then buy a second policy for the top-up amount. Check the cost of cancelling the original policy and replacing it with a policy for the full amount of your new mortgage.

Switching Your Mortgage

When switching your mortgage, you will assign your mortgage protection to the new lender. The premium and level of cover will be the same as before, if the amount you borrow, and the term of your mortgage does not change. If either the amount you borrow or the terms of the mortgage change, you may need to increase your mortgage protection cover to ensure that you are still fully protected. You may be able to increase the cover on your existing policy. If this is not possible and you need to take out a new policy. It may cost more as you are now older, and you may not get cover at all if you are not in good health.

What Does the Financial Planning Review Cover?

We review all your pensions and calculate what your retirement income will look like. Based on that analysis, we can recommend a course of action so you can maximise your benefits. Very few employees we talk to have entered full-time employment from day one and stayed with the same employer for their whole working life. Employees call us worried about old pensions, career breaks, job sharing, working abroad, etc. Things are never straightforward until we produce your free report. This is a fantastic no obligation review of your financial wellbeing.

We find that often employees do not fully understand all the fields on their payslip. This can lead to problems, such as not being on the right salary scale point for public sector employees, or not using all your tax breaks correctly.

Whether you need to protect you family’s future, mortgage or plan for inheritance taxes, it is key to have the right insurance policy for your needs. Furthermore, as part of the report, we will search the market for the best prices out there.

If you have more than 3-6 months pay in your bank account (your emergency fund), you are faced with questions how to use your money wisely. Should you increase your pension contributions, open a savings account for your children’s education, invest in bonds, etc.? The MadeSimple report makes these questions much easier to answer taking into account your tax position and financial objectives.

Step 1

You – Complete a short online application form

Step 2

We – Generate your personal report that outlines your current benefits.

Step 3

Together – We schedule a review online (we use Zoom, or a platform you may suggest) or over the phone to discuss what options are available to you.

Start Now! Book Your Review

After we complete the review, many employees are delighted to have their options regarding pension planning, salary protection, life protection, savings and investments explained to them so clearly. Not only that, but we can also set up policies for you all online in a very fast and efficient manner. 

Get your complimentary, personalised review today! You have nothing to lose!

No, you are free to seek advice and deal with whoever offers you the best value. We will always be able to offer you better value than your lender.

If you are able to pay off your mortgage early, then you generally have two options. You can cancel your mortgage protection cover and pay no more or keep the policy and continue paying until the original end date.

Mortgage protection insurance is just a special type of life insurance used by somebody who is taking out a mortgage to ensure if something happens to them their mortgage will be paid off.

Under the consumer credit act 1995, lenders are obliged to ensure that a life insurance policy is in place to cover the balance due on a mortgage in the event of the death of a borrower.