Mortgage Insurance

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Often called mortgage life insurance, or even decreasing term life cover. According to creditaction.org.uk the average outstanding mortgage for the 11.4 million households in the UK who have a mortgage is £108,819. What happens if someone dies unexpectedly and leaves this debt with their family and loved ones?

Mortgage insurance explained

Mortgage life insurance when put in place can help provide and care for your family’s finances by paying off the outstanding balance of a mortgage on your home with a lump-sum payment should you die during the life cover policy. At this point mortgage insurance comes in to play, as you need 100 percent security and safety for your family and loved ones.

The lump-sum payment will decrease over the term of the mortgage, so you end up paying for the specific cover you need rather than paying more for level term cover. The lump-sum will amortise over time roughly in line with the mortgage payment, it won’t be exactly the same, but it will be very close.

As soon as the lump-sum payment is made the mortgage life cover policy ends, alternatively if you survive the term of the cover the cover will also cease but you have the option to take out new life cover at that point in time.

Single or Joint Life Cover

At the outset you have the choice to take out single or joint life cover, which simply means that it covers either only yourself or to also include your partner.

Mortgage insurance with critical illness

By adding the option of critical illness cover you will have the benefit of the policy paying out either on death or on the diagnosis of a pre-agreed critical illness. Read our article here for more information critical illness cover.

Where to buy mortgage insurance

Usually mortgage insurance policy is bought from your financial institution like a bank. However there are also discount brokers who don’t give any advice, and also online comparison sites, like lifedeal, that will work to find you the very best deal.

Two types of policies

Decreasing term insurance

This type of mortgage insurance policy is suitable for those who would like a repayment of their outstanding mortgage balance. As you repay the mortgage the outstanding balance decreases over the years. In short it means that if you die during the policy then you will have enough funds in your mortgage that you could easily pay off the mortgage.

Level term insurance

This is suitable if you have an interest-only mortgage, i.e. one where the balance of the mortgage will always stay the same. Therefore your lump-sum payout will always equal the amount you initially borrowed.

Mortgage insurance is a necessity

Mortgage insurance policy is necessary if you want your family to stay safe in the family home.

What to consider when taking out mortgage life insurance

Now the question comes what are the things that you should consider before buying a mortgage life insurance.

There are many things that you need to consider; like what is your age when taking out the policy? How is your health? Are you a smoker? And what exactly do you want your policy to take care of for you after your death? Do you just want to pay off you mortgages or do you want an income stream for your family?

If you analyse all these things carefully and deeply then you will definitely come to the decision that you should buy a mortgage insurance policy as it helps you pay off your mortgages and helps keep your family in your home at a time when can least afford financial struggles.

Alternatives

Life insurance is one of the alternatives to mortgage insurance. Most of the mortgage insurance policies today are very similar to life insurance policies and in the end of both provide an appropriate amount of money. With that money you can do anything you want – you can pay off your debts or you can save the money and use later as and when it is needed.

Get the best life insurance deal available

Mortgage cover is provided on a case by case basis. Complete our short form and we will help find you the best deal that suits your individual requirements. Complete our short form and find your best mortgage life insurance. Our service is completely free and without obligation.

Guest article: Written by Adrian Brant