Need for Mortgage Insurance

by nash a

Published on 3/23/06

Article views: 919

If you are living in a country like UK mortgage insurance is extremely important to protect your self from getting into ever increasing debt. In case you are not able to make the mortgage payments on account of various reasons like unemployment due to ill health or old age etc, having the Mortgage Payment Protection Insurance or mortgage insurance really helps.

Earlier, the government used to pay the interest on the mortgage if you were unemployed. In the UK mortgage insurance was recommended by the government to the home owners. For millions of people in UK mortgage insurance is now becoming an essential part of their financial planning.

In UK mortgage insurance was brought into the market as a substitute to government help. The intention is to cover the mortgage payments in case of non-ability of the insured to make the monthly mortgage payments. Just like any other policy, the insurer has to pay a monthly premium depending upon the mortgage amount. In case of unemployment, the mortgage insurance company will make the payments on your behalf. There a many mortgage insurance policies available in the market. Many UK mortgage companies provide you with mortgage insurance. If you want to go for a mortgage insurance of your choice, then you can approach another mortgage insurance broker independently.

Choosing the right mortgage insurance

There are many mortgage insurance policies available in the market. Choose the one that suits your needs and requirements perfectly. A mortgage insurance policy that covers a wide range of circumstances for accepting claims should ideally be picked. The mortgage insurance companies offer all kinds of covers like life insurance, handicap, ailment and severe illness.

The mortgage insurance policy should be carefully scrutinized. Read the fine print and understand the terms and conditions of the policy properly. There can be various conditions and clauses under which the mortgage insurance company is not liable to pay. Majority of the mortgage insurance companies do not pay out in the initial three months. Even afterwards, most of the mortgage insurance companies take around 60 days for a payout. So you will have to make arrangements for the mortgage payment during that period. Some UK mortgage insurance companies take around 90 to 120 days for a payout. Such mortgage insurance companies can be avoided.

The Premium

The premium for a mortgage insurance policy depends on the clauses and conditions it has. In the UK mortgage insurance quotes vary from £2.45 to £9 per £100 of the covered amount. The Association of British Insurers recommends a premium of £4.50 per £100 of the amount covered under the mortgage insurance. There are various deals and offers from the mortgage insurance companies all year around so you should do some research work before choosing a mortgage insurance policy.

Some mortgage companies offer a complimentary mortgage insurance policy along with the mortgage. Many people take the offer as they dont have to pay any premium during the initial period. Although it might be beneficial to some extent, it should not be the deciding factor for choosing a mortgage insurance policy.

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