Mortgage repayment cover
The purpose of MPPI is to indemnify borrowers for mortgage repayments if they enter into financial difficulty due to ill-health, an accident, or loss of employment. For a monthly fee – known as a premium – MPPI will provide a monthly sum for mortgage payments, thereby preventing the policy holder from falling behind. MPPI cover most commonly lasts for either 12 or 24 months.
Since MPPI covers you only for a certain period and it mightn’t always be the ideal cover for your circumstances. Many are better suited to what is known as ‘income protection’. Speak to an adviser or broker regarding what form of cover best accommodates your needs and circumstances.
On choosing a policy for MPPI, it’s your decision in choosing the amount paid monthly to cover your repayments.
The majority of MPPI services allow a top benefit of around £3,000, however your income can affected to maximum amount to which you are entitled. Be aware that some policies are not transferable, meaning you will not be able to apply an existing policy to a different mortgage.
A notable difficulty with MPPI is how the policies are underwritten. Whereas income protection is underwritten entirely on medical grounds, MPPI, for the most part, undertakes medical examinations only at point of claim. This means there’s no guarantee you will be insured for a pre-existing illness until you submit the claim itself.
A few words on MPPI waiting periods. This is how soon you’ll receive your payments following a claim application. Waiting times are generally anywhere between 30 and 180 days, depending on your own specific policy. It’s a good idea to ask your cover provider about waiting periods in order to make plans in covering repayments during that time.
A longer period between claim and payment, for the most part, means a less expensive policy. A good tip is to try and synchronise the end of the waiting period with the end of any employer sick pay to which you may be entitled. This way you can use your sick pay as a temporary means of repayment coverage until your MPPI kicks in.
Further information on mortgage cover is available from advisers and brokers. Always remember that you needn’t accept any offer given to you in the course of a consultation and that, although recommended to many, one needn’t take out any cover at all.
Work with an excellent broker or adviser, chose a mortgage that suits your needs, and read the small-print. Sign nothing until you’re completely satisfied, and reserve your right to walk, if you don’t like the talk. Get advice as soon as possible if your circumstances change. Know your stuff, know your rights, and know that with good preparation and insight you can look forward to a less stressful transition into your new home.