MORTGAGE INSURANCE

Mortgage payment insurance is a form of payment protection insurance. If you've ever taken out a hire purchase agreement, applied for a loan or bought something with a store card, then you've probably been offered payment protection insurance. Payment protection insurance makes sure that your credit agreements can be repaid if you have trouble paying them, and mortgage payment insurance works in much the same way. Like other insurance, a small monthly premium is charged. With payment protection insurance, you need to be unable to meet payments through no fault of your own to qualify for the benefit. That means that if you lose your job, have an accident or become ill, the insurance scheme will cover your payments for the specified period. There is usually a deferment period, though, before you start to receive the benefits.
Mortgage payment protection insurance is a form of payment protection insurance, which pays out if you can't pay your mortgage due to an inability to work. Most mortgage payment protection insurance policies pay out for 12 months, though some may cover your payments for as much as two years. This could be worth it, as government benefits (which are only available in some cases) only cover the interest on the first £100,000 of your mortgage. The average mortgage is now much higher.
In the past year, payment protection insurance has been criticised and investigated because of allegations of mis-selling. In essence, the Office of Fair Trading and the Financial Services Authority both criticised payment protection insurance, because in many cases consumers don't get a fair deal. They may be coerced into buying an unsuitable policy, and may only find out its deficiencies when they wish to make a claim. Consumers may also find that they are taking out single premium policies for each credit agreement they make, when an independent comprehensive policy might be much better for their needs - and far cheaper.
Mortgage payment insurance is largely exempt from those problems. Since it is sold with mortgages, consumers are more likely to get independent financial advice, resulting in the right kind of mortgage payment protection insurance policy.
Planning for the unexpected is a sensible move. If you have lost your job and are having difficulty with mortgage payments, the last thing you need is to risk losing your home as well. But that could happen if you get into arrears and the lender tries to repossess your home. In contrast, with mortgage payment protection insurance, your mortgage payments will be met and your home will be safe.