Best Mortgage Deals
Advice, help, information and guidance on the best mortgage deals available

Best Mortgage Deals - Mortgage Protection

best mortgage deals by AnnaNow finally, before signing on the dotted line for what you feel is one of the  best mortgage deals available, you will have to decide whether to purchase mortgage protection - a very tough decision. Your mortgage will probably be one of the biggest financial decisions of your life, and in today's economic climate with soaring house prices, many people struggle just to meet the mortgage repayments each month, having extended themselves to the maximum just to afford the house. The idea of adding yet another financial burden to an already stretched budget is horrifying. So what are the policies available, should you consider them, and do they pay out when you need them most! - let me try to explain and then you must reach your own conclusions.

Best Mortgage Deals - Mortgage Insurance Explained

Mortgage insurance or protection is not mandatory - when you have agreed the terms of your mortgage deal with your lender, all they will insist on is buildings insurance. So the question you have to ask yourself is as follows: what if I died, was made redundant, long term sick, or was unable to work again? Unpleasant questions, but these things can, and do, happen. If you are the principle income provider in the household, then there is no fallback should something happen to you. The worst case is that the mortgage falls into arrears, and the house is re-possessed by the lender. Now having stretched yourself financially, the last thing you want is yet another monthly standing order from your current account, in effect paying for something which may never happen. Unfortunately that's the nature of insurance. However, should something happen then you will be extremely grateful that you took out a policy. So is there a half way house, which provides some cover to your mortgage, but at a reduced cost - let's have a look at the types of policy currently available.

Best Mortgage Deals - Type of Mortgage Protection Policies

I've created these in a table below, as there are many different types but these are the most common, along with the pros and cons of each.

Policy Type Explanation Pros and Cons
Life Assurance Policy Also known as term assurance. The policy provides a fixed lump sum should you die at any time during the policy term. There are generally two types, level cover and decreasing cover. Level cover remains the same throughout the term of the loan, decreasing cover falls as the outstanding capital owed falls. The mortgage is paid in full in the event of death so there is no need to worry, but the policy only pays out on death. Decreasing cover is cheaper than level cover. The policy has no maturity value.
Critical Illness Policy This type of policy normally pays out a tax free lump sum on the diagnosis of certain specified illnesses. One normally has to survive between 14 and 40 days afterwards. Once a plan has paid out the policy ceases with no further benefits. The policy can often be built into another policy such as Life Assurance, and provide two types: death and critical illness OR, death or critical illness. Most, but not all critical illnesses are covered - check the policy very carefully. Also make sure pre-conditions are specified and agreed beforehand.
Income Protection Policy Pays a fixed monthly amount for long term absence from work due to sickness, or accident .Generally pays around 50% to 60% of your gross salary, although some policies lend to 75%. Unemployment, redundancy is not normally covered as standard under such a policy. This is one of the most expensive forms of mortgage protection. It can be a very grey area as insurers will often try to avoid paying. The FSA has tightened this area up due to mis-selling, but check your policy carefully. They will generally pay for periods between 12 and 24 months.
Unemployment Policy As above but for long term unemployment As above - again be careful as this has been the subject of policy mis-selling in the past

Well that's about it on mortgages, and how to find the best mortgage deals in each of the various markets. Remember, finding them is the easy part, paying them off is hard work!

Thank you so much for getting this far, and I hope you find this site useful in your search for the best mortgage deals. Remember in the next few years, prices in most of Europe and the US are likely to fall along with interest rates, so choose your mortgages carefully. If you do have any comments suggestions, or would simply like to ask me a question, please do drop me a line in the ask Anna link above - I will always reply, but as I do receive many enquiries a week it might take some time, so please be patient!

I wish you every success in your hunt for the best mortgage deals, and also in finding your dream home - kind regards - Anna