Take cover from shocks in the future
LIVERPOOL ECHO – 29TH APRIL 2002 - 29TH APRIL 2002
If jobs were to go and interest rates started to climb, how could overstretched borrowers maintain monthly mortgage repayments?
Nobody knows how this housing boom might unravel.
Simon Burgess, of independent broker Burgesses, which sells policies protection homebuyers against accident, sickness and unemployment, says it is often too late to get cover when companies hit trouble.
Simon says: “If a home-owner has no savings, or no second income to buy valuable time, there is a serious risk of repossession.”
Sales of mortgage payment protection insurance have grown steadily since 1998, but the CML says the take-up occurred largely because of better products, pricing and awareness, rather than because of benefit cutbacks.
Just 21% of outstanding mortgages are protected y mortgage payment protection insurance – far short of the government’s stated target of 55% by 2004. But more than a third of mortgages (36%) taken out in the last six months of 2001 were covered by mortgage payment protection insurance.
Competition between suppliers is cutting the cost of cover – from £7 per year for each £100 cover to £5.50 today.
In January, Nationwide Building Society announced that new borrowers taking mortgage payment protection insurance would get it free for the first 12 months.
At the same time, the MarketPlace at Bradford & Bingley launched Payment Protection which guards against accident, sickness and unemployment.
Simon says: “Every single person who is employed should seriously consider unemployment cover.”
