Insurer spotlights £6bn loan policies ‘rip-off’
FINANCIAL ADVISER - 18TH APRIL 2002
Mortgage borrowers are overcharged by more than £6bn in mortgage payment protection insurance from traditional mortgage lenders, according to Burgesses.
The specialist insurance provider claimed that billions of pounds could be saved by switching mortgage payment protection insurance to independent providers.
Burgesses is promoting its new policy, MortgageSafetynet, which it says not only guarantees savings of up to 33 per cent but also offers a wide range of additional benefits, including three months’ free cover to all policyholders and “back-to-day-one” cover instead of the usual 60-day excess period.
Hamilton Insurance underwrites MortgageSafetynet deals.
As an example, Burgesses calculated that the average mortgage payment protection insurance cost £5.80 for each £100 at the top 10 lenders – over 25 years this adds up to an average total mortgage payment protection insurance cost of £8,700 on a £500 a month mortgage payment.
Burgesses said premiums on its own policy covering the same monthly payment totalled £2,775. Applied to the 2.2m mortgage payment protection insurance policies, the savings figure comes to £6.1bn.
Simon Burgess, managing director of Burgesses, said: “For far too long, mortgage lenders have been ripping off their borrowers. Simply by seeking independent advice, borrowers can save thousands of pounds over the lifetime of a mortgage.”
